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The crisis at JJB Sports over a £1.5 million loan to its chairman Sir David Jones from rival retail tycoon Mike Ashley deepened today, as it emerged that Jones had not disclosed the affair to five of his six fellow directors.
JJB has suffered two days of increasingly fevered speculation as critics questioned Jones's judgement in having an outstanding loan with Ashley, the boss of arch-rival Sports Direct.
The JJB board today attempted to defuse the row by saying Jones has their “unanimous support”.
However, the Evening Standard can reveal that despite giving their public backing, the first JJB's three non-executive directors — merchant banker David Beever, City lawyer Roger Lane Smith, and accountant Alan Benzie — knew of Jones's links with Ashley was when they read about it two days ago in the Sunday press.
It is understood the company's finance director Lawrence Coppock and retail director Colin Tranter were also unaware of the loan. Jones's silence — he has still to make a personal statement over the affair — contributed to yesterday's near-25% slump in JJB's shares. Today the company went to the Stock Exchange and confirmed in a statement that Jones had received £1.5 million from Ashley.
It said its board believes the loan “has not given and does not give rise to any conflict of interest” because it was “made known to the company's executive directors and its financial and legal advisers [Lazards and Herbert Smith]”.
JJB added: “The view was taken that it was a private arrangement not requiring public disclosure.”
That judgment was not taken by JJB's non-executive directors to whom the loan was not disclosed.
Instead it was a view taken by Chris Ronnie, the long-time friend and associate of Ashley whose discredited reign as JJB chief executive ended earlier this year; David Madeley, the finance director who left soon after Ronnie; Peter Williams, the retail expert who has also since left after just four months at the company; and Richard Manning, who remains as JJB's company secretary and in-house legal counsel.
The affair has been further stoked by counter-allegations that the emergence in the press of letters detailing the loan are an attempt by Sports Direct to destabilise JJB ahead of a planned £50 million fund raising in the City to cement its recovery from near-bankruptcy in the spring.
JJB said the loan from Ashley to Jones covered an investment in Advanced Network Technologies, a private company controlled by Jones.
It has been reported that Ashley first gave Jones the loan in 2007.
The loan was due for repayment last autumn — around the time Jones first joined JJB as a non-executive. However, it was extended to January — when Jones became JJB chairman — and then extended again until summer 2010.
Reports that Ashley said the loan was to help Jones out of financial difficulties have been dismissed by friends of Jones as “plain nasty”.
Reader views (2)
Possibly, Justin, possibly. But one does have to question his judgement in all of this. As Chairman of a public quoted company, he should have sought/ accepted advice on the matter before it hit the fan. A personal loan of £1.5m from Ashley, in his position, was a time bomb waiting to go off.
- Haskey, London SE1, 07/07/2009 21:03
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I have known David Jones for very many years. I hope he won't be offended if I describe him as one of the most boringly honest of the retail supremos.
One can quite easily see how Ashley might choose this sort of tactic but fortunately those who know David know him for what he is- a great leader and a man of honour. The Board of JJB are right to be 150% behind him and shareholders to should be pleased to have David sorting out the mess; his brilliant record at Next says it all
- Justin Downes, London, 07/07/2009 12:25
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