Ashley shows Goals bosses red card over accounting ‎crisis | Business News

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The Sports Direct International tycoon Mike Ashley has declared war on the board of Goals Soccer Centres over the accounting crisis which has left its shares suspended for months.

Sky News has learnt that Sports Direct has written to Goals to demand that the listed 5-a-side football pitch operator allows it to hire Kroll, the corporate investigator, to probe a string of issues at the company.

Sports Direct, which owns just under 19% of Goals’ shares, has set a deadline of 5pm on Wednesday to reconsider its refusal to hire Kroll, and has warned Goals’ directors that they may face further action if they do not.

“The Sports Direct position as regards any subsequent action against members of the board as a result of the decisions taken or indeed actions or omissions during the course of their tenure is entirely reserved,” the letter – seen by Sky News – said.

A source close to Sports Direct said it was furious that the scale of the apparent accounting irregularities was broader than assurances it had been given by Michael Bolingbroke, Goals’ interim chairman.

“Based on this view we want a root and branch independent investigation into every single aspect of Goals including its officers, shareholder interactions and wider corporate governance,” the source said.

“However, the board of the company has stonewalled our suggestions repeatedly at this juncture.”

As a consequence of the impasse, Sports Direct plans to vote its shares against all resolutions at next week’s Goals‎ annual general meeting, the source added.

In its letter to Goals, Sports Direct raised concerns that a review already ordered by the 5-a-side venue-owner’s lenders would only be shared with the board.

Sports Direct said this was “not acceptable” because Christopher Mills of Harwood Capital – Goals’ second-largest shareholder – is also a non-executive director of the company.

A Goals insider dismissed this position on Tuesday evening, saying the interests of Sports Direct or other shareholders were not prejudiced.

Goals has been left in crisis over an estimated £12m VAT liability which remains the subject of negotiations between the company and HM Revenue and Customs.

Sports Direct said in its letter that the former chief financial officer of Goals had “changed VAT codes on various service lines…[resulting] in Goals being required to approach its investors to seek and secure further funding to cover this liability”.

“It is very difficult to understand how this could be allowed to happen and how it could have taken place without assistance, negligence or incompetence from Goals’ officers, auditors or advisers which would otherwise have prevented or promptly discovered these matters.”

The Times reported this week that KPMG, Goals’ former auditor, has been put on notice of a potential lawsuit over the VAT mishap.

Sports Direct’s letter also flagged concerns about “double-counting and/or false accounting in relation to sponsorship deals” which it alleged it was “hard to see that this could have transpired without collusion or cover-up within the Goals business”.

A spokesman for Goals declined to comment on the letter on Tuesday night.

It is the latest in a series of rows involving Mr Ashley’s company and businesses in which Sports Direct holds stakes.

The tycoon is attempting to have a new administrator installed at Debenhams and is challenging a financial restructuring of the department store chain.

Nevertheless, it is conceivable that Mr Ashley will ultimately end up owning Goals outright.

Sky News revealed at the weekend that‎ the work being undertaken by Deloitte on behalf of Goals’ lenders would include a review of medium-term options including a sale of the business.

Goals, which trades from about 50 sites,‎ had a market value of just £20m when its shares were suspended in March.

In a statement last month, the company said work undertaken with its auditors had led it to conclude that full-year results for both 2018 and 2019 would be “materially below expectations”.

A source pointed out that Goals, which employs about 700 people, remained cash-generative.

The company’s future has been thrown into further doubt by the recent decision of chief executive Andy Anson, who has only been in the job for just over a year, to quit to run the British Olympic Association (BOA).

Mr Anson was drafted in after the departure of Mark Jones, with other senior executives also having left.

He is expected to remain with Goals until November to assist with resolving its VAT crisis, the company said last month.

A permanent successor to Mr Anson is unlikely to be sought until after Goals’ accounting issues have been resolved and, even then, only if the company is likely to remain independent.

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