BHS Probe MPs To Examine Green-Goldman Ties

The long-standing relationship between Sir Philip Green and Goldman Sachs (NYSE: GS-PB - news) will be scrutinised this week as part of a parliamentary probe into the collapse of BHS, the high street retailer.

Sky News understands that MPs on the Work and Pensions Select Committee intend to examine the ties between Sir Philip, who sold BHS for £1 last year to a consortium of little-known investors, and the Wall Street bank.

Goldman provided informal advice to Sir Philip’s holding company, Taveta Investments, about the proposal to acquire BHS but was not incentivised to recommend that the deal went ahead - unlike the advisers to Retail Acquisitions Ltd (RAL), the vehicle which bought the chain.

BHS's future was plunged into doubt last month when administrators were called in after RAL failed to secure new financing needed to keep the chain trading.

Approximately 11,000 jobs now hang in the balance, although the administrator, Duff & Phelps, is hopeful that a rescue deal can be agreed this week.

Frank Field, the Labour MP who chairs the Work and Pensions committee, said on Sunday that he wanted to understand why Goldman had agreed not to be remunerated for the advice it gave Sir Philip on BHS.

"I want to know why this was the case. Banks do not make big profits by acting as charities," he told Sky News.

It (Other OTC: ITGL - news) is common practice for investment banks and other City firms to undertake work on projects for long-standing clients without payment, often in the expectation that future work will be directed towards them.

In the case of BHS, Goldman's work is said to have involved fewer than a handful of meetings between its bankers and RAL's frontman, Dominic Chappell, whose involvement in a series of failed ventures will also come under the microscope during the MPS' inquiry.

Goldman is not understood to have provided a formal recommendation for Sir Philip to sell BHS to RAL.

The Wall Street giant has counted Sir Philip and his Arcadia business as clients for well over a decade, having acted for him on his ill-fated attempt to buy Marks & Spencer (Other OTC: MAKSF - news) in 2004.

Lord Grabiner, the chairman of Taveta Investments, is also a non-executive board member of Goldman Sachs International, its main London-based subsidiary.

In a statement published on Friday, Lord Grabiner said he had not been involved with any negotiations related to the sale of BHS and that he had not heard Mr Chappell’s name prior to the deal's conclusion.

Among the witnesses giving evidence at Monday afternoon's joint session with the Business, Innovation and Skills Select Committee will be Lord Grabiner and Anthony Gutman, a senior UK-based Goldman executive who joined the firm in 2007.

A lengthy hearing will also hear from advisers on the BHS pension scheme which is now hundreds of millions of pounds in deficit, and a number of Arcadia directors.

A Goldman spokeswoman confirmed that Sir Philip and Arcadia were long-standing clients of the firm but declined to comment further.