Former BHS boss Dominic Chappell is considering legal action over PwC’s discredited audit of the retail chain after the accountancy giant was slapped with a historic misconduct fine.
Ex-bankrupt Mr Chappell bought BHS for £1 in 2015, but he is now investigating whether he can take action against those involved in the audit, sources told the Press Association.
It is thought that Mr Chappell’s argument centres on the fact that he used accounts rubber-stamped by PwC as the basis for his acquisition of BHS.
He is expected to write to PwC about his concerns within the next two weeks.
PwC has been fined by £10 million by the Financial Reporting Council (FRC) for its 2014 audit of the chain ahead of its doomed sale – and Steve Denison, who signed off on the accounts, has been banned for 15 years.
BHS collapsed into administration in 2016 with the loss of 11,000 jobs. Its demise sparked a parliamentary investigation which branded Sir Philip Green, the retailer’s previous owner, “the unacceptable face of capitalism”.
Sources suggested Mr Chappell believes Sir Philip’s Arcadia Group and holding company Taveta Investments could also be embroiled in any legal spat, as they would have provided information for PwC’s audit.
However, Mr Chappell must first apply to a court to secure access to documents used to compile the audit to work out which party is responsible.
The FRC sanctions come as Mr Chappell remains embroiled in a case with the Insolvency Service, which is seeking to have him disqualified from being a company director.
A procedural hearing on the potential disqualification will take place on July 3, and Mr Chappell’s lawyers are currently wading through legal evidence which has been handed over by the Insolvency Service.
However, it is thought the disqualification proceedings could be derailed by the new rulings from the FRC because the Insolvency Service’s investigation was bound up in PwC’s audit.
Labour’s Frank Field, who spearheaded the parliamentary inquiry into the sale of BHS, is now piling pressure on the FRC to reveal why it has fined PwC.
Mr Field said: “This is undoubtedly a good first move. It reopens the key question of whether BHS was in fact a ‘going concern’ when it was jettisoned for £1. For that, the company directors as well as the auditors are on the hook.
“As we know, that sale – which came just six days after PwC signed off the books – threw 11,000 people out of work and permanently reduced the pensions of 20,000 people.”
PwC and Sir Philip declined to comment.