Goals ‘blocks’ Mike Ashley probe into £12m accounting crisis
Goals Soccer Centre is accused of having “stonewalled” calls from its largest shareholder, Sports Direct, for an external probe into its £12m accounting crisis.
Sports Direct billionaire Mike Ashley had urged Goals to green light an external investigation over fears about the scale of the accounting issues.
Read more: Goals warns of weaker results amid accounting blunder
Goals reveal it owed £12m in VAT tax back in March. The revelation, which followed shortly after a profit warning, forced Goals to suspend trading.
In a furious letter penned to chairman Sir Michael Bolingbroke, Sports Direct claimed Goals’ own investigation has discovered double-counting and possible false accounting around sponsorship deals.
“This is another grave matter which, again, begs the question as to how this was allowed to take place by the board or Goals’ advisers,” said Sports Direct in a letter dated 14 June, seen by Morning Wire
“It is hard to see that this could have transpired without collusion or cover-up within the Goals business.”
Meanwhile, the Times reported this week that former Goals auditor KPMG is on standby for a potential lawsuit over the apparent VAT irregularities.
Goals declined to comment to Morning Wire
Deloitte is undertaking an internal investigation into the accounting irregularities, Sports Direct’s letter said.
However, the findings of this probe will only be shared with board members.
Those include Christopher Mills, the boss of Goals’ second largest shareholder, Harwood Capital.
Read more: Goals Soccer Centres loses second CEO in just two years
“This is not acceptable and prejudices Sports Direct’s and other shareholders’ positions,” Sports Direct said.
Ashley now wants to commission his own investigation with Duff & Phelps’ risk consulting subsidiary, Kroll.
“It would look at the extent to which the current board, previous board members or other officers of the business were aware of, implicated in or condoned these issues,” Sports Direct’s letter read.
It would also examine if Goals officers were negligent in identifying what was going on.
“We are very concerned to understand, given the significant size of these irregularities and the timeframe over which they took place, whether the problem is wider than one individual acting alone,” a source close to Sports Direct told Morning Wire
But Goals has blocked Ashley’s demand for a second investigation.
“The board of the company has stonewalled our suggestions repeatedly at this juncture,” the source said.
“We feel it is imperative that our investigation is undertaken as a matter of extreme urgency to try and restore trust in the business.”
Goals has until 5pm today to agree to Sports Direct’s proposed “root and branch” review of Goals’ shareholder interactions, corporate governance and company officers.
Read more: Goals suspends trading due to £12m accounting irregularities
If Goals continues to block the move, Sports Direct will vote against all resolutions at the five-a-side company’s annual general meeting (AGM) next week.
Shareholders are set to vote on the board’s re-election and BDO’s appointment as auditors.