Olswang and Linklaters criticised by MPs for 'cursory checks' on BHS sale
MPs lay the blame for the collapse of the high street stalwart squarely at the feet of Sir Philip Green
July 25, 2016 at 07:45 AM
3 minute read
Olswang and Linklaters have been criticised for the "cursory nature" of their checks into Dominic Chappell, the director of Retail Acquisitions Limited (RAL), which took over BHS last year prior to its collapse. In the Parliamentary Select Committee report into the collapse of the retailer, the firms were criticised for the checks they carried out into Chappell, a bankrupt with no retail background.
The report, released today (25 July), states that firms were there to advise and "not to provide an expensive badge of legitimacy to people who would otherwise be bereft of credibility", which it says is what had happened.
The report adds: "In the case of BHS, it appears that advisory firms either did not consider the reputational risk or demonstrated a remarkable level of 'group-think' in relying solely on each other's presence."
It also cites a handwritten note from a call between Linklaters and Olswang regarding Chappell as evidence of the "cursory nature" of the checks into his background as a business owner.
While it praises Olswang's due diligence into BHS, describing it as "detailed and rigorous", it adds: "Grant Thornton and Olswang were increasingly aware of RAL's manifold weaknesses as purchasers of BHS. They were nonetheless content to take generous fees and lend both their names and their reputations to the deal."
The report also criticises Olswang and Grant Thornton's decision to cite legal privilege, which had not been waived by Chappell, as a reason for not disclosing some information to the committee. It says that while firms' ability to provide confidential advice was important in a matter of clear public interest, such as BHS's collapse, disclosure of confidential or privileged information was necessary.
It adds that the firm adopted "a very wide interpretation of confidentiality", which included sending substitute witnesses to evidence sessions and refusing to provide details of fees earnt. Olswang's general counsel Stephen Hermer appeared before MPs on 25 May, when corporate partner David Roberts had been scheduled to appear.
It concludes: "We regret that Olswang and Grant Thornton sheltered behind these duties [of confidentiality and privilege] when their interests – and that of the public – would have been better served by full and frank disclosure to legitimate parliamentary scrutiny."
Speaking to Legal Week following a hearing on 23 May, Frank Field, chair of the Work and Pensions Select Committee, expressed his frustration at what he saw as a lack of detail in the partners' responses to questions.
Field said: "I just think it's too easy to claim privilege. It's just laziness and a cover-up."
The report laid the blame for the retailer's collapse squarely at the feet of Sir Philip Green.
Field said: "One person, and one person alone, is really responsible for the BHS disaster. While Sir Philip Green signposted blame to every known player, the final responsibility for up to 11,000 job losses and a gigantic pension fund hole is his. His reputation as the king of retail lies in the ruins of BHS."
Olswang and Linklaters declined to comment.
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