MPs launch probe into the sale of BHS that will look at role of auditors and accountancy firms in sale process
MPs have launched a probe into the sale of BHS, the department store that collapsed into administration earlier this week.
The Business, Innovation and Skills Committee inquiry will scrutinise the steps taken by Arcadia Group to ensure that Retail Acquisitions Limited (RAL) was a responsible owner.
The inquiry also looks at what checks were undertaken by RAL to verify that BHS was a growing concern.
Former BHS owner Phillip Green sold BHS to Retail Acquisitions – led by Dominic Chappell, a former bankrupt and racing driver – for £1, when it was saddled with over £1bn in debts and a £571m pension deficit.
The investigation will look at what due diligence checks Retail Acquisitions Group were required to conduct by law prior to purchasing BHS and what steps, if any, Arcadia Group took to give it assurance that Retail Acquisitions Group was a responsible buyer.
It will also look at the role of external advisers during the sale and acquisition process, particularly bankers, lawyers, accountants and auditors conducting due diligence checks on behalf of Arcadia Group.
Iain Wright, chair of the BIS Committee said: “The sale and acquisition of BHS raises real questions about whether directors acted in the best long-term interests of the company and their employees.
“Is there too much of an incentive in the system for owners to asset-strip, take out vast sums for personal gain, and then dump and run leaving the taxpayer to pick up the tab when the company fails, rather than create value for the long-term?
“In this inquiry we’ll want to question the role of advisers – the lawyers, bankers, auditors and others who advised on the sale and purchase of BHS – and examine the legal obligations of company directors in this process”.