Ex-accounting watchdog head to join Frasers board in corporate governance push

Frasers Group has appointed four new board members including Sir Jon Thompson, the former head of the UK’s accounting regulator, which engaged in a bitter legal battle with the retailer during his tenure. 

The FTSE 100 group said on Monday that it intended for Thompson, now chair of the HS2 high speed rail project, to join its board “later in the year, when his current commitments allow”. 

The appointment comes less than a year after the accounting regulator, the Financial Reporting Council, closed an investigation into the financial statements of Sports Direct International, later renamed Frasers Group, for the 12 months to April 2016. 

Thompson, former head of HMRC, became FRC chief executive in 2019 and left in July 2023, just months after the investigation was closed. 

His appointment by Frasers raised eyebrows in the City of London, where the retailer was reportedly labelled “an embarrassment to UK corporate governance” by investor advisory group PIRC in 2019 following delays to its financial results and the disclosure of a potential €674mn tax bill. The latter was ultimately settled for an “immaterial amount”, according to the company’s 2020 annual report.

Frasers also faced difficulty finding a suitable audit firm after Grant Thornton resigned in 2019. Mid-tier firm RSM eventually took the role, averting concerns that the government might need to appoint an auditor directly. 

A senior audit partner at one large accounting firm said Frasers had “bought themselves credibility by hiring the ex-sheriff”.

“It makes sense for them but not him — he would have lots of opportunities,” the person said, but queried “how does it tie to his agenda of improving reporting and transparency?”

Frasers declined to comment.

During Thompson’s tenure, Sports Direct successfully blocked the watchdog from accessing some documents that the retailer argued were legally privileged, following a Court of Appeal case. The FRC had demanded the material as part of an investigation into Grant Thornton over its auditing of Sports Direct.

The FRC launched investigations in 2016 into both Grant Thornton and Sports Direct International’s own preparation of its accounts after reports that the retailer had not disclosed a related party arrangement with a company run by the brother of Sports Direct founder Mike Ashley. 

Grant Thornton was fined £1.3mn for “serious failings” in its auditing. The investigation into the preparation of the accounts by Sports Direct was closed last year without further action.

Ashley, who owns more than 70 per cent of the company, handed the reins to his son-in-law Michael Murray in 2022, who has been seeking to bolster its corporate governance and “elevate” its brands. On Monday, Murray praised Thompson’s “expertise in corporate governance and major project management”. 

Frasers also said Helen Wright, global chief executive of luxury brand Sergio Rossi, has joined as a non-executive director. Frasers’ chief operating officer David Al-Mudallal and Ger Wright, a managing director, will join the board as executive directors. 

Chair David Daly said: “Much has changed at Frasers over recent years and today is another significant milestone in our transformation as we welcome new high-calibre individuals to the board.”

HS2 said Thompson was not standing down from the project but his current responsibilities as executive chair would ease with the planned appointment of a chief executive later this year. 

Thompson did not immediately respond to requests for comment made via Frasers and HS2.