Best Buy's founder Richard Schulze quits over CEO Brian Dunn's secret affair

The founder of Best Buy, the biggest electronics retailer on the American high street, lost his job last night after it was revealed that he had kept secret the fact that his chief executive was having "an extremely close personal relationship" with a female employee.

Richard Schulze quit as chairman a month after the chief executive, Brian Dunn, also quit for violations of the company's ethics policy.

Mr Schulze said in a statement released by the company: "In December, when the conduct of our then-CEO was brought to my attention, I confronted him with the allegations (which he denied), told him his conduct was totally unacceptable and contrary to Best Buy's policies and everything I, and the company, stand for." However, he did not bring it to the attention of the board. "I understand and accept the findings of the audit committee," he said.

Mr Dunn, who left the company on 10 April, will receive a severance payment of $2.85m.

He will also get his previously earned bonus of $1.14m for 2012, and previously awarded shares valued at $2.54m.

Mr Schulze will become chairman emeritus, an honorary position, and serve out his term as director until June 2013, the company said.

Until a few years ago, America's largest consumer electronics retailer was the place to go for TVs, cameras and gadgets. But the chain has suffered in the economic downturn and is widely criticised for not being quick to respond to growing competition and changing shopping habits.

A short-lived joint venture with Carphone Warehouse, which saw 11 Best Buy stores open in the UK, ended last year following losses of at least £83m.