Work and Pensions Committee chair Frank Field has again called for more anti-avoidance powers for The Pensions Regulator, as he publishes the latest correspondence with collapsed wholesaler Palmer and Harvey.
The Committee began its probe into the wholesaler in December last year when the group went into administration amid reports of an £80m pensions black hole, whilst large sums of money continued to be paid to executives of the company. Before Christmas, Field blasted the directors “highly irresponsible” for a £70m dividend payment.
Continuing with its inquiry, the Committee has written to the administrators, PwC, with a series of questions about the firm’s finances and operations, and the position that leaves the pension fund in. For example, it has asked PwC where the pension scheme’s claim ranks in the order of creditor preference, and how many pennies in the pound the scheme can expect to recover.
Field has also published a series of correspondence so far including letters from The Pensions Regulator and Independent Trustee Services, and a letter from lawyers representing the former Chair and CEO of Palmer & Harvey Group, Christopher Etherington setting out his side of the story. In a letter from Wedlake Bell LLP, Field was offered a meeting with Etherington and was told his concerns about Etherington are “misdirected”.
Furthermore, in a letter from TPR chief executive Lesley Titcomb, she said the main reason for the group’s failure is the “decline in profitability of the business, largely due to competitive pressure, but also to high restructuring and expansion costs”.
“We are aware that the group’s trading position was exacerbated by debt servicing costs as well as the payment of preference dividends to the owners of the group (which included members of senior
management). We are looking into this further.”
Commenting, Field said he is “getting very tired of this same old story” and that he can’t imagine how the unfortunate workers and pensioners feel.
“A small group of individuals, advisers and hangers on emerge unscathed from a collapsing company, rich pickings secured. The administrators must do everything in their power to get as much as possible for the people who deserve it most. The whole deck is stacked for executives, shareholders and creditors, with The Pensions Regulator largely oblivious on the sidelines until the game is up and the PPF once again reduced to picking around the wreckage hoping to salvage scrap.
“While we allow companies to be run like this, we will see this over and over. Every instance adds to the case for the stronger anti-avoidance powers – including bumper fines to act as a deterrent - we called for over a year ago. All the more disappointing, therefore, that the Government has this week once again delayed its long-awaited proposals for reform. I’m sure pension scheme members across the country will join me in urging them to get on with it.”