Frasers Group boss Mike Ashley has lashed out at both the previous management of Studio and the UK’s corporate governance regime after saving the floundering fashion retailer.
In a note issued to the City on Friday afternoon, Ashley lambasted the previous leadership of Studio for having “buried its head in the sand whilst the world around it changed” and slammed the UK corporate governance regime as being “clearly unfit for purpose”.
Ashley’s choice words came just hours after he had bought the struggling retailer out of administration for £26.8m, saving 1,500 jobs in the process.
“It is clear that the fundamentals of its business were, at best, inadequately scrutinised by its board and/or advisers to the business or, at worst, deliberately concealed as the business entered its death spiral,” he said.
“Frasers is of the view that a UK corporate governance regime that countenances sudden and unaccountable failure of businesses, viable one week and irredeemably broken the next, entirely without sanction or censure of those involved, is clearly unfit for purpose and in need of urgent reform.”
Ashley, who had been a major Studio shareholder before the business collapsed following the failure of a £25m loan application, pointed to the previous failures of retail businesses such as Debenhams and Goals Soccer Centres as further proof of the need for reform.
“If the regulation of business is to have any purpose at all, it should be in ensuring that businesses and jobs do not simply disappear overnight, damaging lives, eroding shareholder value and tarnishing the reputation of the UK business system as a whole,” he said.
“Frasers believes that it should be an urgent priority of the government to increase the meaningful regulation of UK business, including by fully investigating the collapse of ALL [sic] listed businesses, and imposing fines and/or criminal penalties on any individuals found to have been complicit in or responsible for any wrongdoing which contributed to their failure.”
Ashley also called for increased funding for a number of watchdogs, including the Financial Reporting Council and Financial Conduct Authority, “to properly police the regime and act decisively as a deterrent to others”.
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