Any other business

The five times business leaders felt the wrath of a government select committee

9 min read

25 July 2016

Former editor

As retail entrepreneur Phillip Green comes under fire from government select committees for his role in the sale and subsequent collapse of BHS, Real Business looks at five of the most high profile recent investigations.

Phillip Green

When?

July 2016

Why? 

When the nation’s beloved British Home Stores (BHS) collapsed into administration in April it triggered a series of discussions that led to renowned retailer Philip Green (a man who was knighted in 2006) being hauled before MPs to answer questions.

The thrust of the argument is that in the period Green and his Arcadia Group owned BHS, between 2009 and 2015, he extracted money from the business in the form of generous dividends. This left the company with a significant pensions black hole when it was ultimately sold to a man synonymous with bankrupt businesses, Dominic Chappell, for £1.

Green has now been told to his face that his actions amounted to a “systematic plunder” of the BHS coffers and that he had a significant part to play in the company ultimately shutting up shop – leaving some 11,000 people without a job.

What happened next?

While there is a significant risk that Green will lose the knighthood he received for services to retail, there is also a suggestion that he’ll need to make good the pension shortfall. This is very much a wait and see situation.

Read on to find out about the football club owner, media tycoon, private equity heavyweight and charity ambassador.

Mike Ashley

When? 

June 2016

Why?

Mike Ashley and his Sports Direct empire have been under threat for a number of years, relating to employment practices at both his high street stores and warehouse operations. Alongside accusations that he unfairly employs people on zero-hours contracts, Ashley also had to answer questions looking at why staff were paid less than the minimum wage, were docked pay for being late and were subjected to over-zealous security checks upon leaving work at the end of the day.

Investigate journalism teams from The Guardian and other titles went undercover to work at Sports Direct and referred to conditions as like a “gulag”. It reportedly has a six strikes and out system for offences such as excessive chatting, toilet breaks that are too long or use of a mobile phone in the warehouse.

Ashley had resisted calls to sit before a select committee, dating back to March 2015, but risked being found in contempt of parliament. He also invited politicians to visit the company’s controversial Shirebrook headquarters in Derbyshire.

What happened next?

In finally getting Ashley to answer questions in a formal setting, the select committee did get him to admit to underpaying some staff and that fining staff for being late was unacceptable. He also revealed that Sports Direct had perhaps “outgrown him” but admitted the buck had to stop with him as the majority shareholder.

He also pledged to bring about a number of changes to working practices within 90 days. HMRC has now taken up the minimum wage investigation.

Read on to find out about the media tycoon, private equity heavyweight and charity ambassador.

Rupert Murdoch

When? 

July 2011

Why?

As one of the biggest scandals to hit the UK in decades, everyone tuned in when media tycoon Rupert Murdoch faced the music in front of a select committee. It all related to the phone hacking scandal that ultimately led to the closure of the News of the World, with the likes of the family of murdered schoolgirl Milly Dowler, the Royal Family, the families of the 7/7 terrorist attacks and celebrates including the Beckhams, Tony Blair and JK Rowling victims.

MPs wanted to know how illegal phone tapping practices had become so accepted and engrained within News International, now News UK – the publishing company for titles including The Times, The Sun and formerly the News of the world.

So vilified was Murdoch that he was attacked, while sitting next to his former wife Wendy Deng and son James, with shaving foam.

What happened next?

The immediate aftermath of the select committee hearing was the announcement of criminal proceedings against Murdoch and News International. The tycoon announced that the paper responsible for the majority of offences, the News of the World, would close for good.

News International published a two-page apology for its wrongdoings, and it brought about the resignations of high-ranking executives including Rebecca Brooks and Les Hinton.

However, following the lengthly Levison Inquiry and a comment from the Culture, Media and Sport Committee stating that Murdoch was “not a fit person to exercise the stewardship of a major international company”, he avoided criminal prosecution after it was determined he could not be held accountable.

Read on to find out about the private equity heavyweight and charity ambassador.

Jon Moulton

When? 

January 2015

Why?

Turnaround investor Jon Moulton, who was no stranger to a select committee grilling, was ordered to answer questions on the back of the collapse of City Link, a portfolio company of his investment firm Better Capital. The announcement that the company was going under was made on Boxing Day, and followed a period of difficult trading for City Link.

Moulton and Better Capital revealed that £40m had been injected into the business over the course of the investment, and that, through the collapse, the firm had lost half of that amount.

One of the main accusations hurled at Moulton was that, in only formerly announcing the administration to staff on Boxing Day, rather than weeks before when it was known the company was struggling, he had allowed City Link’s team of 1,000 self-employed drivers to take on extra work. While permanent staff would get overtime pay because they were preferential creditors, subcontractors would not.

There was also the issue of the £4m bill taxpayers had to pick up to cover statutory redundancy payments.

What happened next?

Moulton is someone who had been there, done that and has the criticism t-shirt from events previously. However, he did admit that the City Link investment was a “mistake”.

Since the committee hearing, Moulton has come out and complained that he and his firm were not given tome to respond to a committee report on the collapse of City Link.

Read on to find out about the charity ambassador.

Camila Batmanghelidjh

When? 

October 2015

Why?

Kids Company founder Camila Batmanghelidjh was heralded as a charity pioneer before it was revealed she had squandered million of pounds worth of funds, including government money. The reputation of the Cabinet Office was also on the block in light of a £3m loan that was made to Kids Company a short time before it closed for good.

Batmanghelidjh’s responses at the select committee hearing were so frustrating for one MP that he described it as “a spiel of psychobabble, a torrent of words, verbal ectoplasm”.

What happened next?

Kids Company closed its doors because it was unable to pay debts as they fell due. Batmanghelidjh was later caught on camera admitting she would “stretch” and “slightly break” the law – branding the government “bastards”.

While HMRC is after the loan back, the charity founder has said she has nothing to give them. In the latest turn of events, she’s announced she’ll write a warts and all book about “the untold story” of Kids Company.