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It’s not very often that you get to embarrass Her Majesty but the billionaire brothers behind a surprise takeover grab of Asda are doing a pretty good job of it.
Just days after they became CBEs, Deloitte has quit as auditor of EG Group, the petrol stations giant assembled by Mohsin and Zuber Issa, reportedly because of governance concerns.
Despite being chosen as the preferred joint bidder for Britain’s third biggest supermarket, the pair are yet to speak about it - so now may be a good time for them to break their silence.
It surely doesn’t need pointing out that this is not a good look for two people that have just been recognised by the head of state for “services to business and charity”.
If you were being really cynical you would say that while this could be damaging for the Issas, it is fantastic publicity for one of the big accountancy firms. Auditors have failed miserably to reverse the long-running narrative that they should be more proactive on controls and governance.
What better way to fight back than sacking a high profile client on the basis that they fall short of normal corporate governance standards? How principled is that? Especially when EG Group has said that “there have been no disagreements on any auditing or accounting matters”.
Yet, none of this changes what a public relations disaster it is for two entrepreneurs seeking to take control of a major household name like Asda.
The Issas have rightly captured the public’s imagination. Here are the sons of poor Asian migrants, who had started off with just a single petrol station in the North West, poised to buy a retail giant.
Unfortunately for them, however, a preference for privacy invites accusations of secrecy, which in turn only serve to encourage more scrutiny than if they had shown a little more willingness to step out into the open.
This now finds them facing avoidable questions about the amount of debt that has been used to build their sprawling empire, as well as their tax affairs, and now, thanks to Deloitte, corporate governance and internal controls.
Deloitte’s decision to resign “with immediate effect” raises additional questions about what discussions took place before standing down. Presumably the company either declined to address the concerns of its auditor, or at least wasn’t able to do so to Deloitte’s satisfaction, otherwise the accountant would have stuck around for the next exciting chapter of their empire-building.
Up until this point, the Issa brothers looked like a shoe-in to buy Asda. Yet it seems unthinkable that the Competition and Markets Authority won’t be taking a proper look at the deal.
Having blocked Sainsbury’s from merging with its big rival, partly on the basis that the pair would have owned too many petrol stations, EG’s position as one of the biggest owners of forecourts in the world surely raises issues, even if Asda’s petrol pumps will technically be held in a separate structure.
But even if the brothers can find a way to placate the regulator on that front, they are now facing a series of other difficult questions that they seem reticent to answer.
For a while, the secrecy behind the siblings added to their mystique. But there is now a danger that people will think they have something to hide.
Marston’s has no reason to call time
If you remain unconvinced that the Government has it in for pubs, consider this little snippet: the Chancellor has reduced grants for pubs stranded in tier 3 lockdown areas to a third of what they were in the March lockdown.
With the harshest level of restrictions exclusively affecting areas in the North West, it makes a mockery of the so-called levelling up agenda. The industry is reeling from the introduction of tighter measures such as the 10pm curfew and table service only, having only just got back on its feet after lockdown.
Still, one wonders if Marston’s isn’t jumping the gun somewhat with plans for more than 2,000 job cuts.
Sure, trading has suffered if you look at it over the entire financial year to the beginning of October. Turnover sank nearly a third to £821m, but the crucial period to look at is the last 13 weeks since reopening. Over that timeframe, sales are down just 10pc, and as the company points out, its finances remain relatively strong.
There’s £160m of borrowings still untapped, and £230m to come from a forthcoming tie-up with Carlsberg so can’t it ride out the storm for longer before calling time on so many jobs?
At least we’re sitting comfortably
Lockdown has ushered in many changes, not least to our homes. We’ve been going crazy for soft furnishings, according to Dunelm, and the latest fridges and freezers, says AO World. An Englishman’s home is no longer his castle, it’s been transformed into a palace.