Former BHS owner Dominic Chappell has revealed more about the complicated property dealings of BHS before it went into administration in April.
He was speaking to MPs on the Work and Pensions Committee today following a morning of evidence from BHS’s former management, who accused him of having “his fingers in the till” over payments to his company, Retail Acquisitions, over a £32m BHS property deal.
Asked why he redirected some of the money from the sale of BHS property in Sunderland (£440,000) and Oxford Street, London (£600,000) to Retail Acquisitions, Chappell said: “Because RAL had acted and completed those transactions and were due payment directly from point of sale as any agent or acting body would have done, whether it had been an estate agent or funder on the way through.”
He said he could not recall if the money had ended up in his own bank account.
Property problems
Chappell also revealed more about the extent of property sales the turnaround plan envisaged.
He said he had saved £4m a year in rent from selling BHS’s HQ at 129-137 Marylebone Road, NW1, and neighbouring office North West House, which it had intended to close anyway.
But Frank Field MP, chair of the committee, said: “It seems to me there were lots of promises of actual property for you, but when you went to call on that property to get the value you needed for the business the cap was taken up and the property had gone somewhere else.”
When asked about BHS property portfolio sales before Retail Acquisitions took over, and where the money went, Chappell said: “The only one sold was Ealing.”
“[Sir Philip Green] asked our permission, because we were in the final throes of buying, whether we wanted to keep it or not.
“The transaction was, we thought on the face of it, a relatively good position. What we weren’t informed was that Philip has sold it to his stepson.”
Brett Palos, the son of Sir Philip Green’s wife Tina Green, and who is also on the board of Arcadia Group, bought the Ealing branch for £6.9m in March 2015 − days before BHS was sold − and sold it for a reported £10m three months later.
He claimed that Green, when asked by the regulator whether he had sold any property in the past 36 months to connected parties, wrote ‘no’, but Chappell told the hearing that “when it broke in the [Sunday] Times he had to put a retraction to that and say ‘oh yes, I forgot’”.
Chappell said they were looking at a legal case against Green and Arcadia.
He also claimed that Green had not wanted the successful CVA, where landlords agreed to reduce rents, to go ahead.
“I think Philip genuinely thought we would fail. He was very hostile about us doing a property CVA,” he said.
No experience
Chappell told the committee he admitted to Green he had no retail experience and had been involved in a bankruptcy.
He denied his intention had been to just be involved for a short period of time before selling to make a profit, stating that BHS had suffered from “enormous lack of investment over a very, very long period of time”.
“There were shops that had no heating. There were shops that had no air handling. There were shops there that the staff, bless them, who loved and adored BHS, came in at the weekend to paint, to replace lights because no one had given that company any money for 10-12 years,” he said.
He said that capital investment was included in the turnaround plan from the £120m he hoped to raise in cash and property sales, which he said had started to do – selling the food franchise to Compass.
Possible buyout
The hearing also heard that Mike Ashley of Sports Direct had been willing to step in and buy BHS, if it could avoid the liability of the pensions, but that Sir Philip “went insane” and was able to stop it by forcing BHS into administration.
Ashley had told a separate committee of MPs yesterday he wanted to buy BHS.
