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Mike Ashley calls for probe into House of Fraser directors

By Simon Penfold | Wolverhampton | Business | Published:

Frustrated Sports Direct billionaire Mike Ashley has called for an Insolvency Service inquiry into the former directors of Beatties' owner House of Fraser.

Sports Direct founder Mike Ashley

The tracksuit tycoon is reported to have accusing them of “totally” misleading suppliers and the House of Fraser's delivery company.

Sports Direct bought the department store chain out of administration for £90 million last month.

House of Fraser collapsed four years after it was bought by Sanpower, a Chinese group led by Yuan Yafei,who appointed onetime HSBC banker Frank Slevin as chairman.

The store chain had debts of close to £1 billion when it went into administration, including £30 million owed to XPO Logistics, the company that ran its two distribution warehouses.

Since then Mr Ashley and his team have been at loggerheads with XPO, resulting in the firm suspending deliveries to House of Fraser stores. Sports Direct had to cancel all outstanding customer orders and the House of Fraser website remains shut down.

House of Fraser's administration followed the collapse of a rescue deal that would have seen around £70 million pumped into the business by another Chinese company. Sports Direct alleges Mr Slevin and other directors promised XPO and suppliers deferred payment with the Chinese cash, but it failed to materialise. According to weekend reports, Mr Ashley said: “I believe that XPO and others were totally misled by Frank Slevin and the House of Fraser board, and the demise of House of Fraser should be fully investigated.”

Meanwhile talks are understood to be continuing between Mr Ashley and his Sports Direct team and the landlords of House of Fraser stores around the country, including the owners of the Beatties store site in Wolverhampton.

There is no suggestion that any deal is expected in the next few days, as negotiations drag on into a third week.

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Mr Ashley's hands-on involvement in the negotiations has been underlined by the fact that he will not be attending Sports Direct's annual shareholders meeting next week, despite his role as chief executive, "due to overriding demands for his time".

The company's chairman, former top cop and UK drugs czar Keith Hellawell, could be in for a rocky time at the meeting, in London next Wednesday, with several shareholder groups unhappy with the way the sportswear chain is being run.

Mr Ashley has been under fire from US shareholder group ISS, which is unhappy at the appointment of Michael Murray, the fiance of Mr Ashley’s eldest daughter Anna, as the company’s ‘head of elevation’ as well as a proposal to pay him £5m for property advice.

And voting advice from Pensions & Investment Research Consultants (Pirc) said governance worries at Sports Direct included “the excessive influence of Mike Ashley over the board and the running of the company”.

Simon Penfold

By Simon Penfold
Business Editor - @SPenfold_star

Business Editor based at the Express & Star's head office in Wolverhampton, looking for stories big & small.

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