Yesterday in the news there was a report that the government will start construction on a secondary school at Searles, Christ Church in early 2017. The information caught the attention of BU not because the school is earmarked to have a sixth form, rather, Minister of Education Ronald Jones explained he preferred not to divulge the reason why the construction of the school was delayed. It is difficult to imagine a minister and by extension a UK or US government being allowed to avoid disclosing the reason why a government project was delayed.
To support the point, across the pond in recent days there has been a full parliamentary enquiry into the collapse in April this year of British Home Stores (BHS) which, until its sale last year, was the ‘jewel in the crown’ of frequent visitor to Barbados Sir Philip Green. Sir Philip is not scheduled to be in the parliamentary hot seat until next week but BU anticipates his testimony will follow the same course as BHS’s new owner, Dominic Chappell and its CEO and CFO have yesterday [08/06/2016]. In other words, the loss of over 11,000 jobs and the disappearance of its employees’ pension fund is everyone else’s fault, not his.
The noticeable difference between a major collapse of a large company in the UK and a similar collapse in Barbados lies in the robust application of transparency laws. Whereas in Barbados successive governments have given lip service to governance issues, in the UK, an enquiry is not only held to investigate suspected or reported malfeasance, it is publicly televised and information made available for a legitimate fourth estate to report on. It also goes without saying that the UK DPP will be following events with the threat of prosecution unlike our DPP Charlie Leacock.
Yesterday’s hearing was fascinating in that Darrin Topp, the CEO (or former CEO) of BHS and the CFO, Michael Hitchcock, blamed everything on the new owner Dominic Chappell and went so far as to accuse Mr Chappell of threatening to kill him (Mr Topp) and Mr Hitchcock called him a “premier league liar and Sunday pub retailer”. In his turn Mr Chappell denied that he had threatened to kill Mr Topp and stated, in effect, that Mr Topp was completely incompetent and blamed the collapse of BHS, which he purchased for £1 from Sir Philip Green, on…..Sir Philip Green. Mr Chappell however was forced to admit that he had made a profit.
We wait to hear from Sir Philip Green who may find himself in the law courts alongside Mr Chappell.
The key issues are:
The pension scheme: There is a pension deficit of £571 million (BBD$ 1,661,717,332). In 2013 BHS agreed to put £9.5m (BBD$ 27,642,867) into the pension yearly for 23 years to make up the deficit. Companies have a legal obligation to do this under the Pensions Act 2004. This amount does not compute and seems far too low a refund to the raided pension fund.
Property: Sir Philip bought BHS in 2000. In 2001 BHS sold 12 stores to Carmen Properties Limited for £105.9million (BBD$ 305,687,376) and then rented them back from the Carmen (which is off-shore and based in Jersey) for £12million (BBD$ 34,935,907) a year. Carmen Properties was owned by Sir Philip Green. Over the next 11 years BHS paid £141million (BBD$ 410,558,695) in rent to Carmen. These rents are generally considered to be high in comparison to the prevailing market rate.
Dividends: BHS paid £414 million (BBD$ 1,205,504,283) over 4 years (£220 million (BBD$ 640,581,016) in 2004 alone, more than £118 million (BBD$ 343,626,037) more than its pre-tax profits). More than $400 million (BBD$ 1,164,834,024) of that went to Sir Philip Green. This eradicated the £147.7million (BBD$ 430,121,852) reserves of BHS at a time when the pension fund had gone into substantial deficit. £60million (BBD$ 174,737,898) of these reserves went on dividends, instead of into the pension fund. The payment of dividends reduced shareholder funds from £335.2 million (BBD$ 976,268,985) to £86 million (BBD$ 250,556,126) between 2000 and 2004.
Sale and purchase: BHS was purchased from Sir Philip Green by Retail Acquisitions for £1 on 12 March 2015. Dominic Chappell, the new owner, is a TWICE declared bankrupt and was millions of pounds in debt as a result of a failed business building, a marina on the Isle of Wight. Mr Chappell has no experience in retail whatever.
Prospects of success: Arcadia Group/BHS’s 2014 results show like-for-like sales were up 3.6% at BHS. Yet it is generally held that BHS had fallen behind its competitors and were steadily falling.
In Barbados, Little England, we accord a high level of preferential treatment to these dubious foreign operators like Claire Cowan, David Ames, Eugene Melnyk (the father of our Charlie Leacock’s godchild) et al. Commentary on an article posted recently by Jeff Cumberbatch exposed our lack of appreciation of how dots are connected in the temporal space humankind exist. Freedom to exercise the intellect and nurture a healthy curiosity about all things in the ecosystem is a prerequisite to achieve actualisation and happiness.
If we want our system of government to work, we have to ensure checks and balances are legislated and practiced. There is a reason bipartisan Committees of parliament exist such as the Public Accounts Committee (PAC), The Committee of Privileges to name two. Note these important committees of parliament have not functioned in the interest of the public under a BLP or DLP government. Instead the system has given rise to a political class whose interest is to serve themselves. Barbadians although rumoured to be an educated lot have ceded our right to advocacy under our Westminster system of government to an ineffective few.
Several lessons can be learned from the on-going BHS public parliamentary enquiry in Great Britain. No system is perfect, however, we must continually work to make it better.
Related Link: BHS: Death threats, ‘crazy’ rants and a scuppered Sports Direct rescue bid