Following its acquisition of the Studio Retail Group (SRG), Frasers Group has criticised the handling of the retailer's collapse, outlining key concerns in a statement that also called for a review of the UK corporate governance regime.
The group, which has also been struck by past failures involving Debenhams and Goals, said, as a significant shareholder, it had long attempted to push a strategic review of SRG, indicating to management a number of concerns surrounding different areas of the business.
In the statement, made through the London Stock Exchange, the group said: “SRG is another example of a business which has buried its head in the sand whilst the world around it changed. Furthermore, it is clear that the fundamentals of its business were, at best inadequately scrutinised by its board and/or advisors to the business, or at worst, deliberately concealed as the business entered its death spiral.”
It additionally noted that the company’s appeal for a 25 million dollar loan was a “gross underestimation” of the scale of its issues.
A call for corporate business reform
Frasers also criticised UK corporate governance, stating that the scheme was “clearly unfit for purpose” as it allowed the sudden, unaccountable failure of businesses.
It added: “In the opinion of Frasers, if the regulation of business is to have any purpose at all it should be ensuring that businesses and jobs do not simply disappear overnight, damaging lives, eroding shareholder value and tarnishing the reputation of the UK business system as a whole.”
It believes that, what it considers to be “systematic governance failures”, should be an urgent priority of the UK government, asking it to increase meaningful regulation, such as the implementation of investigations into the collapse of all listed businesses.
The company also suggested the introduction of fines and criminal penalties on individuals found to be involved in the contribution to a company’s failure.