Mike Ashley demands investigation into Boohoo founder’s debt collecting

Mike Ashley has demanded an independent investigation into attempts by Boohoo’s founder to collect a £100,000 personal debt by taking a cut of payments from one of its suppliers.

In a letter to Tim Morris, Boohoo’s independent chairman, lawyers for Mr Ashley’s Frasers Group said its founder and executive vice chairman Mahmud Kamani must be suspended “immediately” pending the outcome of an investigation.

Lawyers at White and Case said they had sent the letter, which was also published on the London Stock Exchange, directly to Mr Morris “due to the seriousness of the issues raised with regards to the conduct” of Mr Kamani.

The demand comes after The Telegraph last week revealed Mr Kamani’s debt collection demands with one supplier, publishing angry WhatsApp messages sent by the retail tycoon.

Frasers Group, which owns Sports Direct and House of Fraser, is Boohoo’s biggest shareholder in Boohoo with a 30pc stake.

Lawyers for Frasers said they were seeking “urgent reassurance” that the revelations would be “properly and independently investigated”.

The letter said: “Frasers also considers that it is your responsibility, as well as that of the entire board of directors of Boohoo, to protect Boohoo and its shareholders from Mr Kamani and any of his associates who may be complicit in these matters.

“These allegations are very serious and damaging to the reputation of boohoo. If proven, it appears that Mr Kamani may have breached his duties as a director of Boohoo and could also have committed various criminal offences.”

In the messages, Mr Kamani, who retains a 12.5pc stake in Boohoo, claimed he was owed £100,000 by Anjum Majid, the father of the owner of PDQ Textiles. He instructed a middleman in its supply chain to deduct 20p per garment from payments to PDQ Textiles, a Manchester company with factories in Pakistan, in order to collect the personal debt.

In the WhatsApp conversation from 2023, Mr Kamani said: “I want my £100k... please deduct 20p per garment from all his son’s orders... with immediate effect all deliveries from today.”

He appeared to suggest that Boohoo would punish PDQ Textiles if it attempted to increase prices in response, saying: “I have told my buyers also any increase in prices and it will become very difficult and business will get affected or stopped.”

Mr Kamani said: “I will personally be signing off the orders and making sure the account is monitored. Please let’s keep this clean or problem.”

At the time, Boohoo declined to comment on whether deductions were paid to Mr Kamani and did not respond to requests for comments about its financial arrangements with the middleman and its founder.

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A spokesman for the company said: “The loan predates the group’s IPO [stock market debut] in 2014 and remains unpaid. We have no further comment.”

Boohoo was contacted for comment on Thursday.

‘Forensic review’

Frasers said any investigation must be completely independent and should involve a “forensic review” of emails and any other communications such as WhatsApp used by directors at the time of the transactions, as well as those of employees involved in financial reporting, sales, and internal controls.

It also demanded a background check into Boohoo’s suppliers and interviews of any relevant employees or directors.

It added: “Failing to preserve potentially relevant documents could have serious consequences for Boohoo and the relevant individuals, including the incurrence of criminal liability for attempting to conceal information from law enforcement.

“Frasers suggests that following your receipt of this letter, Frasers meets with you to discuss the steps you intend to take.”

The demand for an investigation will come as a fresh blow to Boohoo, which has claimed to have pushed through reforms within its supply chain. It followed an independent report which previously found “weak corporate governance” in relation to malpractice in its supply chain.

In 2021, it culled more than 400 suppliers following allegations of poor working conditions and low pay at Boohoo factories.

However, the company has since faced mounting scrutiny over internal practices amid concerns over management from Frasers. At the turn of the year, Frasers sought to oust Mr Kamani from Boohoo, saying its “dismal” financial results and lack of transparency meant the Boohoo founder “must go”.

At the time, Frasers wrote to fellow Boohoo shareholders to raise concerns over governance.

Frasers had pointed to alleged payments by Mr Kamani’s son Umar, the founder of the PrettyLittleThing brand, of which Boohoo acquired full control in 2020 for up to £324m.

Boohoo hit back at Mr Ashley’s attempted coup, claiming that the Sports Direct tycoon had an “ulterior motive”.

In December, Boohoo shareholders rejected a proposal to install Mr Ashley to the Boohoo board.

Boohoo at the time said: “We remain focused on delivery of our business review with the objection of unlocking and maximising value for all shareholders.”

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