Sir Philip Green’s injuction on BHS audit report fails

Sir Philip Green BHS audit

A High Court judge has rejected Sir Philip Green’s bid to restrict the publication of a damning report on a BHS audit by the Financial Reporting Council.

This means that the report could be published as early as this week.

The ruling came after Green’s holding company Taveta Investments sought an interim injunction of the FRC’s yet-to-be-published report on PwC’s audit of BHS.

Taveta also sought a judicial review of the FRC’s report, which the High Court was still considering.

Justice Nicklin said there were serious issues that needed to be taken into account in relation to the report, including whether the FRC had breached its “duty of fairness” by not providing Taveta enough time to respond to “implied criticisms” of Taveta staff.

However, Nicklin said these reservations were not sufficient to justify an injunction to block publication of a report by a public body.

His ruling also made it clear that Green was not “adversely affected” by the report.

Taveta’s lawyers had argued that it was not seeking a “blanket prohibition” but wanted the FRC to redact parts of its report which “contain criticisms of the claimant, its directors and employees”.

“Taveta’s sole concern was (and remains) to be given a fair opportunity to respond, prior to publication, to those parts of the FRC’s report which unnecessarily criticise Taveta and which were so clearly based on a partial and inaccurate view of the facts,” the company said.

The FRC may now have to edit its report after Taveta said it would “vigorously defend any claims or allegations” it may contain.

FRC’s lawyers had argued that it should be allowed to publish its findings and that Taveta had no right to challenge the report.

In response to the ruling, the accountancy watchdog said it would “consider the detailed judgment” before they publish the report, and that they “hope to do this as soon as possible in the public interest”.

The FRC had recently fined PwC £10 million for its audit of BHS, when it gave it a clean bill of health for the year ending August 30, 2014.

PwC audit partner Steve Denison also signed off the BHS accounts as a “going concern” days before Green sold it to former bankrupt Dominic Chappell for just £1 in March 2015.

PwC stepped down as BHS’s auditor after the sale.

The FRC also sanctioned Denison and fined him £325,000, and he also voluntarily gave an undertaking to remove his name from the register of statutory auditors.

Meanwhile, PwC’s historic fine was reduced to £6.5 million for early settlement.

When BHS collapsed 13 months after Chappell acquired it, it left behind a £571 million pensions black whole which affected 22,000 employees and former employees, triggering a parliamentary inquiry spearheaded by Frank Field MP.

Field, who been in a long-running and very public feud with Green since the BHS collapse, had pressed the FRC to publish its findings on PwC’s discredited audit.

Field said the work and pensions select comitttee, of which he is the chair, has a copy of the FRC’s report but parliament was being “gagged” as a result of Taveta’s legal action.

On the other hand, Chappell is also considering legal action over PwC’s discredited audit of BHS, and is reportedly investigating whether he can take action against those involved.

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