Belfast Telegraph

Sports Direct and BHS sparked public and political outrage

Sports Direct and BHS barely left the spotlight in 2016 as the plight of low-paid workers and the collapse of a retail institution sparked public and political outrage.

Mike Ashley's retail empire endured a choppy year, punctuated by revelations that Sports Direct staff had been forced to stomach "Victorian working conditions" while being paid below the national minimum wage.

After initially snubbing a showdown with MPs, the billionaire tycoon appeared before the Government's Business Select Committee in June, where he admitted under-paying staff and received a grilling over the firm's controversial use of zero-hour contracts.

Unite assistant general secretary Steve Turner weighed into the retailer during the session, saying its Shirebrook warehouse in Derbyshire was more like a workhouse or gulag .

Mr Ashley vowed to shore up conditions within 90 days, including an overhaul of the factory's security searches, deemed the root cause of staff being paid below the amount required by law .

But it was not long before Sports Direct faced fresh condemnation - this time from investors.

Shareholders urged Sports Direct to shore up its corporate governance by overhauling its board of directors and launching an independent review into working conditions ahead of its annual general meeting (AGM) in September.

It would lead to investors venting their dismay by voting 53% against the reappointment of chairman Keith Hellawell, but the move proved fruitless as Mr Ashley, who owns 55% of the company, ensured he remained in post.

The shareholder rebellion came during a tumultuous AGM at Shirebrook where Mr Ashley threw open the doors to the public to show the firm's progress since its public flogging in March.

But attempts to confound the naysayers unravelled when the billionaire joked that he had been to the casino and pulled a wad of cash from his pocket while demonstrating a mock security search to journalists and investors.

It was November when the Government got its first-hand impression of Shirebrook, with the Business, Energy and Industrial Strategy Committee hitting Sports Direct with a surprise inspection.

Rather than putting their minds at rest, the firm landed in more hot water when a recording device was found hidden near a plate of sandwiches while the committee held private conversations.

Sports Direct's stand-off with MPs caught the lion's share of the headlines in 2016, but the retailer was often fighting fires on multiple fronts.

The Financial Reporting Council announced an investigation into Sports Direct over the retailer's relationship with a firm owned by Mr Ashley's brother.

On the company finances, Sports Direct announced in December that underlying earnings had sunk by a third to £145.3 million in the first half of the year after it failed to hedge against the Brexit-hit pound.

But that did not stop Mr Ashley - who took over as Sports Direct chief executive when Dave Forsey resigned - taking delivery of a corporate plane at a cost of £40 million.

Elsewhere in the retail sector, BHS's litany of problems began to emerge in March when the firm issued a warning to landlords that it would have to close dozens of stores unless they agreed to slash rents.

There were hopes that a recovery route may have been found at the end of March when 95% of landlords and creditors voted in favour of a company voluntary arrangement (CVA) to help pay off debts, secure jobs and keep stores open.

But this proved short-lived, with the stricken retailer collapsing into administration in April, leading to the closure of 164 stores and affecting 11,000 jobs when attempts to find a buyer failed.

MPs launched a probe into the collapsed firm, focusing on company owner Retail Acquisitions - spearheaded by serial bankrupt Dominic Chappell - and former BHS owner Sir Philip Green, as it became clear that the chain had been left with a yawning pension deficit of £ 571 million.

In a series of extraordinary Pension Select Committee hearings, Mr Chappell - who bought BHS for £1 from Sir Philip - was branded a ''premier league liar'' who had his ''fingers in the till'', but said his efforts to save the firm were ''rail-roaded'' by Sir Philip.

In his face-off with furious MPs, Sir Philip apologised to the staff of BHS and admitted that he sold the business to the ''wrong guy'', adding that he would ''sort'' the firm's pension scheme.

Despite the Arcadia boss's conciliatory tone, tensions continued to flare between himself and Pension Select Committee chairman Frank Field.

MPs backed a non-binding motion for the billionaire to be stripped of his knighthood, Mr Field questioned whether the retail tycoon's yacht could be seized to help shore up the BHS pension fund and t he Pensions Regulator began enforcement action against Sir Philip and Mr Chappell, demanding them to pay towards the BHS pension scheme.

In December, BHS reached another milestone in its sorry saga when it was placed into liquidation, bringing it closer to offering a final payment to its creditors.

Popular