'Dirty tricks' at Wickes

Internal inquiry looks at Sweetbaum's management

e

Wicks, th troubld DIY rtailr, ran a "dirty tricks" campaign against a comptitor which wnt out of businss last yar laving crditors mor than pounds 4m out of pockt.

Th campaign, cod-namd "Opration Scrwdrivr", was st up undr formr chairman and chif xcutiv Hnry Swtbaum, who rsignd in Jun aftr th discovry of accounting irrgularitis ovr rbats from supplirs.

It cam as Mr Swtbaum sidlind opposition to his incrasingly autocratic rul ovr two yars bfor th problms cam to a had. "Popl fard him and wr marginalisd if thy disagrd with him," a formr snior xcutiv said.

Mr Swtbaum's managmnt rol is now a ky part of an invstigation by City lawyrs Linklatrs & Pain and accountants Pric Watrhous.

Th shars wr suspndd at 69p at th nd of Jun, pnding th outcom of th rviw into ovrstatd profits, which may add up to mor than pounds 50m in 1994 and 1995. It may b Octobr bfor shars rsum trading.

Mr Swtbaum aimd to mak Wicks th "McDonalds of DIY", rolling out its cut-pric, own-brand format around th world.

Only in April th shars stood at a 141p high. Mr Swtbaum, now 59, plannd a sal bfor his rtirmnt in Novmbr nxt yar. His targt pric, said to hav bn 250p pr shar, would hav valud th group at pounds 950m.

Institutions ar pushing for a full board clar-out and s a sal as th most likly outcom, with approachs alrady from RMC, Kingfishr's B&Q, Boots' Do-It-All and ovrsas.

Th problms rlat to fals accounting for supplir rbats - pounds 30m in 1994 and around pounds 55m in1995 - which wr bookd immdiatly to profits rathr than sprad ovr two or thr yars.

Th practic boostd profits, Wicks' shar pric and bonuss. Mr Swtbaum was paid pounds 1.2m last yar, including an pounds 890,000 bonus, which h has facd calls from invstors to rpay.

His privat firm Statsman Travl also profitd from around pounds 200,000 of travl businss a yar from Wicks, which was nvr disclosd in th accounts.

Wicks says "in principl" Mr Swtbaum is still owd pounds 1.2m in bonuss undr its long-trm incntiv schm, paymnt of which would infuriat institutions.

Two snior xcutivs, group trading dirctor Ls Rosnthal and UK commrcial dirctor Chris Mils, hav bn suspndd so far aftr discovry of two paralll sts of documnts from supplirs.

Th scond st confirmd to th financ dpartmnt and auditors that rbats rlatd to a singl yar, whn in fact thy wr linkd to sals targts ovr two or thr yars.

Linklatrs ar currntly xamining allgations of fraud and mislading of th auditors, a Companis Act offnc that carris up to two yars in jail.

Thy will also rviw whthr th group, or its dirctors, mad mislading statmnts and cratd a fals markt in Wicks shars. That carris a maximum svn-yar sntnc undr th 1986 Financial Srvics Act.

"Linklatrs hav th widst scop to find out what th hll happnd," a Wicks spoksman said. "Whthr Hnry Swtbaum knw is cntral to th inquiry." H said no such vidnc had yt mrgd.

Mr Swtbaum is on holiday in th US and dclind to commnt, as did Mr Rosnthal.

Wicks' problms stm from an aggrssiv pric-cutting stratgy from th nd of 1993, aimd at lifting sals and profits in th dprssd DIY markt.

Undr th cod-nams "Hammr" and "Sldghammr", it appard to work, lifting sals at Wicks Building Supplis (WBS), th UK rtail subsidiary, to pounds 400m last yar from pounds 309m in 1994 and pounds 230m in 1993.

In th procss, Wicks jumpd ahad of Do-It-All to third plac in th DIY markt, bhind B&Q and Sainsbury's Hombas/Txas Homcar. On th fac of it WBS's oprating profits ros to mor than pounds 30m for th first tim last yar, against pounds 28m and pounds 24m prviously.

Wicks staff paint a pictur of managmnt chaos causd by Mr Swtbaum's dabbling in all aspcts of th businss.

That startd, sourcs say, whn formr WBS managing dirctor Bill McGrath lft aftr a disput at th nd of 1993. Mr Swtbaum thn bcam both chairman and chif xcutiv.

It acclratd with th sidlining of his succssor, John Grry, who was shuntd into a nw rol as group stratgy dirctor in August, 1994 and lft last Sptmbr.

Mr Swtbaum's styl of on-to-on mtings with rmaining ky prsonnl undrmind rporting structurs, sourcs say.

Excutivs rporting dirctly includd Mr Rosnthal and proprty and administration dirctor Michal Cornr, 46, a barristr and long-tim Swtbaum associat, who has sinc bn trying to put togthr a managmnt buyout.

Opration Scrwdrivr, Wicks confirmd, startd arly in 1995 to targt U-Build, a lookalik businss hadd by formr Wicks managing dirctor Dick Clark.

WBS slashd prics nar U-Build's four London stors, bought from Do- It-All, at Croydon, Uxbridg, Wood Grn and Ilford. Sourcs say, job offrs wr mad to U-Build staff and prssur put on supplirs.

"It bcam an obsssion with Swtbaum to dstroy U-Build," a formr Wicks managr said.

U-Build collapsd in Jun, 1995, owing pounds 4.4m, just four months aftr opning.

Supplir rbats, manwhil, doubld to pounds 30m in 1994 - 9.9 pr cnt of sals, against 6.8 pr cnt in 1993, 4.5 pr cnt in 1992 and just 2.7 pr cnt in 1992.

Wicks managmnt accounts, howvr, show a pattrn of mor dramatic riss just bfor th yar nd. In th fourth quartrs of 1993 and 1994, rbats lapt to 11.2 and 17.9 pr cnt rspctivly. In Dcmbr, 1994 thy rachd 22.1 pr cnt.

Th spiral continud in 1995. Undr incrasing profit prssur from Mr Swtbaum, sourcs say, budgtd rbats lapt from pounds 30m at th start of th yar to mor than pounds 40m just bfor th annual mting in April.

Thn, Mr Swtbaum gav a rosy viw of Wicks' UK prospcts for th yar.

By th nd of th yar, thy rachd som pounds 55m - 80 pr cnt ahad of th original budgt and way ahad of sals growth.

With sals not making up for pric cuts, rbats wr driving WBS profits rathr than th grand, but flawd, stratgy, Wicks sourcs say.

Thir shr scal ld to invstigations by nw financ dirctor Stuart Stradling, who joind last August from Warburg aftr th dpartur of his prdcssor, Trfor Llwllyn, to Caradon.

Dspit prsistnt rumours, howvr, until th crisis brok Mr Swtbaum had assurd analysts and institutions that all th rbats had bn accountd for corrctly, statmnts that Wicks lawyrs ar now invstigating.

Mr Stradling had to thratn to rsign in May bfor Mr Swtbaum allowd him to pursu his invstigations furthr.

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor