What is going on at Boohoo? Espionage claims arise as boardroom battle continues

The past few months have been turbulent for Boohoo, to say the least. Yet, last week, things seemed to come to a head when claims of espionage arose at the fast fashion giant.

According to a report by The Times, three current and former executives of Boohoo are believed to be the victims of stalking and surveillance. The alleged espionage is said to have been committed against Boohoo’s co-founder and executive chair Mahmud Kamani, chief executive Dan Finley and former CEO, John Lyttle.

The allegations were brought to light after the company informed the Information Commissioner’s Office (IOC) of a related incident taking place outside of its Manchester headquarters. The report was confirmed by the IOC in a statement to the press, which read: “We can confirm that Boohoo Group has made us aware of concerns regarding the discovery of surveillance equipment outside its head office.”

In a more recent update, the Times has now reported that police in Manchester and Kent are investigating the claims, with Greater Manchester Police stating to the media outlet that it was looking into allegations “involving serious distress”. No arrests have been made, so far.

Kent Police, meanwhile, said it was “investigating reported stalking offences including at locations within the Sevenoaks area". It added: "Enquiries are ongoing and there have been no arrests."

Frasers ‘intent on disrupting Boohoo’s Business Review’

The news comes amidst a separate ongoing boardroom battle between Boohoo and its majority shareholder, Frasers Group, which has been pursuing a takeover of the company since Boohoo launched a review of the business in mid-October. It was after this that Lyttle stepped down from the helm position, with Finley named his successor in the weeks that followed.

From the outset, however, Frasers expressed its disapproval over the move, instead calling on its own founder, Mike Ashley, to be appointed Boohoo’s new CEO, a request Boohoo ultimately denied. Since then, the duo have made a series of public comments towards the other; Boohoo slamming Frasers for acting in its “own commercial self-interest”, while Frasers has continued to criticise the “leadership crisis” at its industry peer.

In the saga’s most recent development, Boohoo has now also noted a voting recommendation from Institutional Shareholder Services (ISS), an independent proxy advisor, that has urged shareholders to vote against resolutions to be presented at an upcoming General Meeting, which Frasers requisitioned earlier in November. Next to Ashley’s proposed appointment, the group has also requested that restructuring expert Mike Lennon be named a director.

According to the ISS and Boohoo’s subsequent regulatory filing, Frasers has “offered a superficial view of performance and no specific plans for changes”, with both Ashley and Lennon also believed to have “real conflicts of interest”, leading to the conclusion that board change at Boohoo is “not warranted”.

Boohoo said the recommendation aligned with its previously stated reasons for investor confidence, including its “credible plan to unlock and maximise value”. It further stated that Frasers appeared “intent on disrupting Boohoo’s Business Review, destabilising the company”, while Boohoo itself was “not deliberately seeking confrontation with Frasers”.

In a statement, Boohoo CEO, Dan Finley, said: "I believe that the group is fundamentally undervalued. There is no doubt that there is enormous opportunity for the group and I am determined to get back to being a disruptive and industry leading business. Working with Tim [Morris], our independent non-executive chairman, overseen by our independent board, I am fully focused on creating maximum value for, and protecting the interests of, all shareholders."

In response to Boohoo and ISS' statement, a spokesperson for Frasers told FashionUnited: “The ISS opinion pre-dates the statements from Mr. Ashley yesterday. Mr. Ashley set out clearly in his letter of 8 December his determination to work on behalf of all boohoo shareholders and support Dan Finley to deliver on the opportunities to turn around the fortunes of the group and restore shareholder value. He has been very clear he would not want Debenhams sold or any fire sale of assets and has put on record his commitment to transparency and shareholder consultation, something badly missing under the current board. To achieve this, Boohoo shareholders must vote for the resolutions on 20 December.”

This article was updated 13:55 CET, December 9, to include a statement from Frasers Group provided to FashionUnited.