'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.

News
The Banksy image in Folkestone before it was vandalised
people
Life and Style
tech

Sales of the tablet are set to fall again, say analysts

Sport
football West Brom vs Man Utd match report: Blind grabs point, but away form a problem for Van Gaal
Arts and Entertainment
Gotham is coming to UK shores this autumn
tvGotham, episode 2, review
PROMOTED VIDEO
News
i100
Arts and Entertainment
Bloom Time: Mira Sorvino
tvMira Sorvino on leaving movie roles for 'The Intruders'
News
First woman: Valentina Tereshkova
peopleNASA guinea pig Kate Greene thinks it might fly
News
Brian Harvey turned up at Downing Street today demanding to speak to the Prime Minister
news

Met Police confirm there was a 'minor disturbance' and that no-one was arrested

Arts and Entertainment
George Lucas poses with a group of Star Wars-inspired Disney characters at Disney's Hollywood Studios in 2010
films

George Lucas criticises the major Hollywood film studios

Voices
Chris Grayling, Justice Secretary: 'There are pressures which we are facing but there is not a crisis'
voices

Does Chris Grayling realise what a vague concept he is dealing with?

News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
A street vendor in Mexico City sells Dorilocos, which are topped with carrot, jimaca, cucumber, peanuts, pork rinds, spices and hot sauce
food + drink

Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets

Life and Style
The charity Sands reports that 11 babies are stillborn everyday in the UK
lifeEleven babies are stillborn every day in the UK, yet no one speaks about this silent tragedy
News
Blackpool is expected to become one of the first places to introduce the Government’s controversial new Public Space Protection Orders (PSPOs)
news

Parties threaten resort's image as a family destination

Life and Style
Northern soul mecca the Wigan Casino
fashionGone are the punks, casuals, new romantics, ravers, skaters, crusties. Now all kids look the same
Life and Style
gaming

I Am Bread could actually be a challenging and nuanced title

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

Customer Service Executive / Inbound Customer Service Agent

£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...

ASP.NET Web Developer / .NET Developer

£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....

Operational Risk Manager - Asset Management

£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...

Project Coordinator - 12 month contract

£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...

Day In a Page

Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Salisbury ranked seventh in world’s best tourist cities

The city is home to one of the four surviving copies of the Magna Carta, along with the world’s oldest mechanical clock
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are
Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album