Goldman Sachs Banker Drawn Into BHS Scandal

The BHS fiasco widened last night to embroil leading City firms, with Goldman Sachs set to be hauled before MPs and two of London’s best-known law firms at loggerheads over their roles in the company’s disastrous £1 sale.

You kind of knew that GS grubby little hands would be involved this dodgy deal somewhere !

#SaveBHS

Anthony Gutman, the Goldman Sachs banker who informally helped Sir Philip Green on last March’s sale of the high street chain, will be questioned over his advice before it was offloaded to Retail Acquisitions, a little-known outfit led by Dominic Chappell, a three-times-bankrupt former racing driver.

Meanwhile, Linklaters, Sir Philip’s adviser, and Olswang, the law firm that advised Mr Chappell, are in disagreement over the checks into his background before he did the deal.

Calling Mr Gutman will put Goldman Sachs’ long-standing relationship with Sir Philip under scrutiny as MPs on both the business and the work and pensions select committees investigate BHS’s collapse, crystallising a £571 million pension deficit. Mr Gutman is due to appear before MPs next Monday.

While Goldman insists that it had no formal mandate and that it did not receive payment for the work, it will face awkward questions over its role in how a business with 11,000 employees and a big pension shortfall was entrusted to a buyer with so little retail experience and a questionable track record.

Goldman Sachs has long been among Sir Philip’s favoured banks. In 2004 it advised on, and helped to back, Sir Philip’s second failed attempt to buy Marks & Spencer.

Frank Field, the Labour MP, said yesterday that both committees would be taking a keen interest in the advisers around the deal, as well as the dividends that were taken out of BHS. “Our interest on the pension side is why a company that was able to generate such wealth during part of its recent life was sold off for a quid after paying rather generous dividends, with a pension deficit of £571 million.

“What routes did the money take? Why did the money end up there rather than the pension fund?”

                                        

Mr Field said that he would meet officials from the Serious Fraud Office this week to ensure that the committee did not interfere with any potential investigation that the SFO may run.

Olswang and Linklaters cannot agree even on basic facts. Linklaters said: “Olswang confirmed that Olswang had carried out detailed due diligence on their client Mr Chappell and that it had not raised any concerns in relation to impropriety.”

However, an Olswang spokesman said that the firm could “confirm that Olswang did not provide any assurance to Sir Philip Green or the pension trustees regarding Retail Acquisitions”.

A source close to Sir Philip said: “If Chappell hadn’t been represented by people like Grant Thornton and Olswang, he would never have been let through the door.”

Amid the rows, Duff & Phelps, BHS’s administrator, is talking to five prospective buyers of parts of the business. An announcement could come as soon as tomorrow. A spokesman said: “We are dealing with a number of interested parties and are hopeful of concluding a sale of the business and assets of BHS.”

The Times reported last week that Olswang and Grant Thornton, the accountant, had shared a £2.4 million “success fee” for advising on the £1 BHS purchase, on top of regular consultancy fees of £8 million.

The parliamentary inquiries into the collapse of the business descended into rancour in their first day after Sir Philip accused the Pensions Regulator of misleading MPs by stating that she had learnt about the sale of BHS only in the press.

Mr Chappell himself is among the parties vying to resurrect part of the business. Other bidders are believed to include Sports Direct, Edinburgh Woollen Mill and Yousuf Bhailok, a Preston-based property businessman. Philip Day, the owner of Edinburgh Woollen Mill, has been interested in buying assets from failed retail businesses in recent years. He acquired Peacocks and Jane Norman. Sports Direct, controlled by Mike Ashley, has also sought to buy stores and businesses out of administration.

The Times also reported last week that one of the country’s largest lighting companies, which supplies BHS, has registered an interest in buying the lighting division of the retailer. It is understood that Cascade Holdings, which is headed by Ronny Abrahams, hopes that a trade buyer is found, so that it can continue as a long-term supplier to BHS.

Profile: dealmaking marathon man’s sprint to the top

Nine years ago, on the eve of the credit crunch, Goldman Sachs ruffled rival Citigroup’s feathers by poaching its 31-year-old star dealmaker in the leisure sector on a package guaranteeing him $4.6 million in the first two years (Marcus Leroux writes).

The hiring of Anthony Gutman in April 2007 was taken as evidence that M&A bankers were enjoying bumper pay. Yet it also confirmed the former lawyer as a rising star in the City. His ascent was complete in 2011 when he became co-head of investment banking in the Europe, Middle East and Africa regions, a role he now has to himself.

His status as one of the City’s top dealmakers is confirmed by a glance at his fundraising page for the London Marathon this year. It reads like a who’s who of the Square Mile and beyond: Adam Crozier (the ITV boss) and George Weston (Associated British Foods) are among those who helped to raise more than £35,000.

Two names on the list of donors — those of Lord Rose, the former Marks & Spencer boss, and Goldman banker Phil Raper — serve as a reminder of Goldman Sachs’ long-running partnership with Sir Philip Green. In 2004, Mr Raper claimed to have overheard that Lord Rose, then merely Stuart Rose, was to lead Sir Philip’s bid vehicle in what turned out to be his second attempt to buy M&S. Lord Rose furiously denied the suggestion and was soon parachuted into M&S to defend it against Sir Philip’s approach.

Mr Gutman’s contacts have helped to smooth deals including Betfair’s sale to Paddy Power and Telecity’s acquisition by an American suitor. At Citigroup, he advised on the £1 billion sale of Madame Tussauds to Blackstone and Cinven’s acquisition of Gondola Group, the PizzaExpress owner.