Sports Direct has been slammed by the Church of England over its ‘Victorian’ treatment of factory workers and working conditions, it can be revealed.
The Church Commissioners – which manage the Church’s £7.9 billion investment fund – criticised Mike Ashley’s sportswear giant amid a string of controversies.
In a series of letters delivered to the company, the Church is thought to have chastised the firm on issues including huge bonuses and executive pay.
The correspondence came at a time when Sports Direct was dealing with serious operational, governance and risk oversight problems.
Sports Direct (owned by Mike Ashley, pictured) has been slammed by the Church of England over its ‘Victorian’ treatment of factory workers and working conditions, it can be revealed
These included what unions described as ‘Victorian’ working conditions at the chain’s Shirebrook factory in Derbyshire, and the retention of Keith Hellawell as chairman against the wishes of key shareholders.
The retailer also admitted to paying warehouse workers below the national minimum wage in 2016.
Mr Ashley, who also owns Newcastle United Football Club, was hauled before MPs to answer questions on the controversies.
Shortly after, Sports Direct ordered in-house law firm RPC to carry out a review of the failings.
The Church’s investment arm, which has a minority holding in Sports Direct, made its disapproval clear at the group’s AGM.
It voted against the re-election of both chairman Mr Hellawell and chief executive Mr Ashley in 2017, as well as the head of the remuneration committee.
MPs released a report saying Mr Ashley should be held ‘directly accountable’ for ‘appalling’ conditions akin to a ‘Victorian workhouse’ at the firm’s factory in Shirebrook (pictured)
The Church of England declined to comment.
Church Commissioners also voted against a proposed £11million back payment to Mr Ashley’s brother and former Sports Direct IT director John Ashley, which had caused consternation among investors.
The group also backed an initiative spearheaded by union Unite which called for an independent review of working practices and corporate governance.
It is understood that the Church still holds its stake in the business but continues to engage over key areas of concern.
The intervention by the Church Commissioners falls in line with its responsible investment policy, which sees its engagement team work with firms on environmental, social and governance issues.
The revelations come at a difficult time for Mr Ashley, whose retail empire saw profits plunge 67.3 per cent to £45.8 million in the first half of the year.
In a series of letters delivered to the company, the Church raised questions about the retention of Keith Hellawell (pictued) as chairman against the wishes of key shareholders
Among the other controversies the tycoon has been involved in includes a slapstick legal battle that took place last year between the billionaire and a former confidant, the investment banker Jeffrey Blue.
While Mr Ashley emerged victorious, lurid details in the case – which included the Sports Direct chief apparently vomiting into a fireplace after an alcohol-fuelled management meeting – have done little to enhance the businessman’s reputation.
The Church Investors Group has also warned recently that it will toughen its stance regarding the lack of women on company boards.
There are no women on the board of Sports Direct.
A spokesman for Sports Direct said: ‘The board received backing from a majority of independent shareholders at the AGM in September 2017, at which many of these historic issues were addressed.
‘We note that under its 2018 voting policy the Church will not back members of nomination committees where less than 25 per cent of the board are women.
‘We recognise the value and need for female representation on the board, and we are taking steps to address this.
‘We recently disclosed to the Hampton-Alexander review that women make up 35.1 per cent of our senior executive team, which is ahead of target and compares with the Church of England, where we understand that around 10 per cent of bishops are female.’
‘Appalling’ conditions at factory were akin to ‘Victorian workhouse’
Drugs paraphernalia, including a crack pipe and dirty needles, were said to have been uncovered at the firm’s headquarters in Shirebrook, Derbyshire, during an investigation in 2016.
It was claimed that employees have been seen taking Class A cocaine, as well as cannabis and amphetamines.
There have been 23 drink and drugs breaches since 2012 – leading to police being called five times – a probe claimed.
Mike Ashley is pictured at the company’s notorious warehouse in Shirebrook
Labour MP John Mann called for the headquarters to close, adding: ‘I have no confidence they can turn it around.’
Earlier that year, MPs released a damming report saying Mr Ashley should be held ‘directly accountable’ for ‘appalling’ working conditions akin to a ‘Victorian workhouse’.
MPs on the committee investigated the working practices endured by around 3,000 workers at the Shirebrook HQ.
Most of them were on controversial zero hours contracts which do not guarantee a minimum number of hours’ work.
Giving evidence to the committee, theowner admitted for the first time that workers were effectively being paid below the legal minimum wage.
This was because they faced lengthy queues to be stopped and searched before they went home.
This meant that they were paid an effective rate of about £6.50 an hour, as opposed to the then statutory rate of £6.70.
Drugs paraphernalia, including a crack pipe and dirty needles, were said to have been uncovered at the firm’s headquarters in Shirebrook
Managers also imposed a ruthless ‘six strikes and you’re out policy’ with staff penalised for taking a short break to drink water and for taking time off work when ill.
Staff were also docked 15 minutes pay if they were one minute late for work.
There were 110 ambulances called out to the Shirebrook warehouse between January 1 2010 and April 19 2016, with 50 cases classified as life-threatening, including chest pain, fitting and strokes.
There were also 115 injuries over this period, including an amputation of a finger, a fracture neck and a crushed hand.
One trade union boss likened the conditions to a Soviet ‘gulag’.