Philip Green is almost too obviously a greedy bastard, even perhaps an exemplar of the ideal type. He presents as a warts-and-all stereotype (for all that all stereotypes have their errors of omission and commission), and there are many otherwise inclined to baulk at my use of ‘greedy bastards’ as a technical term who would nevertheless not find its application to Philip Green overly disturbing.
He was born in Croydon on 15 March 1952 into a middle-class Jewish family. His father, Simon, was a successful retailer with a fondness for expensive cars, and his mother, Alma, was an entrepreneur with interests in a launderette, several self-service petrol stations and a buy-to-let property portfolio. The family subsequently moved from Croydon to Hampstead Garden Suburb in North London, and at the age of 9 Philip was sent to a private Jewish boarding school, Carmel College in Oxfordshire (where apparently the fees topped those required by Eton and the uniform was on sale at Harrods). Three years later his father died of a heart attack and, notwithstanding the existence of an older sister, Philip found himself in line to inherit the family business
He left boarding school when 15 (with no O-levels) and worked for a shoe importer prior to travelling in the USA, Europe and the Far East. Returning from his travels, now aged 21, Philip set up his first business, importing jeans from the Far East to sell on to London retail outlets. He was assisted in setting up his business by a loan of £20,000 backed by his family. He had become a ‘job buyer’, that is, someone who retrieves excess stock from badly run or bankrupt companies and sells it for a profit.
In 1979 Philip bought up – at low prices – the entire stock of ten designer-label clothes retailers that had gone into receivership. He had the newly bought clothes dry cleaned, put on hangers and wrapped in polythene to appear new, and bought a shop to sell them to the public. In 1988 he became chairman and chief executive of a quoted company called ‘Amber Day’, a discount retailer. After initially doing well this company faltered and in 1992 he resigned when it failed to meet its profit forecast.
Oliver Shah, business editor of the Sunday Times, notes that in the 1980s and ‘90s Philip became ‘the most talented asset-stripper and trader of his generation.’ For example, he purchased the ailing chain ‘Jean Jeanie’ for £65,000 in 1985, and sold it for £3 million a year later. I could cite numerous other examples.
In 1992 Philip ‘supported’ his wife Tina in the purchase of the Arcadia Group, which owns High Street chains such as Burton, Dorothy Perkins, Evans, Miss Selfridge, Outfit, Topshop/Topman and Wallis. Philip was in fact the initial owner, but he sold it to Tina within 24 hours, though he continued to act as CEO.
In 1995 Philip reaped £36 million after selling Sports Division to JJB Sports. The payment coincided with his family’s move to the tax haven of Monaco (where they have since settled). It will be recalled that in 1998 Peter Mandelson controversially said that he was ‘intensely relaxed’ about ‘people getting filthy rich’ … ‘as long as they pay their taxes.’ Unfortunately Tina Green, the legal owner, did not pay ‘her’ taxes. Not that this stopped Tony Blair awarding Philip a knighthood in 2006. When New Labour ran out of steam Philip swiftly transferred his loyalty to Cameron and Osborne (‘they understand what needs to be done’, he said of their austerity programme; ‘they get it’). He was rewarded in 2010 when David Cameron appointed him to head up a review of public sector efficiency. Ok.
As owners of the Arcadia Group plus BHS (purchased for £200 million in 2000) ‘the Greens’ enriched themselves. In 2005, whilst – according to Shah – ‘loading the Arcadia Group’s balance sheet with debt’, Philip paid Tina a £1.2 billion tax-free dividend. Maybe it was a turning point. BHS was under-performing, and in 2015 Philip sold it for £1. By April of 2016 BHS had debts of £1.3 billion, including a pensions deficit of £571 million. Despite this deficit of £571 Philip’s family collected £586 million in dividends, rental payments and interest on loans during their 15-year ownership of the retailer. He had, it seemed, ‘extracted hundreds of millions of pounds from the business and walked away to his favourite tax haven, leaving the Pension Protection Scheme to pick up the bill’ (Angela Eagle’s words). He is reported as holding a number of £1 million + parties for the super-rich. In 2016 the House of Commons approved a motion asking the Honours Forfeiture Committee to recommend Philip’s knighthood be ‘cancelled and annulled’: 100 MPs voted in support but the vote was not binding on the government. Philip made a payment of £363 million into the BHS pension scheme in 2017 (though his family retain a £2 billion fortune). A decision in 2018 was made not to ban him from being a company director, and it appears that he is keeping his knighthood at least for the time being. Maybe the recent charges of sexual harassment and bullying will further loosen his grip on his title.
In some respects Philip seems a paradigmatic greedy bastard. Nothwithstanding his volubility and notoriety, however, he is less exceptional than might be imagined. It is apparent that he was not keen to pay tax. There are of course numerous complex devices available to avoid tax and plenty of greedy bastards taking advantage of them. It is instructive to give a flavour of what is possible.
Prem Sikka provides the following encapsulation of a select few of the escapades of Philip and Tina in a new book entitled Economics for the Many edited by John McDonnell:
‘BHS was managed by Sir Philip Green and its main shareholder was Lady Green. BHS had a number of transactions with entities that were not formally part of the BHS Group or its parent company but were under the control of its major shareholder,
In 2005 the Arcadia Group (connected with BHS), managed by Sir Philip Green, paid a dividend of £1.3 billion. Around £1.2 billion was paid, without any withholding tax, to its main shareholder Lady Green, who is resident in Monaco. Monaco does not levy income tax. Lady Green did not pay any income tax on her dividend even though the UK infrastructure had been used to generate it. If she had been resident in the UK she would have paid around £300 million in income tax.
In 2001, BHS sold a number of its properties for £106 million to Carmen Properties Limited – a Jersey-based company controlled by Lady Green – and then immediately leased them back. Over the lifetime of the sale and leaseback agreement (2002-15), BHS paid £153 million in rents to Carmen. These rents were a tax-deductable expense in the UK and reduced the tax liabilities of BHS. In 2015, the properties were sold back to BHS for £70 million. The sale proceeds and rental income of Carmen were not taxable in Jersey and Lady Green effectively received the amounts tax free.
In 2005, BHS rented a property from Mildenhall Holdings Limited, a company registered in Jersey. Over the years, it paid £2.7 million in rent. The rental payments generated a tax-deductable expense for BHS, but the rental income sent to Jersey was received tax-free by Lady Green, the main beneficial owner of Mildenhall.
In 2001, BHS raised a ‘subordinate bond’ for £19.5 million with an 8% coupon rate from Tacomer Limited, a Jersey-registered company controlled by Lady Green. In 2006, the bond was redeemed with a payment of £28.975 million. This related-party transaction gave BHS a tax deduction of £9.475 million for investment payments and a tax-free income for the same amount to Lady Green.
In July 2009, BHS engaged in an internal reorganisation. Lady Green’s shareholding in BHS was sold to Taveta Investments (No.2) Limited, a subsidiary of Taveta Limited, for £200 million. Lady Green was the ultimate owner of all the companies in the chain and was in effect transacting with herself. The acquisition was financed with a £200 million, ten-year Eurobond with an 8 per cent coupon rate. The Eurobond was issued at the Channel Islands Stock Exchange and funded by companies controlled by Lady Green. The general rule is that UK companies making payments of interest are required to deduct a withholding tax of 20 per cent and pass it on to HMRC, but there are a number of exemptions. One of these relates to securities issued through the Chanel Island Stock Exchange. It is a recognised stock exchange under section 841 of the UK Income and Corporation Taxes Act 1988 and securities listed there enjoy exemptions from withholding rax even though they may be held by opaque companies. In a nutshell, the Chanel Islands Eurobond enabled the borrower (Taveta Investments (No.2) Limited) to make payments of interest without the withholding tax. For the period to 2015, £76,355,444 was paid in interest, which provided BHS and its parent companies with tax-deductible expenses. Lady Green received the amounts tax-free.’
In other words, writes Sikka, ‘related party transactions enabled BHS to generate huge tax-deductible expenses, and at the same time its main shareholder did not pay any income tax on the receipts.’ And you can go to prison for shoplifting (a word given an entirely new meaning by Philip). One rule for …