Directors of Gateway and its parent, Isosceles, are furious that Mr Monaghan changed his mind after he had signed a letter of acceptance agreeing to work for Gateway.
Archie Norman, chief executive of Asda, insisted that Mr Monaghan, a former colleague when Mr Norman was finance director of Kingfisher, had not technically signed a contract with Gateway.
A Gateway spokesman said: 'That Mr Monaghan has now decided to join Asda despite having signed an agreement with Gateway indicates to us that he would not be an appropriate senior manager for Gateway.'
Mr Monaghan, who is currently operations director at B&Q, is to join Asda as retail director and will become a main board director. He will succeed Richard Harker, who resigned earlier this week.
Mr Norman, who joined Asda from Kingfisher in December, had earlier agreed with Geoff Mulcahy, chairman of Kingfisher, which owns B&Q, that he would not poach Kingfisher staff.
He therefore could not approach Mr Monaghan until he discovered he was planning to move in any case.
Gateway has decided against taking legal action.
Mr Monaghan, who has previously worked at Marks & Spencer and J Sainsbury, was unavailable for comment.Reuse content