What to expect from Sir Philip Green's appearance before MPs tomorrow

 
Helen Cahill
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There will be no runway models tomorrow for Green to hang out with - but we hear Frank Field is also a hoot (Source: Getty)

The day is almost here... Sir Philip Green himself will (probably) make his appearance in front of MPs tomorrow to explain his part in the sale of BHS.

So far there have been allegations of death threats, tantrums, and dramatic confrontations in hotel lobbies.

As David Buik, market commentator for Panmure Gordan & Company, put it: "Wednesday’s testimony will be a guinea a minute. I’d pay money to be there."

What, then, can we expect from tomorrow's hearing?

Will Green turn up?

Pundits are questioning whether Green will even turn up tomorrow, but, given the damage that has been done to his reputation in previous instalments of the inquiry, it's likely he'll show to defend himself.

He's already started to defend himself, last week hitting back at accusations that he tried to prevent a rescue deal for BHS.

Nick Hood, business risk analyst for Opus Restructuring, said: "Men with an ego big enough to run a retail company cannot just walk away from this kind of criticism, and that's obvious from the way he is behaving.

"I think he will turn up."

What strategy will Green adopt?

Hood said: "My feeling is that the thrust of any strategy being set will be to defend his record of managing BHS up to the point it was sold. He will say he didn't underinvest and didn't strip it of all of its money - and he'll say it was in reasonable shape when he sold it.

"He will say: you can't blame me for the pension deficit because the actuarial changes in terms of bond yields are not things he can influence. He'll say he can't be accused of causing the deficit, and that it's down to the trustees.

"And then, of course, Green will say the reason BHS has gone bust is because of Dominic Chappell and his poor management - he will gloss over the fact that he knew what a lightweight Chappell was."

Maureen Hinton, retail analyst at Conlumino, said: "He'll put his best defence up."

Green will be battling against harsh criticism from MPs; they may well put it to him that he didn't care what would happen to BHS. Hinton pointed out, however, that the end of BHS was something Green would have wanted to avoid.

Hinton said: "We should remember, BHS is carrying a lot of Arcadia brands and now BHS have gone bust they don't have a channel to sell through."

What questions should the MPs ask?

Tom McPhail, head of retirement policy at Hargreaves Lansdown, said there are several questions MPs must address regarding the BHS pension scheme and Project Thor, a proposed recovery plan for the scheme.

He said: "Where were the distress flares - how and when should anyone have intervened on behalf of members?

"Why the gap between Project Thor being put on hold and the trustees being notified of the sale?"

McPhail added: "Project Thor was put on hold in September 2014, to the dismay of the scheme trustees who saw it as a viable opportunity to safeguard members' interests. Within weeks, in October 2014 Sir Philip Green was discussing the sale of BHS with Deloitte.

"However, the trustees and the Pension Regulator were only informed of the possible sale in February of 2015, just weeks before the sale to Retail Acquisitions was completed. Should they have been notified earlier?"

Buik said: "Sir Philip has questions to answer, as do his advisers. They currently do not come out of this escapade smelling of roses. Did Sir Philip block a potential rescue operation by Mike Ashley, which he strenuously denies? Sir Philip through a spokesman dismissed the idea that a plausible deal was ever on the table.

"Did Sir Philip offer to give Chappell first offer on Arcadia ex-Top Shop, if the BHS deal went through smoothly? Now that is what the rumour says! What does he intend to do about the £571m pension black hole? Will he ‘divi’ up a couple of hundred million to placate parliament and those 20k pensioners who feel they have been morally legged over?"

Will Green make an offer to save the BHS pension scheme?

Frank Field, the uncompromising head of the work and pension committee, recently told the Financial Times his committee would “laugh” if Green offered less than £600m to settle BHS’ pension debts.

Hood said of all of the issues facing Green tomorrow the £571m pension deficit is the one "that threatens him the most - if he has to put his hand in his pocket".

Retail analyst Hinton said: "It's so public now there is this issue of how to restore the pension fund, to put it into credit."

McPhail said: "The debt effectively passes to the new owners of the business. However, as the committee has learned, Retail Acquisitions seemed to have only a very superficial understanding of the scale of the debt they were taking on."

So, should Green cough up, given how much he took out of the company in dividends?

Hinton said: "I think there was a lack of investment initially; but when he took the money out [of BHS], the company was in profit, and he was putting money in when it was starting to go into negative territory. You have to be careful about making assumptions."

If the committee make enough noise, however, Green may well shell out just to get rid of the bad press.

"The committee has the divine right to huff and puff and they most they can achieve is to threaten his reputation so that he will make an offer," Hood said.

Sir Philip Green has been approached for comment.

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