Arcadia chairman rejects claim lack of governance led to BHS collapse

In a letter to the committees probing BHS’s demise, published today, Grabiner said some of the remarks by work and pensions committee chairman Frank Field were “unfair and offensive”. 

He added: “The events that have unfolded are deeply regrettable but the suggestion that those events are the consequences of a failure of governance is misconceived.”

BHS collapsed into administration in April and is being wound down as administrators were unable to find a buyer for the business.

Grabiner rebuffed the suggestion by MPs that he and other non-executive directors should have been directly involved in the sale of BHS to Retail Acquisitions.

“Contrary to many ill-informed views there is no duty in law, regulation or otherwise which applies to the non-executive chairman of a private company going beyond the duties of any other director - including executive directors.

“There was no special obligation for me to a member of the group which conducted the sale process leading to the disposal of BHS. The UK Corporate Governance Code does not apply to private companies.

“It should not be remotely surprising that as the non-executive chairman of a private company, without any of the knowledge or expertise, I was not a member of the group and played no hands-on role in the sale transaction. Suggestions which have been made to the contrary are founded on misunderstandings of the facts”.

MPs had quizzed Arcadia directors on the company’s corporate governance after it emerged that Arcadia finance director Paul Budge stated that “a very small” sub-team met on a daily basis to discuss the sale of BHS, and had the blessing of the board to do so.

Arcadia directors said that non-executive directors, such as Lord Grabiner, learned the identity of BHS’s buyer after it had been agreed in principle, but before the deal was formally ratified.

Grabiner said in his letter that he believed that ”if, hypothetically, all the non-executive directors had been invited to the meeting I do not believe the outcome would have been any different.”

MPs also suggested that non-executive directors had no power over the main Arcadia shareholders, the Green family.

Michelle Thomson MP asked which non-executives spoke up against Green and held the board to account. The directors could give no immediate examples.

In his letter, Grabiner added: “I also wish to correct the impression that members of the committees have conveyed that board members simply do whatever Sir Philip tells them to do and that there was insufficient challenge by the boardroom. That is not the case.

“I have never held back from asserting myself including where there may be a difference of views. The nature of the group’s business is not such that there are many issues of high controversy - it is a very well-run, successful group.”