The IoD (Institute of Directors) have said that the Sports Direct’s board doesn’t provide a sufficient check on the powers of majority shareholder Mike Ashley.

Oliver Parry who is senior adviser on corporate governance at the IoD has made his comments after the admission by Keith Hellawell, Sports Direct’s chairman, that non-executive directors were unaware of a plan to put part of the retail group into administration until the day before it happened.

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When Hellawell appeared in front of the parliamentary committee last week, it was discovered that chief executive Dave Forsey had been talking to the eventual administrator, Duff & Phelps, for nearly three months before about 200 workers at a Scottish warehouse lost their jobs in January.

Workers at the USC warehouse in Ayrshire lost their jobs when administrators were called into West Coast Capital (USC), a Sports Direct-controlled entity that owned 28 USC stores. The shops were immediately bought out of administration by Sports Direct’s Republic division, which already owned 32 USC stores.

Hellawell admitted that Ashley and a handful of senior executives took key decisions without any discussion at board level.

Oliver Parry:

“This is a further indication of how dysfunctional the Sports Direct board is. Last year we saw the board trying to push through a huge pay plan for Mike Ashley and you don’t need to be a forensic lawyer to figure out that there isn’t a sufficient check on Ashley’s powers.”

“This is not just reputational damage, but there are moral and ethical issues here. About 200 workers were laid off and the board was not aware until the day before. For a FTSE 100 firm that’s not acceptable. Boards need to hold management to account.”

What the underlying theme clearly appears to be is that Mike Ashley is attempting to run Sports Direct as a wholly owned private company, rather than simply being the biggest shareholder in a PLC.

With Ashley’s ownership of Newcastle United being so closely tied to Sports Direct and all the free benefits his retail group get from the association with the football club, Newcastle fans simply find themselves entangled in a much bigger web of the multi-billionaire’s making.

The basic potential sale value of Newcastle United may not be the most significant part of Ashley’s fortune but I have no doubt that the club forms a key part of his business empire moving forward.

Suggestions that he may sell NUFC in the near future must be very much more hope than expectation.

  • LeazesEnder

    The free benefits his retail group S***** D*****  enjoy at St James’s Park, surely mean that the Institute of Directors (IOD) should look into the way Board run this club…

    …the Directors are failing in their prime purpose to secure the Clubs Own revenue streams, and appear to be giving money away ‘nolens, volens’.

  • bill black

    It just shows how right wing our laws have got in the last 40 years that there are no real powers for the workers left (apart from protest) Yet Ashley has made around 2 billion pounds out of NUFC in 8 years while trying to kill the soul of the club and the best those in power have done to stop him in this time is to have ASKED HIM to turn up to see M. Ps and to have the IoD after all these years looking like they going to tell him off. While many fans still SUPPORT HIM BY TURNING UP TO MATCHES AND BUYING S,D TACK. I will vote for any party that will stop this magget from doing the harm he does by bring in laws  that will stop him what he is doing before I DIE.

  • PeterRobson

    The IoD can criticise all they want, but at the end of the day they´re just an advisory body with no powers of implementation (that´s going to be my word of the day).

    Whether anyone listens to them is not the point, the real point is whether anyone acts on their findings.

    The markets might take note of the bad press generated by their opinion, but after all is said and done, only a fall in value of Ashleys business concerns could make him rethink his whole attitude towards how he does his business.

    He´s already shown a total disregard towards Parliament and anyone else we perceive to be in any position of power or influence !!!

    He doesn´t give a toss about what anyone thinks as long as he´s got his bags of money to keep him warm in bed at night !!!

    So far all we´ve had from Parliament, local MP´s and anyone halfway famous, has been just “beating the chest”.

    As long as we keep filling SJP and buying his tat, thereby giving at least an appearance of respectability to his brand, he won´t be swayed to do things differently.

    Most people have a “moral compass” which points us in the right direction in our decisions and actions.

    Clearly the man has no morals, therefore a moral compass would be redundant, unless of course he could flog it in one of his “tat” shops !!!

  • IntravenusMP

    bill black Sorry but that’s tosh. Where do you get these figures from? How do you get the figure of £2bn over 8 years?

    Do you really think a government should get involved with the day to day running of a business?

  • No Brainer

    PeterRobson I think a lot of what you say is correct. However the moral compass between him parliament Local MP’s for me is squarely in his favour.
    In the case of USC the truth is that this was a company that had went bust a previous 18 months ago after his long term friend and ally in the sports good market Tom Hunter.

    Mr Hunter took his eye off the ball with most of his retail operations to focus on charity work with the Clinton’s of smokey cigar fame.
    This led to USC going bust 
    Ashley took on the business and integrated the profitable stores in to his business and than implemented his management of the stores which weren’t to see if they and the USC/warehouse/business would become profitable. They didn’t so he shut it. This isn’t part of an empire that was built and he has drove into the ground it was defunct long before and probably caused by the unrealistic rents many retail companies are bound to by over zealous landlords who now find themselves with empty properties.

    The MP’s bleating about this are doing nothing about the online retailers who pay as much as £7sqft for their distribution hubs in the middle of no where and contribute naff all to the tax man.

  • No Brainer

    bill black Probably need to change focus as thats not going to happen.

  • LeazesEnder

    PeterRobson I liked Misanthrope as word of the day.

  • PeterRobson

    LeazesEnder PeterRobson I used that one the other day mate, but it´s really hard to work it into everyday conversations !!
    Sorry !!

  • PeterRobson

    No Brainer PeterRobson I get your point exactly, but we´re discussing our club, and whether it´s been a few months or in my case nearly 50 years, we´ve all invested a lot more than just money.

    I just don´t see the point in organisations like IoD issuing plattitudes about the way Ashley conducts his business when every man and his dog knows it will have zero influence on any of his actions.

    As for Parliament: I´m a long time member of the BMF, it campaigns for the rights of PTW´s (powered two wheelers), it has a large membership and allied associations throughout Europe.

    A few years back, political parties realised bikers were also voters and so they targetted them for votes, making noises about how they think PTW´s are eco friendly and blah blah blah, basically saying what they think we wanted to hear.

    The BMF aren´t stupid and realised we could hold them to their promises for the benefit of not just it´s members but all bikers in general !!

    What football NEEDS is a voice for the fans that will be heard in Parliament.

    They can spout off about the money being generated by sponsors and TV deals all they want, but at the end of the day it´s the fans, whether in the stadium or the pub or even the sofa, who buy the TV subscriptions, and wear the shirts and give that all important perfect backdrop to that product being beamed around the world !!!

    Recent sporting history shows that nothing causes a sponsor to pull the plug quicker than Bad Publicity !!!

    But no matter what I say or think we´re just going to keep on filling the stadium, wearing the shirts, and buying the subscription to whatever channel is showing the next game !!!

  • Sickandtiredstill

    No Brainer PeterRobson Nonsense, again.
    He sent USC onto administration entirely to avoid paying suppliers (Diesel) and to force a lower facility rent. If USC was not viable why did he immediately buy it back through Republik?
    Read Hallawells replies to the Parliamentary Committee – he admits that legal opinion was sought and ignored and SD were knowingly in breach of contract when doing this.

  • Sickandtiredstill

    LeazesEnder A point I keep making – and all the Ashley apologists avoid answering or commenting on.
    NUFC provide free advertising and our retail profits to a PLC and its variety of shareholders. And people have the stupidity to think that’s somehow a good thing, or some form of quid pro quo for the MASH debt of 129 million.
    SD didn’t and haven’t provided a single penny to NUFC.

  • Sickandtiredstill

    No Brainer PeterRobson Here’s the relevant part –

    “Revell pushed. ‘When you, as chairman of a FTSE 100 company, make a decision to withhold monies you owe to a supplier, presumably you go to someone and ask are we legally entitled to do this?’
    ‘Were you?’
    Some heavy breathing from Hellawell now. ‘No.’
    ‘So you were in breach of contract?’
    ‘So you acted in breach of contract with Diesel in order to bring them to the negotiating table?’
    ‘Yes.’ By this point Hellawell sounded like he really didn’t want to be there anymore, and it was only 10 minutes in…