MPs turn spotlight on collapse of Palmer & Harvey
The chairman of the Commons work and pensions committee is turning his guns on Palmer & Harvey, the wholesaler that collapsed into administration last November with the loss of about 3,000 jobs.
Frank Field said that he would add it to a wider investigation by the parliamentary committee into companies that leave big holes in their pension pots before having to be rescued.
Palmer & Harvey was Britain’s fifth biggest privately owned company, supplying cigarettes, sweets and food to more than 90,000 shops. The business, based in Hove, was generating annual sales of more than £4 billion when it crashed with more than £65 million of debt.
An analysis by The Times later found that the company had paid out nearly £77 million in dividends to executives and managers who held preference shares over almost a decade after a management buyout.
Mr Field has already written to Jonathan Moxon, a director of Palmer & Harvey, to express concern about reports of a possible £80 million deficit in its defined-benefit pension scheme, saying that it appeared “highly irresponsible that the company has been able to enrich preference shareholders to such an extent”, given its sustained losses.
He said that his committee was looking at half a dozen companies. “It’s part of a familiar pattern,” he said. “What looks like a sound company pays out money, usually in dividends. The pension deficit increases and then it’s bye, bye to the company. The losers are the workforce and pensioners.”
The committee will send letters to interested parties in the Palmer & Harvey case this week. It has been in correspondence with PWC, the administrator, and with Christopher Etherington, the former chief executive and chairman.
Mr Etherington joined Palmer & Harvey in 2006 to oversee the buyout and received an interest-free loan from the company to buy shares. The company’s most recent accounts showed that £3.4 million of the loan was still outstanding.
Mr Field also questioned whether the Pensions Regulator was sufficiently proactive in monitoring the health of pensions at large private companies that made big dividend payments.Alexandra Frean, The Times