The person who put forward Sir Philip Green for a knighthood has said he should be stripped of the honour if his handling of BHS is found to have lacked integrity.
Green sold BHS last year for £1 to Retail Acquisitions, a consortium led by Dominic Chappell. The department store chain had a pensions deficit of £571m after the Green family withdrew hundreds of millions of pounds in dividends. BHS went into administration this week putting 11,000 jobs at risk.
Sir John Collins, a former chairman of Dixons who headed the Whitehall honours committee which proposed Green’s ennoblement, said the BHS story was “not a good one” and its sale to Retail Acquisitions did not fill him with confidence.
Collins added: “The judgment that has to be made is whether in the sale of BHS, has the man acted with the integrity that would underpin being awarded a knighthood? If you decide that he hasn’t then he should lose it.”
Green was knighted in 2006 following approval by the then prime minister, Tony Blair, “for services to the retail industry”.
Collins said: “At that moment he was hailed as a very successful retailer [and] he was also considered fair and generous in helping with charities.”
He said he was “conscious that sentiment changes” and now wanted those in charge of the honours system to consider whether the knighthood should be rescinded.
“Our golden rule was that you must have done exceptionally well in your profession, but you must have done something beyond that for society,” Collins said. “If the judgment was that you have not continued your behaviour in a manner that was consistent with the award granted to you then it is fair that it is removed.
“I feel the BHS story is not a good one. I feel those who were overseeing these things, the sale and who it was sold to, it doesn’t fill me with confidence.”
Paul Flynn MP, a Labour member of the public administration and constitutional affairs committee, said he would refer Green to Whitehall’s honours forfeiture committee.
The forfeiture committee has previously removed knighthoods from Fred Goodwin, the disgraced chief executive of the Royal Bank of Scotland, and James Crosby, a chief executive of Halifax bank. More usually, the committee removes honours from people such as sex offender Rolf Harris, who have been sentenced to prison for at least three months for a criminal offence, or those who have been censured or struck off by a professional or regulatory body.
Last year Blair praised Green as a “real visionary” for setting up his Fashion Retail Academy in London in 2005. Recalling their first meeting, he said: “Philip never graduated from the school of diplomacy, but rather the school of life, and there was a real meeting of minds that day.”
The intervention by Collins, a senior figure within the honours system at the time, will ratchet up pressure on Green over his business tactics.
It also emerged on Thursday that Green and Chappell could be called to give evidence before MPs on the business, innovation and skills select committee. The committee announced it will explore the sale and acquisition of BHS, including whether the directors of Green’s Arcadia and Chappell’s Retail Acquisitions acted as best they could to fulfil their statutory duties.
Paul Budge, the finance director of Green’s company Arcadia, risked angering BHS staff and pensioners when he said the chain was “like Woolwooths and Littlewoods … past its sell-by date”.
Budge defended Green’s handling of BHS, claiming that the £400m of cash taken out of the company by the former owner, his family and other shareholders was offset by about the same amount in loans, property and cash.
“Philip’s optics are that the family got out £280m in dividends and the family has lost £255m in funding BHS over the years and then has sold it for £1, giving the new owner £74m in cash and £100m worth of property,” said Budge.
Green is already embroiled in an investigation by the BHS administrators, Duff & Phelps, into what happened at the department store chain in recent years. This could potentially lead to the government’s Insolvency Service striking off company directors or even mounting criminal prosecutions.
Duff & Phelps reassured staff on Thursday that workers’ wages would continue as a “priority payment” and said it had received “a number of expressions of interest” in the business.
The Pensions Regulator is also investigating the BHS pension scheme to determine whether to take action to pursue those “deliberately attempting to avoid their pension obligations”. Green has reportedly offered £80m to help fill the pensions gap, but that will still leave a much larger deficit.
Most of the cash and all of the property were part of the business that was being sold rather than the personal assets of the Green family.
John Mann MP said Green should lose the title unless he pays back £400m in dividends extracted from BHS before its collapse.
Vince Cable, business secretary from 2010 to 2015 who clashed with Green over his tax affairs, said: “If there are any questions about his conduct with the company then this isn’t a matter about knighthoods – it’s actually something that should be looked at by Companies House, whose specific role is to investigate the conduct of directors. That is where the debate should be.”
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