Commenting on the joint Business and Pensions committee report into the collapse of BHS, released today, Oliver Parry, Head of Corporate Governance at the Institute of Directors, said:
“The collapse of BHS casts a long shadow over British business. The committee is clear that the blame for this scandal must be shared widely, but that Sir Philip Green and the board of BHS’s parent company, Taveta, bear ultimate responsibility. Green’s swashbuckling spirit may have helped him build a large retail empire but, once he reached the top, he does not seem to have taken to heart what responsibility for this number of staff, and pensioners, means.
“This made the failure of his board, and the Chairman, Lord Grabiner, all the more disappointing. Non-executive directors are there to rein in the excesses of executives and protect the company’s long-term sustainability, including its reputation. In this light, the board’s lack of oversight of the sale of BHS to Dominic Chappel is staggering.
“The business community will be very worried about the damage this episode will do to public faith in capitalism. Now is the time to take a fresh look at how large private-owned companies are governed. Just because a company is not listed on the stock market it does not mean there is no public interest in how it is run. The IoD has recommended that the new Prime Minister launch a review into UK corporate governance. After damning reports into BHS, and last week Sports Direct, there is a pressing need to work out how to raise levels of trust in how British companies are overseen.”
The IoD is in the process of updating its guidance for directors unlisted companies, to be published in the Autumn.