Goldman Reviews Green Links After BHS Saga

A senior Goldman Sachs (NYSE: GS-PB - news) executive said the Wall Street giant was reviewing its decade-long relationship with Sir Philip Green in the wake of the collapse of BHS.

Michael Sherwood, the investment bank's Europe boss, revealed the move as he was grilled by MPs over the demise of the high street retailer and asked how it had affected Goldman's reputation.

Mr Sherwood also appeared to contradict Sir Philip's evidence that he would not have sold BHS to former bankrupt Dominic Chappell had he failed the bank's "sniff test".

Goldman is facing questions over BHS after providing informal advice to Sir Philip's Arcadia group during the sale of the business to Mr Chappell for £1 last year.

The hearing also saw MPs confront senior management at Arcadia as they insisted the billionaire would keep his pledge to "fix" the pensions black hole left by BHS's demise.

BHS went into administration earlier this year with huge debts including a £571m pension deficit and is now being wound down after a search for a new buyer failed - leaving 11,000 jobs likely to go.

The episode is being investigated in a joint inquiry between the Business, Innovation and Skills and Work and Pensions select committees.

Mr Sherwood said Goldman's involvement in the saga had not enhanced its reputation and that it had moved to reconsider its involvement with billionaire Sir Philip, whose retail empire spans Topshop, Burton and Dorothy Perkins.

He told MPs: "We've been reviewing Goldman Sachs' relationship with Sir Philip Green at this point."

Sir Philip had insisted in his own evidence before the inquiry that he would not have done business with Mr Chappell had he failed the US bank's "sniff test".

But Mr Sherwood said: "I absolutely do not accept blame. He never passed our sniff test."

He said he and fellow Goldman executive Anthony Gutman "never told Sir Philip that he had passed our sniff test".

"All we highlighted was observations about the risks around Mr Chappell and the transaction," Mr Sherwood told MPs.

"Our role was extremely limited."

Later, Arcadia finance director Paul Budge was pressed on the suggestion that there needed to be "a very large cheque from the Green family" to fill the pensions deficit, after Sir Philip's pledge that he would fix it - and that there was fury in the City over the episode.

Mr Budge said: "I'm sure if Sir Philip says he's going to fix it, he's going to fix it. It's a work in progress (Other OTC: UBGXF - news) ."