THE sportswear business run by Newcastle United owner Mike Ashley has been criticised as the least ethical big company in the country.
In a survey run by a Sunday newspaper, Sports Direct came top of the table in an examination of unethical conduct among the members of the FTSE 350.
The business is criticised for its social, ethical and environmental conduct. It scored bottom marks for poor boardroom discipline, for having a controlling shareholder, and for not having enough non-executive directors on its board.
The Observer newspaper also criticised Mr Ashley’s company for its “lack of rigour” in reporting risks to its business model which is reliant on cheap manufacturing processes in high-risk emerging markets in the Far East.
Sports Direct scored just 12.17 marks out of 100 according to the Observer’s ethical scoring system, which was compiled in conjunction with Co-operative Investments.
However company chairman Simon Bentley has promised Sports Direct will do better in the future. He said: “We are committed to improving our investor relations and our score on these measures next year. In some cases we have not done what we should have done.”
Mike Ashley has attracted controversy in the City over corporate governance ever since he floated the business he founded earlier this year.
Last month Sports Direct finance director Bob Mellors came under attack when he was described as “out of his depth” and investors pressed Mr Ashley to find a new man. One presentation on the company’s finances was described as “farcical”.
Mr Ashley netted £929m in a single day in February after selling 43% of the business he founded. But shareholders who bought at the 300p opening price have seen their stock nosedive since then.
In addition to the concerns already raised by the City, yesterday’s survey highlighting Sports Direct’s reliance on goods manufactured in developing countries is a new worry which the company does not need.
Mr Ashley’s spokesman declined to comment yesterday when asked to respond to the specific issues raised by the “Least Ethical” report.
Other companies listed in the Observer’s league table included media firm Euromoney Institutional Investor, controlled by the Daily Mail and General Trust; broker Tullett Prebon; and Kazakh mining giant Kazakhmys.
Other companies making an appearance include cruise operators Carnival, Thomas Cook and a cluster of property firms – Daejan Holdings, Warner Estate Holdings, CLS Holdings and Assura.
Exploration firms JKX Oil and Gas and Dana Petroleum are listed as they have high political and environmental risks but it is not clear how they are managed.
And property website Rightmove is listed, partly because it provides so little information, but also because its executive directors get automatic payouts if the company is taken over, which the study says could clash with other shareholders’ interests.