CORPORATE GOVERNANCE & OPERATION RISK
Learning outcomes
- Recognise and evaluate the role of corporate governance in the appointment of board of directors, and the role that stakeholders play in the governance of a firm.
- Discuss andevaluate the complexity of the financial risk environment and how different contexts within which businesses operate interact with each other.
- This assignment covers learning outcomes 1 and 3
BHS Case Study
You are an independent corporate governance consultant andyou have been approached by former BHS employees to provide them advice that is basedonthe following newspaper article.
"Sir Philip Green's prize £100million super yacht was tagged the 'BHS Destroyer' in a comedy stunt.TV star Lee Nelson managed to get up close to Sir Philip's Lionheart floating home and attach the sign from a propelled dinghy in Monaco.
The comedian and his team sneaked up to the imposing ship after none of Lionheart's 28-strong crew spotted the approaching craft. Nelson tweeted: 'Good of Sir Philip Green to rename his £100m yacht to something more appropriate. I was glad to help.'
Sir Philip sold BHS to the former racing driver, Dominic Chappell, for £1 in March 2015. The doomed department store closed its final stores last month after years of decline, ending 88 years of one of Britain's best known names.
Meanwhile, Sir Philip was enjoying a five-week extravaganza around southern Europe on Lionheart.He started out in the Greek islands, visiting Corfu, Skopelos, Skiathos, Mykonos, Poros and Hydra. Look who were the auditors how long did they audit the company did they have any independent. Who were the BHS stakeholders what was the effects? Identify the reasons look both side what is the validate with those reason.
Around 11,000 people lost their jobs in the BHS collapse and as many as 22,000 pensions could be affected.Sir Philip was criticised for his role at BHS over the years in damning report published by MPs last month.He is being investigated by regulators probing BHS' £571million pension deficit" (Daily Mail, 2016).
You are required:
a) To write to the former employees, a Report that gives adetailed analysis of the following key corporate governance issues. Your Report should:
i. Discuss the reasons why Sir Philips Green is facing criticism for BHS' closure. Your discussion should also explain if the former board of directors led by Sir Philips Green may have been complicit in the closure of BHS.
ii. Analyse whether the external auditors had a duty to unearth this scandal and the reasons they may have missed it.
iii. Discuss in the context of the Agency Theory, whether it is the employees' prerogative to lobby the government to institute an enquiry into the conduct of the management of BHS. What other actions could the employees have taken to address Sir Philip Green's conduct?
iv. Discuss the effects that this scandal may have on the other BHS stakeholders.