16.

The Aftermath

On a chilly, overcast afternoon in January 2017, I went to see three of the former South Shields BHS staff members who had held up the defiant sign when their shop closed telling Sir Philip Green where to go. Over sandwiches and soup in a café overlooking the Tyne, Jean Costello, Tracey Headley and Liz Lloyd – bright, chatty women in their fifties – reminisced about the sense of community that grew up around their store. Headley and Lloyd had known each other since junior school. They met Costello, who described herself as ‘the gobby one’, on the first training day when the shop opened in October 2005. ‘We’ve been through personal tragedies, we’ve been through nice life events and we’ve always been there for each other,’ Costello said. ‘I lost my son, tragically, and they were so supportive.’

The three friends described the department store as a kind of community centre. ‘There were people who didn’t come in to buy – they came in to see us for a chat,’ Lloyd said. ‘They’d bring photos of their holiday and that.’ They laughed at stories about smuggling in saveloys to eat and wearing beach clothes on a particularly hot summer’s day in protest at the lack of air conditioning. The tone turned sadder as they remembered the last few days in July 2016. ‘We stood at all the windows with the mannequins and customers were going past and taking photographs,’ Headley said. ‘One old couple – they weren’t even from Shields, they were on a day trip – took photographs and went to get them developed from their phones. I don’t even know how they found us, but they came to the pub and gave them to us.’

Costello said, ‘Philip Green doesn’t realize the human side of what he’s done. It’s not just about the business, it’s about everything that’s gone, that we’ve been used to for eleven years. It’s hard to change your life around.’ Two angry questions were on all of their lips: when was Green going to settle the pension deficit? And why was it taking so long?

There was undoubtedly an element of truth to the complaints Green voiced about the maze he had to find his way through. Pension funding is complicated and changeable, and the regulator could be a bureaucratic, cumbersome negotiating partner. In his parliamentary grilling, Green had said, ‘The regulator has never found my number in three years … They’ve been looking at the scheme since ’13. Do you think it is reasonable that [Lesley Titcomb, its boss] shouldn’t have telephoned us, emailed us or had any contact in three years?’

But Green’s desire to pay the lowest possible price and his lack of empathy for the BHS pensioners dominated the headlines. His loathing for the establishment was also a strong subplot. A friend thought Green became distracted by the Punch and Judy show with Frank Field to such an extent that he forgot the Pensions Regulator was actually the arbiter of any deal. ‘He was the dog who lost sight of the rabbit,’ the friend said. In November 2016, the frustrated watchdog launched legal action against Green and Dominic Chappell, sending them 325-page ‘warning notices’ setting out its case. In February 2017, a month after Jean Costello and her friends demanded to know what was stopping him, Green and the regulator finally announced a resolution. Green agreed to pay up to £363 million to save the BHS schemes from entering the Pension Protection Fund. The rescue deal, codenamed Project Atlantic, offered BHS’s 20,000 pension-fund members 88 per cent of their original benefits, versus the 75 per cent they would have received in the PPF. The big winners were ten former senior managers – Green’s old lieutenants – who would have seen their generous pensions capped at £33,700 a year by the PPF. They were now guaranteed almost full payouts of up to £100,000 a year.

This was nine months after the start of the crisis. As Jeff Randall had warned, the huge settlement came far too late to save Green’s charred reputation. The regulator’s legal case had never been proven, but the public perceived that he had been dragged to the negotiating table kicking and screaming, and signed the cheque with a gun held to his head. The Daily Mail ‘pardoned’ Green and revoked the Sir Shifty title, saying he had ‘belatedly’ done the decent thing. The Sunday Times asked, ‘What Next, Sir Philip?* (*Yes, He Keeps the Knighthood)’. But former BHS workers were unimpressed, and Frank Field said, ‘Anybody who can’t walk down the street in their own country without bodyguards … you have to question whether they ought to have a knighthood.’

Even in death, BHS was the subject of unseemly squabbling. Chappell accused the administrators at Duff & Phelps of acting as Green’s ‘ponies’, saying, ‘They do exactly what Philip tells them to do.’ Duff & Phelps brought in Hilco, the restructuring firm that had been Green’s ‘jockey’ on the break-up of Allders, to liquidate BHS. Phil Duffy of Duff & Phelps insisted there was no improper relationship with Green, and Hilco’s Paul McGowan said that his firm had won the work in a competitive tender. But the Pension Protection Fund, BHS’s biggest creditor, pushed for the appointment of a second administrator who would be independent of Green. FRP Advisory, brought in at the PPF’s urging, fought a tug-of-war with Green over the £35 million charge he still held against BHS’s assets. Despite the endless column inches written about his greed, the billionaire was still keen to recoup the money. The PPF believed his charge was invalid, and it wanted the £35 million to be distributed evenly among all BHS’s creditors. Green eventually backed down in the face of a legal action started by FRP.

The characters who had contributed to his downfall scattered after the BHS scandal. Chappell retreated to his Grade I-listed manor house in Dorset. He refused to return the £3 million he had received from Retail Acquisitions’ £7 million haul, telling BBC’s Newsnight it was a ‘drip in the ocean compared to the money that had been needed to turn around BHS’. In spite of the huge profit he had made, Chappell still seemed to have financial problems. Two months before BHS collapsed, he asked Alex Dellal for a short-term personal loan of £150,000 to meet a tax bill. At the time of his select-committee appearance in June 2016, £75,000 was outstanding, and Dellal had served a formal demand. Iain Wright asked Chappell, ‘Are you going bankrupt again?’ ‘No I’m not, no,’ he said with an awkward smile that turned into a grimace.

Neighbours occasionally saw Chappell pulling up in his new Bentley outside 10 Castle Street, the private members’ club in Cranbourne. But a stream of embarrassing stories poured out in the wake of BHS’s failure. Chappell was reported to have evicted his brother, Damon, from his parents’ home in Marbella after persuading them to transfer ownership to him (he said Damon had struggled to pay the service charge and that he had helped his brother move to a cheaper property). He was banned from driving for six months for speeding, having pleaded unsuccessfully with magistrates that he would be unable to take the train because he suffered ‘abuse’ from fellow passengers. Steve Rodger, Chappell’s former business partner in Cadiz, threatened to file a ‘denuncia’ – a legal complaint – over the €368,000 of allegedly unauthorized payments he had taken from the oil depot. Chappell was arrested and released by HM Revenue & Customs over more than £500,000 of unpaid taxes on his BHS gains – less than a month after he was spotted viewing a £1 million Grade II-listed Georgian townhouse in Blandford Forum, which he said would be for his parents. (In the end, he didn’t go ahead with the purchase.) At the time of writing, Chappell had been found guilty on three charges of failing to hand over information to the Pensions Regulator. The judge overseeing the case described some of the former owner’s evidence as ‘incomprehensible’ and ‘not credible’. He was fined £87,000, but told the court he had no money. Chappell said he had a monthly income of up to £3,000 from a job working as a consultant to a small cosmetics company, but that his outgoings reached almost £9,000 for rent on his mansion, a finance agreement on a Range Rover and school fees for his two children. He said, ‘I’m an entrepreneur. It’s the nature of the business. There are boom times and slack times.’ The watchdog was continuing to pursue Retail Acquisitions for up to £10 million over the BHS pension deficit. BHS’s administrators, having put Retail Acquisitions into liquidation after a lengthy battle, were trying to recover the £1.5 million loan that paid off Chappell’s parents’ mortgage – although he had switched the security from the property in Sunbury-on-Thames to a plot of land in Portugal. Shortly before publication, the Insolvency Service announced that it would seek to ban Chappell and three others – including his father, Joe – from acting as directors for up to fifteen years. Green was not among those targeted. Chappell said in a texted statement that he was ‘extremely angry’ at the process and considered it an ‘outrage’ that ‘Phillip [sic] Green has managed to slip his way through the net’.

Eddie Parladorio resigned from Retail Acquisitions a month after BHS went into administration. He kept the £1.5 million he had banked and set up a new legal practice, Hanover Bond. One of his first clients was Nicola Tarrant, girlfriend of the convicted fraudster Paul Sutton. Tarrant fought – unsuccessfully – to stop Sutton’s creditors taking over B52 Investments. Sutton told me that he was ‘really fed up with the way the whole thing’s gone’. He and Tarrant vanished, although victims of the B52 Investments scam reported having seen them in Windsor and Belgravia.

Stephen Bourne and Mark Tasker gave back their shares in Retail Acquisitions following the scandal. The professionals, who had been handed 2.5 per cent each in December 2014 as an inducement to join Chappell’s board, wrote to Parladorio’s old law firm, Manleys, in May 2016, ‘Given the recent widespread reports of alleged wrongdoing at the company in relationship to its ownership of BHS in the period after we resigned as directors, we wish to sever all remaining involvement.’ Bourne carried on working as a corporate adviser. Tasker continued to run the commercial department at Bates Wells Braithwaite. Paul Martin remained at Grant Thornton. David Roberts, who stayed at Olswang, received a fiery letter from Linklaters on behalf of Green, accusing him of helping Retail Acquisitions break covenants by taking money out of BHS to pay fees. In any case, Olswang merged with the law firms CMS Cameron McKenna and Nabarro in May 2017 and the Olswang name disappeared.

Darren Topp and Michael Hitchcock, perhaps gluttons for punishment, both moved to L. K. Bennett, the struggling women’s fashion brand favoured by the Duchess of Cambridge. Topp joked that it was the first job his wife had actually wanted him to take. He and Hitchcock had bonded through the tribulations of the Retail Acquisitions days, and they were firm friends, although Hitchcock stood down in November 2017, having only ever planned to do the job as an interim assignment. Topp resigned as chief executive five months later.

The publicity over Green’s looting of BHS was embarrassing for Richard Caring, given his secret roles as both shareholder and supplier in the early days. Green had drifted apart from his old business partner after 2006, when Caring sold his shares in BHS and started buying trophy assets such as Annabel’s nightclub in Mayfair. Caring had tried to shake off his past as a grubby rag trader, spending more time in Los Angeles on Soho House business. His wealth was estimated at £700 million by the Sunday Times Rich List, but he let it be known that he was worth far more. Soho House insiders laughed about an incident that became famous internally as ‘the billionaire dick-off’, when Caring shouted at Ron Burkle, the majority shareholder, during a dispute, ‘Ron, I’m a billionaire too, you know!’

Caring refused to appear before the BHS select committee, but he was forced to dispatch two letters from his rarefied bubble confirming that he had held a secret 22 per cent stake in BHS through two offshore funds, which received £93 million in dividends. Caring wrote, ‘Given that I was a supplier to most of the brands in the high street, the belief was that it would be better if it was not public knowledge that I was both a supplier and shareholder to a retail competitor.’

The attention was particularly unwelcome because Caring had just left his wife of forty-five years, Jackie, for a Brazilian model half his age, Patricia Mondinni. He had moved out of the Palace of Versailles in Hampstead and into a ten-bedroom house in St John’s Wood with Mondinni and their toddler son (they had a daughter the following year). The split upset many of Caring’s older friends, who liked Jackie and complained that he no longer wanted to socialize with people over forty. It even caused problems with some of the crew on his yacht, Silver Angel, who apparently bridled at the peremptory way their new mistress handed out orders. In one anecdote, on a trip to the Maldives during an outbreak of the Zika virus, Mondinni asked the crew to stand around the edge of the boat with fly swatters to fend off any mosquitos that might come their way. The captain persuaded her that it would be impractical.

The more minor lieutenants who had helped Green build his empire went to ground. Paul Coackley, who had retired after his long career at the billionaire’s side, declined to speak about the decade or so he had spent liaising with BHS’s pension trustees. I tried to have a conversation with Coackley’s former sidekick, John Readman, Green’s old property director, who had also retired – perhaps to spend more time on his yacht, Marmalade of Manchester. ‘That’s not going to happen,’ Readman said, before hanging up.

The individual who suffered the most was Mike Sherwood, Green’s one-time confidant at Goldman Sachs. As recently as October 2015, Sherwood and Anthony Gutman, his right-hand man, had been instructed by Green to start planning a stock-market listing or sale of Topshop – the big deal for which they had been ‘hanging around the hoop’. The plan died as the BHS scandal exploded and Topshop’s sales slipped into reverse. Goldman was shown to have made, sent or held ninety-five calls, emails and meetings involving the sale of BHS. As the fire raged, ‘Woody’ was caricatured as Green’s Mini-Me in the Sunday Times, complete with an Austin Powers graphic. He resigned as Goldman’s joint European head in November 2016, five months after his parliamentary grilling. Sherwood insisted that his decision to leave was unrelated to BHS. Some Goldman insiders thought it was the final straw for the bank’s New York management after a series of misjudgements, including the hostile Marks & Spencer bid in 2004, a controversial arrangement to help Greece massage its finances for entry into the Eurozone and work for the Gaddafi-era Libyan Investment Authority, which resulted in an embarrassing $1.2 billion court case alleging that Goldman bankers had paid for private jets and prostitutes (Goldman successfully defended the case).

Sherwood described BHS as a ‘blip’ in his thirty-year career. He said he was ‘ready to live [his] life at a different pace for a little while’. But observers were struck by the way Green had thrown Goldman under the bus during his hearing. Green had gone as far as to read out the ingratiating email from Gutman, Sherwood’s trusted deputy, congratulating Chappell on his acquisition. A property financier who admired Sherwood said of his treatment, ‘There was nobody Philip Green wouldn’t fuck to get this deal done.’