Frasers Group plc has called for the suspension of boohoo founder and executive vice chair Mahmud Kamani.
Mike Ashley’s retail group also called for an independent investigation following a report in the Telegraph last week alleging misconduct in relation to loans made to suppliers to boohoo, which now trades as Debenhams Group.
Frasers, Boohoo Group PLC’s largest shareholder, today published a letter from its legal advisers, White & Case LLP, which has been sent to boohoo chairman Tim Morris.
It said that it “firmly believes that this investigation and Mr Kamani’s suspension are required in order to protect the interests of boohoo, its shareholders and its stakeholders”.
The letter reads: “We set out in this letter some very serious concerns which directly impact boohoo itself… given the seriousness of the matters which have now been published by the Telegraph, Frasers requests urgent reassurance from you that you will arrange for these matters to be properly and independently investigated.
“This letter has been sent to you directly due to the seriousness of the issues raised with regards to the conduct of Mr Kamani. Frasers considers that it is extremely important you take immediate legal advice as to the most appropriate way to have these issues investigated.
“Frasers also considers that it is your responsibility, as well as that of the entire board of directors of boohoo, to protect boohoo and its shareholders from Mr Kamani and any of his associates who may be complicit in these matters.”
The Telegraph article claimed that Kamani has been involved in making loans to suppliers of boohoo through other companies, including Pinstripe Clothing – now trading as Pinstripe Property – a private company co-owned by Kamani himself.
The article further suggested that these loans appear to have been repaid by the suppliers to Kamani through a scheme whereby funds are taken from boohoo and instead deposited into his personal accounts, or the accounts of other companies he owns.
“These allegations are very serious and damaging to the reputation of boohoo. If proven, it appears that Mr Kamani may have breached his duties as a director of boohoo and could also have committed various criminal offences,” continued Frasers.
It cited potential violations of the Companies Act 2006, including his duty to promote the success of boohoo; to exercise reasonable care, skill and diligence; to not accept benefits from third parties; and to declare interest in proposed transaction or arrangement.
It also cited the Fraud Act 2006, specifically “dishonestly failing to disclose information which Mr Kamani is under a legal duty to disclose and intending to make a gain for himself” and “fraud by abuse of position by occupying his position as a director of boohoo, dishonestly abusing that position and intending to make a gain for himself by abusing that position”.
Finally, it claimed a potential violation of the Theft Act 1968: “Dishonestly appropriating property belonging to boohoo with the intention of permanently depriving boohoo of it.”
Frasers also called for boohoo to “preserve all information and documents in its possession, including email and other electronic documents, that potentially relate to the matters described in this letter.
“Failing to preserve potentially relevant documents could have serious consequences for boohoo and the relevant individuals, including the incurrence of criminal liability for attempting to conceal information from law enforcement.”
BusinessCloud has contacted boohoo’s parent company Debenhams Group for comment.
We reported last week how pressure is growing on boohoo’s owners to publish its full-year results. The beleaguered online retailer’s share price dropped fter a downgrade by Deutsche Bank over concerns about the lack of financial visibility at the company.
Earlier this year a bid by the company to rebrand the corporate name of the listed holding firm to Debenhams Group PLC was narrowly defeated by shareholders, led by Frasers.
It was the latest move in a long-running feud between Mahmud Kamani and Frasers boss Ashley, which came to a head in January when the latter failed to have Kamani removed as a director of boohoo.
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