A lawyer who is one of Mike Ashley’s closest confidants was involved in setting up the obscure company that organises international deliveries for Sports Direct and is owned by the billionaire retailer’s brother.
The Financial Reporting Council, the City regulator, is looking into the agreement between Barlin Delivery Ltd and Sports Direct, which was revealed last week. Shareholders have said the arrangement casts further doubt on corporate governance at the company that Ashley controls.
Public companies are required to report transactions with related parties such as family members but Sports Direct said its accountants, Grant Thornton, advised that John Ashley’s ownership of Barlin did not have to be disclosed. Sports Direct told the Financial Times Barlin arranged delivery of goods worth about 6% of Sports Direct’s £2.9bn of revenue and that Barlin’s profit was about £300,000.
Companies House records show that Justin Barnes, Sports Direct’s former head of brands, was the only director of Barlin Delivery from its incorporation on 6 February 2015 until 7 July 2015 when he resigned and John Ashley, Mike Ashley’s older brother, became a director.
Records also show Barnes has been a director of a separate company, Barlin Investments Ltd, since before 1992 and that he has been linked to other companies using the Barlin name.
Barlin Investments is registered at the same address in Reigate, Surrey, that Barlin Delivery registered before changing its address to a house in Lincolnshire in October 2015. Barlin Delivery’s terms and conditions on Sports Direct’s website list Barlin Delivery’s address as Millennium House, 99 Bell Street, Reigate.
Barnes’s involvement with Barlin Delivery raises fresh questions about its status as a provider of services to Sports Direct, which has been criticised by shareholders and governance experts. John Ashley is the sole owner of Barlin and was Sports Direct’s IT chief until 2014. Barlin Delivery’s other director is Margaret Brown, who owns the house in Cleethorpes, Lincolnshire, where the company is registered.
Barlin arranges all international deliveries for Sports Direct by commissioning couriers such as DHL to deliver goods ordered online from outside the UK. Sports Direct said Barlin was set up on the advice of professional advisers to reduce complexity and risk for Sports Direct.
Barnes, who is a trademark lawyer, was in charge of Sports Direct’s brands, which include Dunlop and Slazenger, when the retailer floated in 2007 and was one of four directors who shared a £25m bonus. He stopped being an employee of Sports Direct Holdings Ltd, Dunlop International and other companies linked to Sports Direct in 2008 but has continued to work for Ashley.
Barnes was reported to have led Ashley’s team that worked on a proposed bid for BHS this year. Ashley did not bid for BHS in the end. Barnes was also involved with Sports Direct’s decision to put USC into administration and to buy the chain back back minus its debts after stripping its assets.
He has represented Ashley in his dispute with Rangers FC and in June became a director of Rangers Retail Ltd when Ashley and other Sports Direct representatives resigned from the company. The club is suing Sports Direct over the joint venture, which makes Rangers about 4p for every pound fans spend at its Ibrox store.
Shareholders and investor groups have said Barlin adds to concerns about how Sports Direct is run by Ashley, who is executive deputy chairman of the company he founded. Earlier this year it emerged the billionaire had put his daughter’s boyfriend in charge of Sports Direct’s property division, putting him in line to earn millions of pounds from deals.
Sports Direct’s annual report says the company’s board “reviewed and, where appropriate, approved certain situational conflicts of interest that were reported to it by directors”. It said the company keeps a register of conflicts and keeps them under review.
Sports Direct holds its annual general meeting on 7 September at its head office in Shirebrook, Derbyshire. After the Guardian’s revelations about treatment of employees at Shirebrook’s warehouse, the company faces a revolt by shareholders other than Ashley, who owns 55%.
Keith Hellawell, Sports Direct’s chairman, and other directors are expected to suffer large votes against their re-election and could be voted down by minority shareholders. A resolution calling for an independent review of working practices, proposed by trade unions but opposed by Sports Direct’s board, is also expected to receive the backing of some big City investors.
Sports Direct did not respond to a request for comment. No individual wrongdoing is suggested.
