Sir in a mousetrap: how Philip green earned $5.6 billion and lost reputation

The British Parliament accused the billionaire Philip green in deliberate bankruptcy previously, he owned one of the country’s largest retail chain BHS. Its collapse is the largest in the history of the UK since 2008, when the same fate befell the Woolworths chain of stores, which became one of the victims of the global financial crisis.

Members of Parliament published a report which says that Greene and others “rich” on the ruin of the company, and called the situation “unacceptable face of capitalism”.

In 2015, green controlled 12% of the retail market in the country, his trading Empire occupies the second place in the UK in the amount and extent of coverage. Greene owns one of the country’s largest retailers, Arcadia Group, which owns more than ten brands of clothing of the massmarket segment, including Topshop and Topman, and more than 2.5 thousand stores across the country and 500 abroad. Forbes magazine in the year 2016 estimates the total amount of his personal fortune and status of his wife Tina green $5.6 billion and puts them at fourth place in the list of the richest subjects of great Britain. Bloomberg assesses the state of the green at $3.6 billion.

A boy from a good family

Philip green was born in March 1952 in South London into a wealthy Jewish family. When Philip was just 12 years old, his father died of a heart attack. Father Philip was engaged in development and manufacturing, and after his death the management of the business engaged in the widow Greene.

Philippe’s mother is no less enterprising than her husband, opened a gas station and allowed the son to earn. “Wipe the Windows, pour gasoline and so forth,” he recalled in an interview with the Guardian newspaper in 2004. His first earnings were a trifle — six pence, two shillings, half a crown. On Saturdays, he could earn up to five pounds. Pocket money Philip never received — in the family it was not accepted.

In childhood, the future billionaire was attending the prestigious Carmel College in Oxfordshire, popularly dubbed the “Jewish Eton”, but interest in education never felt.

Remembering his childhood, in an interview with the Guardian, green explained that College students were divided into two types: those who wanted to learn, and those who wanted to get out. Green considered himself to be the last. “I never intended to become scientists,” he said. Instead, I wanted to see “what’s inside the real life.”

“Greene always liked to position himself as the outsider who broke business taboo and succeeded, despite the lack of patrons upstairs”, — quotes the Guardian the author of the book “Top Man: how Philip green built his Empire on the high street”.

At age 16 he left College and went out on their first full job in a Shoe shop, where he worked for five years and learned the basics of the trading business. Store selling footwear imported from China and Taiwan. “We were one of the first who began to do business in the far East,” said green in an interview with the Guardian. Initially he was doing paperwork, working in the warehouse and delivery of samples to customers, and four years later — is sales.

Bet on clothes

In 1975, when green was 23 years old, he felt ready to open his own business. Decided to import jeans from China. The starting capital amounted to £20 thousand, borrowed from family. Green jeans bought in Hong Kong, London and resold to retailers.

Four years later green opened the first retail store. He’s heard the rumors about the ten fashion designers who were on the verge of bankruptcy. He bought their clothes, have it dry-cleaned, wrapped in plastic to make it look like new, and then bought a store in Conduit street in Central Mayfair, where they put the brands at a discount. Stocks sold out in just a week.

Your first million — or rather, seven — Greene earned on the purchase of a network of fashionable shops Jean Jeanie in 1984 for a ridiculous £65 million Company, consisting of ten stores, was wrecked, and raise its cost a lot of efforts. “The owner of the company owed to the Bank and to suppliers of £3.5 million, he was bankrupt. They lost £70 thousand a week. Could not pay staff salaries. I called him up and said, I have for you two news: good and bad. Good — I’m buying the company. Bad — you’re broke. I said I’d pay him £65 million and will add another £435 million, if you raise it in six months, ” recalled green in an interview with the Guardian. — I went to the Bank and said, business is ruined, but I think I can fix it. I’ll give you £100 thousand as a goodwill gesture, if you will give me a reprieve on debt payments for six months. Happened. And then I looked at the business. I saw what happened. As usual, the same thing can be observed today: poor procurement, lack of discipline and control, unsold goods, lack of confidence in decision-making, waste of time, formulaic thinking. I went to Paris — got there three suitcases of things, flew to Hong Kong — copied [design], returned to London — has updated the inventory, dealt with creditors and restored the company’s work in just four months.” In the end, less than a year, Greene called with a proposal to sell the company. In an interview with the Guardian, green recalled that he did not want to sell, so offered “meaningless” price of £10 million as a result of bargaining, he received the Jean Jeanie for only £3 million less returned the debt to the Bank on time and capital in addition to earned the trust of creditors.

The billionaire Philip green in the Topshop store

Photo: Kin Cheung/AP

Sobering experience

But three years later all was lost. The first and last time green decided to lead a public company, namely the chain stores cheap mens clothing Amber Day. He invested their own money in it that in those days it was unusual for the Director of a public company. Business was bad; Philip, regularly appearing in the business press, became widely known in the country. But in 1992, the Board of Directors forced him to resign because green was not able to bring profit to their expected level. This was sobering, but constructive experience that green was later called “the best thing that happened to him in life.”

According to Financial Times, in the late 1990s to do business the green is hampered by the fact that the management Amber Day launched against it “smear campaign”, which he faced with a shortage of supporters in London.

The beginnings of Empire

One of the few who supported the green in a difficult moment, was the representative of the German state Bank WestLB (Westdeutsche Landesbank), a well-known financier Robin Saunders. According to Financial Times, she saw it as the beginnings of the genius that previously found in another “business-outlaw” — Bernie Ecclestone, now the head of “Formula 1”.

In 1999, green wanted to buy a chain of clothing stores Marks & Spenser. It is the largest UK clothing manufacturer, in 1998 became the first British retailer, the profits of which amounted to £1 billion excluding taxes. In an interview with the FT Saunders recalled how difficult it was to get money so that he could speak to this proposal. “I couldn’t understand why. I thought he was great, he was really good at what he does, “she said, adding: We, the bankers, can be silk, and as soon as the green one will be able to demonstrate what he’s capable of, everyone will want to give him money”.

But in the end, green gave up the idea due to the fact that before he publicly announced his interest in buying M&S, media published information that the green wife Tina bought the company’s shares. Before meeting with Philip Tina also worked in sales of clothing — she had her own shop.

Greene again will put forward a proposal to purchase the company in 2004, but the deal did not take place. As the FT wrote, the second attempt finally cemented his reputation as an aggressive, daring, unpredictable entrepreneur — in contrast to the “dull costumes that manage public companies-retailers”. According to insiders and consultants, which led to the publication, Greene was very close to getting M&S, despite the fractious relationship between him and the CEO of M&S Stuart rose, the Board hesitated. But suddenly the grin changed his mind.

“I do not regret that have not bought [M&S],” recalled green in an interview with the FT in 2015, explaining that he feared that the possession of it would bring him “a disappointment”. In my opinion, all these major companies with a history of very difficult to own”.

Is M&S green in 2000 bought for £200 million large network of shopping centres British Home Stores (BHS) — also using Saunders. Business of the company was good, which allowed Greene in 2002 to buy a 92% stake in the group companies Arcadia, which at that time belonged to more than ten brands of clothing massmarket segment, including Topshop, Topman, Burton, Dorothy Perkins, Evans, Miss Selfridge, Wallis and more. The deal cost him £840 million: of these, only £10 he paid out of pocket, the rest of the money he has allocated the consortium of banks. “This was a typical venture capital deal, but I love adventure, I’m a capitalist,” notes green.

One of the stores of Topshop in Central London

Photo: Reuters/Pixstream

Both companies have become the main source of income of the green and made him a billionaire, the constant helper of the world list by Forbes since 2004, when the personal as 52-year-old businessman was estimated at $5 billion) and a respected man in the British government.

Tax scandal

In November 2010 the couple, green has become the object of campaigns of a social movement UK Uncut. Activists protested against the payment of huge bonuses to the heads of large companies and demanded of the government to force companies to pay taxes from which they shied away legally.

Claim to green was the fact that the company that bought the Arcadia Group, Taveta Investments was registered in the name of his wife who lives in Monaco and is not a tax resident of the UK. This allowed them to save £150 million, which would have to pay if would Taveta Investments owned directly by Philip. The green itself holds the post of CEO of Arcadia. And in 2005, he paid a tine record in the history of British business dividends of £1.2 billion, avoiding the need to pay their taxes on profits.

A year after the payment green received the title of sir for his merits in the field of retail trade, and in 2010 — two years after the onset of the global financial crisis — the government of David Cameron appointed him as adviser on efficiency. It was then that UK Uncut has initiated its campaign with protests at the stores of Topshop and Topman.

Green categorically denied allegations of tax evasion. “I’m paying tens of millions of pounds to the British Treasury. I have 45 thousand people, I pay tens and tens of millions in taxes. It’s just outrageous,” — he complained in an interview with the Guardian in April 2016.

With regard to dividends of £1.3 billion taking into account payments to minority shareholders, green believes that this should be seen as a sign of his business acumen: this one and a half times the amount for which he bought Arcadia three years ago, and many times exceeds the amounts that the Greene family had invested initially, writes the FT. “It was a huge amount. Anyone else not able to”, — he said edition “with obvious pride.

One pound for BHS

When green in 2000, bought British Home Stores, a company which by that time was 72 years old, have experienced serious financial difficulties. As writes the Guardian, the new owner insisted that he will be able to make it the Foundation of a retail Empire. First of all it was the result of rebranding and restructuring the management of the company’s net profit for the year doubled [Bloomberg data], and the surplus of the pension Fund increased from £5 million in 2000 to £17 million in 2001 [data Guardian].

But in March last year, green sold BHS, which consisted of 163 Department store across the country and 74 overseas, just £1 of the company’s Retail Acquisitions, which is owned by British businessman Dominic Chapel — had no experience in retail and three times bankrupt. And less than a year later the company went bankrupt.

At the end of April 2016 BHS came under the interim administration. Administrators immediately began talks with potential buyers about the salvation of the company, but to find a buyer failed, the result of which was announced on the company liquidation.

Under the threat of dismissal was 111 thousand. According to the Guardian, the total amount of debt the BHS as of April 2016 £1.3 billion Over 16 years of management of the company the amount of funds of the pension Fund BHS reduced from £17 million in 2001 to minus £571 million in April 2016.

Protests in London associated with Philip Greene, who appeared before a parliamentary Committee on doing business and management pension funds, investigating the bankruptcy case of BHS. 15 Jun 2016

Photo: Reuters/Pixstream

The pressure on Greene was intensified after it became known that the collapse of the BHS will cost taxpayers £36 million and that Tina Greene made a profit of £53 million from the sale of the headquarters of the company is Arcadia. As noted by the Guardian, for the time that green was owned by BHS, he and other investors received a total of over £580 million in the form of dividends, rent and interest.

Members of Parliament are demanding that green contributed a large sum to the pension system of the company. Member of Parliament from the labour party, Jim McMahon even turned to Cameron with a request to consider the issue of deprivation of the green title of sir, and a group of members of Parliament from the conservative party — to the Committee on the grant of honours and awards, wrote the Guardian. The Committee should formally consider the issue of the knightly rank of the green and to give advice to the Queen that she should be taken. As wrote Daily Mail 26 July, Tina Greene, in turn, because of the scandals related to the management of Arcadia, risks losing the status of a resident of Monaco.

June 15 green appeared before a parliamentary Committee on doing business and management pension funds, which is investigating the bankruptcy case BHS. During a six-hour hearing, he stated that “his conscience is clear,” and stressed that did not know about the intentions of her buyer Dominica Capella “to destroy the largest retail company”. After the hearing, green apologized to the staff of BHS, admitting that he sold his business “the wrong guy”.