MPs demand clampdown on private companies to prevent another BHS
Private and publicly listed companies should face the same level of scrutiny, according to MPs demanding sweeping reforms to corporate governance following the collapse of BHS.
The work and pensions committee said the Government could prevent another corporate crisis similar to the downfall of the stricken retail chain if it made private companies abide by the Financial Reporting Council's (FRC) corporate governance code.
It says large private companies - or those with more than 5,000 defined benefit pension scheme members - should be governed by the FRC code, which sets standards on board leadership, remuneration and shareholder relations for public companies.
In a series of recommendations in response to the Government's consultation on corporate reform , the committee also called for changes to the Companies Act 2006 to make directors at private businesses accountable to pensioners through their scheme's trustees.
The moves follow BHS's demise in April last year that affected 11,000 jobs, 22,000 pensions, sparked a lengthy parliamentary inquiry and left its high-profile former owners potentially facing a criminal investigation.
Frank Field MP, chair of the committee, said the collapse of the department store chain was triggered by "gross failures of corporate governance".
He added: "For a company with a big social and economic footprint like BHS it is simply not enough to be accountable to shareholders - particularly when one shareholder owns most of the stock.
" Would the story have played out the same way if its directors had to be open about the financial decisions they were making for its future?
"The finances and leadership of a company with so many people depending on it should be open to scrutiny."
The recommendations came alongside the release of a tranche of correspondence between the committee and Sir Philip Green's Arcadia Group over the state of the retail giant's pensions scheme.
According to MPs, Arcadia's pension deficit is understood to have ballooned to more than £200 million from £190 million in August 2015.
The pension scheme was in surplus when Sir Philip bought the company in September 2002 and reached a peak of £76 million in 2007, the committee said.
Arcadia's chief executive Ian Grabiner and the company's pensions manager Margaret Hannell have rebuffed Mr Field's requests for up-to-date information about the financial health of the pension fund.
Mrs Hannell wrote to Mr Field in September, stating: "We feel that now is not the appropriate time to be engaged in your enquiry, given that our sponsoring employer, Arcadia Group, is currently engaged in the BHS enquiry and resolution of the BHS pension schemes."
Mr Field said it was not right that basic information such as the schedule of employer contributions and the length of the pension scheme recovery plan were not in the public domain.
He added: "We have been pressing Arcadia's directors and pension trustees for detailed information on their schemes but very little is published and neither the company nor the trustees - who, unlike the BHS schemes, do not have an independent chair - will tell us.
"Does Sir Philip not want us to know that he was being relatively generous to the Arcadia schemes while the BHS schemes floundered and the company headed inexorably for insolvency? Was he neglecting both?"
The committee also said that all Insolvency Service reports should be published when judged to be in the public interest after the Government indicated it would make the BHS report public.
Arcadia's brands include Topshop, Topman, Burton Menswear, Outfit, Wallis, Miss Selfridge, Evans and Dorothy Perkins.