Tuesday 11 September 2018 5:14 pm

Judge tells Sports Direct to hand over documents in audit watchdog investigation

A London judge today ruled that Mike Ashley's Sports Direct must hand documents to the accounting regulator to assist with an investigation into its 2016 financial results.

Shares in the retailer fell as much as 9 per cent and closed five per cent down following the court judgement.

The Financial Reporting Council (FRC) is investigating the conduct of auditor Grant Thornton and one of its employees, after they did not disclose that Sports Direct had hired a company run by Ashley's brother John Ashley called Barlin Delivery in the audit of the company's 2016 financial results.

The FRC is also probing a Sports Direct employee as part of the accounting oversight.

Sports Direct argued the documents and emails were protected by legal privilege, but lawyers for the FRC said Sports Direct's behaviour amounted to "obfuscation and delay verging on obstruction", which the judge agreed with.

A spokesperson for Grant Thornton declined to comment.

In a statement, Sports Direct said it would appeal certain aspects of the judgement, as it tried to ease the share slide by telling investors the retailer was not the subject of the FRC investigation.

"The company would like to clarify that Sports Direct itself is NOT the subject of an investigation by the FRC, which has jurisdiction over accounting firms and accounting professionals," it read.

"Sports Direct is a witness in an FRC investigation, details of which were made public by the FRC on 28 November 2016. This court application relates to the FRC's requests for the provision of certain documents."