Scorn for billionaire UK retailer Philip Green following BHS collapse

While Philip Green associated with supermodels and transferred cash to his tax haven in Monaco, the UK retailer that helped to build his fortune was heading towards collapse. It all comes at a high cost to his lofty reputation and lifestyle.

Philip Green, right, who was awarded a knighthood by Tony Blair, has been castigated following the collapse of BHS. Fiona Hanson / Reuters

I can’t think of a time when a billionaire’s reputation has been so rapidly and comprehensively tarnished as that of the British retailer Sir Philip Green over the past few weeks. Nor can I think of anyone who deserves it more.

He has almost asked for it, with a flashy lifestyle which flaunted his ostentatious wealth through a time of austerity, and the manner in which he has shamelessly stripped cash out of his acquisitions and sent it to his Monaco home tax-free.

Now he has got what he asked for. And there will be many who will rejoice at his acute embarrassment.

The controversial retailer, despite (or maybe because of) his three yachts, beautiful models and tax-free status, never quite made it into the inner sanctums of the British establishment.

But his legendary billions and lavish parties made him a notable figure on the social scene, courted by politicians, bankers and countless charities only too pleased to court his favour.

Tony Blair gave him a knighthood and David Cameron asked him to lead an investigation into government spending.

Almost overnight, however, he has become, in the words of one commentator, the new “unacceptable face of capitalism” (Lonrho’s Tiny Rowland was the original one). Why? Because of his role in the collapse of the 88-year-old retail chain BHS, which Mr Green bought for £200 million (Dh1.02 billion) in 2000, stripped some £400m in dividends and cash payments out of it tax-free and sold in March last year to a twice-bankrupt investor called Dominic Chappell for the princely sum of £1 – and then washed his hands of it.

Last week, after a year of scandal and bungling management by Mr Chappell, BHS collapsed, threatening the loss of 11,000 jobs and, even more controversially, leaving a £571m hole in its pension fund which looks after the retirement savings of more than 20,000 current and former employees.

It is now open season on Mr Green and the British press is in full pursuit, profiling him as a foul-mouthed bully and shameless asset-stripper.

This week he faces being summoned to appear before a British parliamentary committee and there are even demands that he be stripped of his knighthood, a move which would cause particular distress to his South African-born wife who likes to be known as Lady Green.

Mr Green has tried to explain BHS's downfall as the result of internet shopping, changing habits among consumers and the rise of nimbler competitors, but no one accepts that. "In reality," wrote The Sunday Times, whose reporter Oliver Shah has done much to expose Green's business world, "the fall of BHS is a story of cynicism and greed".

The BHS acquisition transformed Mr Green, 64, from a small-time discount trader into one of the biggest names on the global fashion scene.

Very cleverly – and he is very clever – he found ways of extracting cash out of it and used it as a springboard into the big time. His major coup a few years later was the takeover of the Arcadia Group, owner of Topshop, Burton, Miss Selfridge, Wallis, Dorothy Perkins and a clutch of other retail brands.

And for a time he did very well, transforming previously dowdy stores into ultra-modern retailers which caught the zeitgeist of the new century.

Within a few years he was near the top of The Sunday Times rich list, with a fortune valued at nearly £4bn, photographed on his yachts with the models Twiggy and Naomi Campbell who worked for him, and hosting £4m parties for his birthdays. At the height of his success he made hostile bids for Marks & Spencer.

BHS was Mr Green’s cash cow, and it is now estimated that it paid more than £400m of dividends, interest and other payments to his family in Monaco and his business partners, Richard Caring, owner of some of London’s leading restaurants and clubs including Annabel’s, and the sportswear entrepreneur Sir Tom Hunter.

That left very little to go back into poor BHS, and while the Greens lived it up on the Riviera its stores became tired and old. So after 15 years of this, in March last year Mr Green offloaded it to a man nobody had heard of and who proved hopeless at the job, leaving behind the massive hole in its pension fund.

The deficit was barely mentioned in the documentation surrounding the deal, but the City knew something about it: as one analyst remarked at the time: “BHS isn’t worth £1 – it’s more like minus £300m.”

Mr Green’s offer of £80m towards the deficit is being met with scorn, and he will now face a long battle with the pensions regulator about his obligation. It will be fascinating to see how this supremely self-confident and arrogant man handles his first real taste of adversity and embarrassment.

He has been hugely proud of the fame and fortune wealth brought him in middle age and highly sensitive to any criticism that he didn’t deserve it.

Over the weekend his reaction was a typical one: outrage and abuse. The Sunday Times reporter Oliver Shah was subjected to a storm of invective and a threat to "come round to your office and punch you on the … nose."

Actually it is Mr Green who has got the bloody nose. And no one deserves it more.

Ivan Fallon is a former business editor of The Sunday Times and the author of Black Horse Ride: The Inside Story of Lloyds and the Financial Crisis.

Follow The National's Business section on Twitter