Palmer & Harvey (P&H), the failed wholesaler which was forced into administration weeks before Christmas, is due to be grilled by an influential Commons select committee.
Former executives of the 92-year-old company, which was the biggest cigarette supplier of the United Kingdom, will face the spotlight of the Work and Pensions Committee to give evidence on a management buyout that occurred in 2008. The said deal, which had P&H valued at £345m, led to a bumper payout for senior executives. However, it left the business suffering from a hefty debt load.
The former chief executive, Christopher Etherington, who was brought in to manage the management buyout but stepped down in 2016, received an interest-free loan from the company amounting tp over £3.4m in order to acquire shares. Later, the directors changed the terms of the said loan, so it was not repayable if the firm went bust but only if Etherington sold his shares – which is deemed to be near-impossible now because the company is already under administration. According to the Sunday Times, he will be a principal witness.
The Work and Pensions Committee also expressed its concern that the £70m, according to the accounts, had been paid out in the form of dividends on preferred stock between the period of 2009 and 2016. This took place as the pension deficit more than doubled in value to £80m.
The chair of the committee, Frank Field, first wrote to Jonathan Moxon, the finance director of P&H at the beginning of last month. He asked for full details regarding the pension scheme deficit, and he commanded to know how the dividend policy had been justified.