Damaged Goods: The Inside Story of Sir Philip Green, the Collapse of BHS and the Death of the High Street

17. Trouble in Arcadia

O wad some Power the giftie gie us

To see oursels as ithers see us!

It wad frae mony a blunder free us,

An’ foolish notion:

What airs in dress an’ gait wad lea’e us,

An’ ev’n devotion!

Robert Burns, ‘To a Louse, on Seeing One on a Lady’s Bonnet, at Church’, 1786

Sir Philip Green’s sixty-fifth birthday party was not branded PG65, nor was it held in Cyprus, the Maldives or Mexico. Instead, eighty friends gathered in China Tang, the Chinese restaurant in the basement of the Dorchester hotel, on a Wednesday evening in March 2017. Leonardo DiCaprio and Kate Hudson were conspicuously absent. The crowd included Tess Daly and her husband, Vernon Kay; the singer Alesha Dixon and her boyfriend, Azuka Ononye; and the ex-footballer Jamie Redknapp and his then wife, Louise. Business guests included the property investors Bruce Ritchie and Robert Tchenguiz, both of whom were present – along with Green and his son – at the scandal-hit Presidents Club dinner a year later, when hostesses were alleged to have been groped and propositioned by some of the businessmen. Kate Moss made a late appearance.

According to someone who attended, Chloe, Brandon and Tina made emotional speeches. Green, who had settled with the Pensions Regulator a fortnight earlier, joked that handing over a chunk of his fortune had been ‘cheaper than getting divorced’. By Green’s standards, it was a low-key affair. ‘It was appropriate for what had happened,’ the guest said.

It was some nine months since Green and I had spoken. In our last conversation, deep in the crisis following BHS’s administration, he had said, ‘I’m not dealing with you, because you seem to twist [and] turn everything, and that’s all you’ve done all along.’ The day after his pension settlement, I decided to give him another try. ‘You’ve got to stop being an arsehole, then maybe I might talk to you,’ he grunted. ‘I’m not dealing with the Sunday Times. You’ve been a bunch of arseholes and I’ve got no reason to want to deal with you.’

A few minutes later he rang back, suddenly flickering towards a more conciliatory tone. ‘All you’ve got to do now, if you want to draw a line under it, is be a big boy, do what I said – and who knows, maybe we draw a line and we start afresh,’ he said. ‘If you want to keep attacking then fine – I don’t give a fuck, to be honest. So you decide … For over twenty years, I had a great relationship with the Sunday Times. You’ve done your best in the last year, as you know, to trash it.’ I remarked that he sounded more upbeat than he had during our last meeting. ‘I’m not upbeat, I’m not downbeat,’ Green sniffed. ‘I’m just bored.’

There was silence for another six months. On a Friday at the end of September 2017, I had breakfast with Neil Bennett to ask whether his client might cooperate for this book. ‘With Philip, you never know,’ Bennett said. That afternoon, a withheld number popped up on my mobile. It was an unmistakeable voice. ‘Hopefully you’ve got insurance for the book,’ it rasped. The conversation that followed was not unfriendly, although as usual there was an edge to Green’s humour. He asked why I hadn’t moved to the Daily Mail. ‘You and Paul Dacre deserve each other,’ the billionaire said. He continued, ‘Your idea of straight is going around eight bends. What are you laughing about? Eight bends is probably me being limited. It’s probably fifty-eight fucking bends, but anyway, never mind … I’m a very straightforward bloke. You’re very tricky.’

Green complained that Chappell had ‘been allowed to get away with murder’ by the media, ‘just taking the piss out of everybody’. ‘Do you think we’d have done business if we’d known he was a scumbag?’ he asked. He said that Frank Field was a ‘nasty, nasty, nasty, nasty, nasty, twisted individual who’s got some personal vendetta’. He moved on to Geoff Cruickshank, the Pensions Regulator’s head of intelligence – ‘this complete – excuse me – cunt’. Green said he had made his £363 million offer months before it was announced, even before the warning notices were issued the previous November. ‘They were dishonest people,’ he said. ‘Because of Mr Field writing probably north of twenty or twenty-five letters to them, and therefore them being subjected to political pressure and not wanting to be called back to Parliament, they issued the warning notices … [But] I took a decision not to go to war with the regulator, on the basis we were trying to settle it. And I thought if we went publicly to war, that would be the end of the movie.’

He had nonetheless enjoyed winding up his tormentors. He described a meeting with ten people at Deloitte’s offices where Cruickshank had barely spoken for two hours. Green said he had asked the enforcer, ‘Mr Cruickshank, do you play poker? No? That’s a shame, because if you look around the table and you can’t spot the schmuck, it’s you.’ He then instructed the ‘bird making the notes’ to spell schmuck correctly. ‘You’re going to put this in your book,’ Green told me.

The man who was once fêted for turning BHS into a £1 billion business expounded the virtues of the rescue deal he had eventually struck with the regulator. ‘If you look at the pensioners and you look at the pecking order, if you go to the top of the tree, there was a guy who was getting ninety thousand quid a year – that was his pension,’ he said. ‘When all the shit hit the fan, I think he got cut down to thirty thousand. So I called him up, and I said look, I’m sorry, if I got you back to seventy thousand, where would you be? He said I’d be over the moon. You know where I put him back to? He got 80 per cent of the future benefits instead of 100 per cent, but he went back to ninety thousand quid a year. So if Frank Field had 1 per cent decency, instead of wanting to go and always beat me up … I think I behaved very well with all these people.’

As I listened, Green exclaimed, ‘This is one of our rare sensible conversations, Oliver! There’s a lot of jealous, twisted, anti-Semitic, la la la people out there. Right? And there aren’t many people that actually turn up with a cheque and write it.’ We ended with Green running through his track record: how he had never been in litigation, never refused to pay a supplier, never ‘fucked people over’. He seemed to have forgotten his libel case against the Sunday Times in 2000 and the legions of BHS suppliers who left after his takeover of the business later that year. Perhaps people have been too scared to complain, I suggested.

‘What are they scared of?’ Green asked. ‘Are they scared because black is black and white is white?’ They’re probably more scared of your boys in south London, I said, thinking of Leslie Warman and the Amber Day incident in 1992. ‘Oliver,’ Green tutted. ‘Let’s leave on an amusing note. If I had any boys in south London, they’d have been round to see you long before now.’

Our ceasefire lasted barely twenty-four hours. That Sunday, I wrote a story about Chris Harris, Green’s property director, leaving for a job at John Lewis. I noted that Harris was well regarded in the industry, but I had the temerity to mention his involvement in the BHS saga. I awoke to a text, ‘Shame i thought we had made a step forward.’ I called Green. ‘You’ve earnt a living off writing about fucking BHS,’ he roared. ‘Now you want to go and write some stupid fucking book!’ The prospect of an interview receded yet further a week later, when Green heard that I was asking around about the loan shark Tony Schneider. ‘You really are a sick fucker,’ he said, by way of an opening gambit. ‘I thought you told me you were going to try and write an intelligent book. I’m not sure you could spell the word intelligent, but never mind. What is it you want to achieve? Nobody’s going to buy your fucking book.’ I emailed a series of questions to Green before publication, but he declined to reply.

Harris was the latest in a long line of Green lieutenants to leave in the wake of the BHS scandal, although in fairness they all probably had slightly different reasons for moving on. Adam Goldman, the company secretary who had given Chappell his non-disclosure agreement and handled many of Green’s responses to Parliament, resigned at Christmas 2016. Lord Grabiner, who had been accused by the select committee of giving Green ‘a veneer of establishment credibility’, stood down as chairman in July 2017. He was replaced by Baroness Brady, vice-chairman of West Ham United, who started her career working as an assistant to the pornographer David Sullivan. Wesley Taylor, Burton’s brand director, walked out in February 2017 after what insiders said was a furious row with Green. Taylor, who is black, then alleged that Green had used racially abusive language on several occasions in the past, and threatened to take him to an employment tribunal. Green denied having made any racist remarks. The two sides settled out of court, and Taylor signed a non-disclosure agreement that barred him from ever speaking about the alleged incidents again. Yasmin Yusuf, the creative director of Miss Selfridge, and Craig McGregor, Topshop’s retail director, left the same month. Mary Homer, who had run Topshop since Jane Shepherdson’s bitter departure in 2006, went to The White Company a month later. As her replacement, Green hired Paul Price, the merchandising director of Burberry. Insiders immediately speculated on how long the relationship would last when Price’s boyfriend, a flamboyant reality TV personality called Fletcher Cowan, posted a cartoon on his Instagram feed of Green shouting ‘You’re hired’ next to a chart of falling sales and profits.

Topshop is on shaky ground. The company’s implosion is a development that could pose a far greater threat to Green’s empire than BHS. In January 2017, a well-placed source gave me detailed figures for Arcadia Group’s performance over Christmas 2016. They showed that Topshop, the engine that had kept Arcadia’s weaker brands running for years, was faltering badly. Its like-for-like sales had fallen by 10.9 per cent over the peak season, compared with 6.5 per cent for Arcadia overall. Wholesale orders for Topshop’s Ivy Park athleisure collaboration with Beyoncé had come in lower than expected and Topshop’s much-hyped American stores were bleeding sales and profits. Anecdotal reports suggested that Topshop’s trading at Christmas 2017 was worse. According to property agents, its sales were down by as much as 20 per cent in some shopping centres. In his inimitable patter, Green told friendly journalists that trading was ‘shit’.

Green has never understood the power of the internet. Out of greed or pride, he refused to sell Topshop’s clothes through Asos. He missed several chances to take over the online platform for a song in its early years. According to a senior Asos insider, he was always too cute, trying to offer cheeky deals such as giving it the right to sell Topshop’s fashions in exchange for a 29 per cent stake. The opportunity passed for good as Bestseller, a Danish fashion group run by the billionaire Anders Holch Povlsen, built a 29 per cent blocking stake between 2010 and 2017. As well as dismissing the opportunities Asos could bring Topshop, Green was unable to comprehend why his staff would want to leave for the fashion site. At a Retail Week industry event in the late 2000s, the tycoon plonked himself down at the table where Nick Robertson, Asos’s founder, was drinking with some of his senior employees. Green reportedly pulled out a wad of cash and waved it at them. ‘Right, who wants to come and work for me?’ he asked. One of the Asos people cleared his throat. ‘Philip, we used to work for you,’ he said.

The rise of web retailers like Asos and Boohoo.com is part of the story, but Topshop’s alarming decline also speaks to the way Green runs his businesses. Rather than investing for the long term, he digs out mountains of cash, which he ferries back to Monaco. In the same way that BHS was hollowed out by the £423 million of dividends he and his partners took in the early years, the record-breaking £1.3 billion dividend for which Green was so lauded in 2006 did untold damage to Arcadia. It diverted resources from the group and loaded it with expensive interest charges just when the retail market was changing. Topshop’s flagship on Oxford Street is still a world-class store, but many of its other shops look tired, and the business has been starved of investment for its digital platform, IT systems and warehousing. An online expert who left in frustration after a year said, ‘Anywhere you can imagine where there was a need for money – an ad campaign or whatever – it was all “I’ll sort that”, and then it was always slashed down. We always took the shit option.’ On a more old-fashioned note, a shoe supplier said that deliveries often had to be delayed by up to two months at the start of autumn because Topshop’s two outdated distribution centres in Milton Keynes were unable to cope with the seasonal rush of stock. Topshop’s health is of critical importance to the 22,000 staff and 11,000 pension savers at Arcadia, whose two funds had a total buyout deficit of almost £1 billion at March 2016 – nearly double the size of BHS’s shortfall. The picture is eerily familiar.

The implications stretch across the Atlantic. Green may already have taken handsome profits from Arcadia, but Topshop has been a disastrous investment for Leonard Green & Partners, the American private equity firm that paid £350 million for a 25 per cent shareholding in 2012. LGP has written down the value of its stake, but Jon Sokoloff, its joint managing partner, was so besotted with Green that he negotiated very few rights at the time of the deal. Green promised to shield LGP from responsibility for Arcadia’s pension deficit, and both sides reserved the right to call for a sale or stock-market listing of the business after five years. Realizing that he will be unable to leave his empire in the hands of his daughter, Chloe, who is currently dating the ‘hot felon’ Jeremy Meeks, or his son, Brandon, who has faded into the background, Green has consulted bankers about trying to separate Topshop from Arcadia and market it to Chinese suitors. In early February 2016, in the ominous period before the BHS scandal burst into the open, Green had dinner with Ian Stuart, his senior contact at HSBC, and one of Stuart’s colleagues, David Barraclough. The meeting was supposed to have been about the succession conundrum at Arcadia, which had been on the bankers’ minds for some time. Little more than two months earlier, in late November 2015, Barraclough had emailed the following to a group of colleagues, including Stuart: ‘PG will [soon] be 65 and there are no signs his two children have the slightest ability to move into the business … Whilst PG has substantial wealth outside of Arcadia, this equity holding remains his single largest investment. It’s a very complex group, close on 2,500 stores in the UK and with no family in the business should PG not be able to properly function. This is a significant financial risk for him. I fully accept dealing with him won’t be easy, but he is not getting any younger, he is not immortal and the day is approaching when he has to address succession issues.’

Stuart and Barraclough expected to find Green on typically ebullient form when they gathered for dinner in February 2016, but he seemed distracted and worried. After a few minutes, he blurted out his problems with the Pensions Regulator and told the bankers he wanted to sell up. He offered to meet any prospective Chinese buyer the HSBC men could find, accepting that he would probably have to retain Arcadia’s pension funds and offset any proceeds from the Topshop sale against the deficit. Once the most fearsome predator in the retail jungle, Green seemed to have realized that he was encircled and hopelessly outmuscled by stronger rivals like Asos, H&M, Inditex and Primark.

After the dinner, Barraclough sent a briefing note about Green’s secret plan to retire from the high street to a group of colleagues, including Philip Noblet, HSBC’s joint head of investment banking. It said, ‘As emotions were running high, PG’s thinking was the need to sell, and having heard my comments … [he] sought our assistance and offered to meet any Chinese prospective partner we consider appropriate. After further discussion, PG agreed to source a sale solution. The strategy should be to sell Topshop/Topman separate to the rest of the Arcadia portfolio of lesser brands … Whilst the Topshop/Topman sale should be straightforward, he accepts residual Arcadia will be a tougher task and may need to be sold by way of individual brands over a protracted period … Mike Sherwood at Goldman’s will probably be involved too but PG acknowledges we are best placed to bring an Asia solution.’

A month later, Andrew Judge, another senior HSBC banker, wrote an email to a group of colleagues summarizing the strange puzzle in which Green was trapped. He speculated about putting the whole of Arcadia through an insolvency process, but concluded that would be ‘too risky with a £2.5 billion asset [Topshop] being thrown in the air’. ‘Stepping back, we have to legally separate Topshop from the leases of all the other brands,’ Judge said. ‘We will never separate the pension fund – depending upon its position that must be assumed by the buyer – private equity are likely out on that basis – making a standard retail auction (with PE as the underwriters) v difficult. Green needs to stay in for more years …’

Barraclough brought up another obstacle to a normal auction. ‘I can’t see PG adopting a sale process,’ he predicted. ‘Whatever he decides to do it will be with a very small circle of insiders and … the market will only know when the deal is done.’

In February 2018, the Sunday Times broke the news that Green was trying to sell all or part of Arcadia to Shandong Ruyi, a Chinese textiles giant that had been on a buying spree for Western brands such as Sandro and Maje. The article said Green was ‘thought to have been seeking a buyer for some time’ and that he had ‘been discussing separating Topshop from Arcadia with bankers from HSBC since at least 2016’, as per the meeting with Stuart and Barraclough. It prompted an immediate reaction from Green’s parliamentary foe, Frank Field, who wrote to Green urging him to clear any sale in advance with the Pensions Regulator. Field’s intervention showed how Green’s every move would be subjected to intense political scrutiny after the BHS scandal.

Green was silent for more than twenty-four hours after publication. Then he issued a furious denial through the PR firm Maitland. The tycoon described the article as ‘malicious rumour-mongering’. He said the suggestion that he was planning to sell up was ‘totally false’. ‘We regard this article as further evidence of the journalist Oliver Shah’s personal vendetta against Sir Philip and the companies,’ the announcement said. ‘This is disgusting and his being allowed to use the front page of a prominent Sunday newspaper by his editors for a totally false story and his own personal vanity project [this book] is wholly unacceptable.’

Green followed the statement with a call to my line manager, demanding my sacking. I spoke to him a few days later. ‘The story was one million per cent wrong,’ Green said. ‘Twenty million per cent wrong … Let’s go to Harley Street tomorrow morning and do a lie detector test, shall we?’ He said he had never heard of ‘Ring Dong Ding’, adding, ‘There’s no Chinese plot, there’s no nothing, we don’t know who the fuck they are. Like I told you, somebody maybe bought you a puppy because it’s the year of the dog, and you got confused.’ When I asked why he was responding so aggressively, he said, ‘That’s show business.’ However, senior Arcadia insiders and sources close to the company confirmed that Green had been in early-stage talks with Shandong Ruyi via an intermediary. One said he was amazed to read the denial statement, adding, ‘He’s making elementary mistakes, and that’s his emotion being allowed to run without talking to a fucking lawyer.’

Green’s statement had said it was ‘totally untrue’ that he had held any discussions with HSBC about any kind of sale. Ian Stuart, who was now UK chief executive of HSBC, provided Green with a personal statement. It said, ‘There has been NO dialogue with myself or (to my knowledge – I have checked) HSBC in respect of any sale of any part of the Arcadia Group.’ The tycoon and the banker must have been embarrassed when their fulsome denials were splashed across the front page of the Sunday Times the following weekend, juxtaposed with details from Stuart and Barraclough’s dinner with Green in February 2016.

Topshop, the one-time jewel in Green’s crown, would be unlikely to fetch an attractive price now, given its deep-rooted problems – and other loss-making Arcadia brands such as Evans and Wallis would almost certainly have to be put into administration. Green appears reluctant to confront the new reality. At LGP’s instigation, Ian Grabiner, Arcadia’s chief executive, hired the consultancy firm McKinsey to review how Topshop might be able to compete better online. Green, who famously detests consultants, was said to have erupted fifteen minutes into the final presentation and stormed out of the room, leaving a McKinsey partner close to tears. He came back two hours later and shouted, ‘What the fuck are you all still doing here?’

Green’s belligerent exterior is a protective shell, grown at a young age in response to his mother’s harshness. It conceals a soft underbelly. An old family friend suggested that Green’s ‘characteristic of barking at everybody’ was reminiscent of the boxer Muhammad Ali, ‘who started off as a really lovely guy and then found it actually paid to be thought of as Mr Nasty. And the interesting thing is that Philip is still very, very shy.’ An associate from his early BHS days described him as ‘a big bully boy who really needs a cuddle’, and a former senior member of staff at Topshop said, ‘If you see him one-to-one and he’s calm, there’s a guy in there that’s so warm and kind. I’ve seen him pay people’s mortgages and school fees. But the outside world doesn’t see it because for him it’s some kind of weakness.’ Frank Kane, a former business editor of The Observer, experienced both sides of Green. After Kane’s son survived a vicious attack of meningitis, Green became a charitable supporter of the paediatric intensive-care unit that had looked after him at St Mary’s hospital in Paddington. Through Jeff Randall, Green acted as the bidder of last resort at the hospital’s black-tie fundraising auctions. It was generous in both the financial and personal senses, but it came with strings attached – as Kane discovered when The Observer took a critical stance on the second bid for Marks & Spencer. Green called Kane and shouted, ‘Why did I give all that fucking money to your boy?’

It is difficult not to feel torn by the contradictions that have defined this brilliant but flawed human being. In the 1980s and the 1990s, Green became the most talented asset-stripper and trader of his generation. His force of personality, hunger and ability to wiggle himself into the middle of other people’s deals made him unique. But his later reputation as a master retailer was based on a mirage. BHS’s sales never improved meaningfully. The miraculous take-off in profits during the early years of his ownership was fuelled by cost-cutting and Richard Caring’s clever sourcing, and the resulting £1 billion valuation placed on the business by the Sunday Times was hyped out of all proportion until Green became more myth than man. It gave him the credibility to buy Arcadia. The runaway success story he acquired through sheer luck in Topshop pulled him into the global premier league. Along the way, Green was lured by the sirens of celebrity, becoming the kind of cartoon character his grittier younger self would have despised. He turned into a grotesque self-parody, a ridiculous projection of the many excesses embraced by the Western world in the years before the financial crisis: greed, fame, self-interest and vanity. He was patronized by the likes of Kate Moss and Rihanna, who sunbathed on his yacht and went to his parties; he revelled in their reflected sparkle in return. His ego carried on expanding, untethered from reality, as the shoppers who bought his clothes shrank under the pinch of recession. Green refused to sell his businesses or even acknowledge that his vaunted retail skills were not working, believing his own PR to the last. Finally, when it was far too late, he offloaded BHS and its £571 million pension deficit to a hopeless chancer, catastrophically gambling that his ability to control every piece on the chess board would protect him from the inevitable fallout. He is in danger of making a similar mistake and leaving it too late to sell Arcadia and Topshop.

Beneath his eternal bravado, the man who once seemed to have it all now carries a jaded air. Old friends find it harder to tempt him out for dinner. Lord Rose, who was made a Conservative peer in 2014, said the bantering dynamic they had kept up since the second M&S bid had become strained. ‘For some reason, and it’s really probably only happened in the last two or three years, our relationship has deteriorated quite badly,’ he said, ‘and I don’t think that has anything to do so much with me rather than him … I went on Radio 4 and I gave a quote to several newspapers saying look, he realizes he’s made a mistake, he’s paid his dues, leave him alone, I don’t believe in the village green lynch mob. It’s not as if I haven’t defended him. But we hardly speak to each other.’ Another old acquaintance thought the tycoon had become isolated and lonely, with many of his confidants having moved on or retired. ‘I think he’s close to exhausted, and the fun has gone out of it,’ he said. Green and his wife complain that Britain is full of people who hate wealth and that Monaco is a ‘goldfish bowl’. In his November 2015 email, the HSBC banker David Barraclough told colleagues that he expected Green would eventually move to America, where he ‘feels he can shelter his family better’. To borrow Theresa May’s infamous phrase, he and Tina have become citizens of nowhere.

Looking back on Green’s life, I think again of Sir Charles Clore, his childhood hero, and a particular paragraph from one of Clore’s biographers. ‘I found to my surprise that, pervading every relationship, there was a peculiar aroma of insecurity,’ Charles Gordon wrote. ‘An entrepreneur’s sudden course of action was almost never inspired by logic but almost always by an emotion brought to the surface erupting from a feeling of anxiety, from a sense of insecurity, from a desire to “show them” – them being a member of the establishment, or a partner or a competitor or a family relation. If there is one common trait in every entrepreneur it is that he is a thoroughly insecure animal whose main drive is vanity and whose main passion is a worship for prestige. His need for money is a need for protection.’

How will history judge Clore’s foremost student, whose appetite for money and prestige at its peak made his predecessor look like a bit-part player? Green’s CV reads like a tour of the high-street graveyard. Forty-one Conduit Street, Bond Street Bandit, Amber Day, Owen Owen, Owen & Robinson, Olympus, Mark One, Shoe Express, Sears, BHS, Allders: he made huge short-term profits from a career of remarkable deals, yet almost everything he touched crumbled into dust, and the riches accrued by his family stand in stark contrast to the redundancy packages collected by the employees. Desperate to prove himself as a retailer in the tradition of Simon Marks and Israel Sieff, he twice tried to buy M&S, and when that failed he held on to BHS and Arcadia for far too long when he should have traded them on quickly, motivated not by logic but by a deep need to show the industry that he was more than a mere corporate raider.

There is a chance that Green will manage to revive or sell Arcadia and spend the rest of his days relaxing on the deck of Lionheart, or at the home he has quietly built outside Tucson in Arizona, near the Canyon Ranch weight-loss facility where he jokes that he sheds the same 9lb twice a year. But in the words of a former Arcadia brand director who left after a falling-out with the boss, ‘He’s not going to take any counsel from anybody, because when he looks in the mirror every morning, all he sees is success – the billionaire Philip Green.’ What remains of Green’s scorched reputation will depend on the interlinked fates of Topshop, Arcadia and its pension funds. If he continues to ignore reality, BHS’s collapse could turn out to be the opening act in an even greater tragedy. Even then, it is far from certain that he would recognize the face staring back in the mirror. In one of our final conversations, Green said, ‘When the dust settles, and the correct story, or the true story, or the facts are written properly, people can make a decision, can’t they?’ I was silent for a moment. ‘Right?’ he said. ‘Let’s hope I can get them written before you can.’