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Mike Ashley pledges 'open discussion' about practices at Sports Direct

Published 04/09/2016

Sports Direct founder Mike Ashley
Sports Direct founder Mike Ashley

Under-fire Sports Direct boss Mike Ashley is bracing himself for a showdown with shareholders and unions next week as he prepares to throw open the retailer's factory doors to the public in a bid to address concerns over corporate governance and working practices.

The billionaire has faced increasing pressure from shareholder groups in the run-up to Wednesday's annual general meeting (AGM), with calls to overhaul its board of directors and launch an immediate independent review into working conditions at its factories.

Conditions at Sports Direct's Shirebrook warehouse have come into sharp focus after Mr Ashley was grilled by MPs in the wake of a newspaper investigation which revealed that hundreds of staff were being paid below the national minimum wage.

Mr Ashley told MPs from the Business Select Committee in June that staff were not paid during security searches at the end of their shift, meaning they took home less than the minimum amount required by law.

However, the tales of woe deepened when Unite the union made clear in its submission to the committee that staff were subject to "Victorian" working practices and lived in constant fear of losing their job or facing disciplinary action for "excessive" talking or spending too long in the toilet.

The union said workers had likened conditions to a "gulag" or "labour camp", with one woman giving birth and other female staff making claims of sexual harassment.

Mr Ashley said he had discovered "issues" at the retailer as part of an internal review into working practices. The retailer said an investigation spearheaded by Sports Direct's lawyers - RPC - is due to be published early next week.

In addition, Mr Ashley has announced he will hold an open day on the day of the AGM.

The retailer said the purpose of the open day is to "enable the board to engage with as many people as possible in an open discussion about the business".

However, the retail giant's attempts to repair the firm's battered image have carried little weight with investors ahead of the AGM.

Several investor groups have taken the unprecedented step of speaking out on the issue of working practices and called into question the amount of power wielded by Mr Ashley, who owns 55% of the group and is deputy executive chairman.

The Investor Forum, consisting of influential investors holding assets worth more than £14 trillion, has urged Sports Direct to "undertake a wide-reaching independent review of the entire governance practices at the company".

The intervention came after it was revealed that Sports Direct's accounts fail to disclose that international deliveries are run by Mr Ashley's brother, John.

In another blow for Mr Ashley, Legal & General, the retailer's 11th largest shareholder, has said it intends to vote against the re-election of chairman Keith Hellawell and all non-executive directors, while also supporting the "shareholder requisition resolution on an independent review of labour practices".

Sports Direct has sought to deflect criticism over its corporate governance by promising to carry out an external evaluation of its board of directors.

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