The DIY boss and the private network he assembled himself

Henry Sweetbaum, the ex-chief of Wickes, was involved in a chain of potentially conflicting interests

Evidence has emerged of potential conflicts of interest faced by Henry Sweetbaum during his time as chief executive and chairman of Wickes, through a network of interests outside the troubled DIY stores group.

Mr Sweetbaum is a director and major shareholder in a travel business, Statesman Travel, which provided Wickes with group travel and accommodation arrangements for senior management.

In a prepared statement, Mr Sweetbaum, through his secretary, said: "The relationship between Statesman Travel and Wickes was a normal arm's length trading relationship, fully disclosed to the board and the auditors of Wickes, and the board resolved the relationship was immaterial, and did not require disclosure."

Wickes owns a number of overseas businesses so group travel would not have been insignificant. Statesman Travel, for example, booked all the flights for overseas non-executive directors who attended an emergency board meeting on 26 June to discuss its accounting problems. The travel operator also booked a number of directors into London's Dorchester Hotel.

Under Schedule 6 of the Companies Act, a company should disclose any transactions where a director has an interest, if the board believes it to be material. The question of materiality, however, should be based on whether the board believes shareholders would see it as material - and not solely on how material the contract may be to the company, or to the director. One company lawyer says: "In the best spirit of the Act, and the Cadbury Code, investors would expect to have this information revealed in a note to the accounts." Another investor echoed this sentiment. "It's only when things go wrong that this sort of information leaks out. We would have preferred to have known about it," he says.

On 31 March, 1995, Mr Sweetbaum owned 40,800 shares in the travel company. The other two main board directors, Richard Boddie and Donald Cleary, between them owned 21,852 shares. Huntingdon Securities - another vehicle of Mr Sweetbaum - owned 32,334 shares, while a Panamanian shareholder, Oxford Corporation, owned 4,357.

Statesman Travel is a successful, established travel operator. Most of its work - 95 per cent, according to Barry Walker, sales manager at its Frith Street branch in Soho - is for business accounts. Despite this, profits at the company are relatively low. In the last accounts filed by the company, sales of pounds 12.25m translated into a pre-tax profit of pounds 21,586. Wickes refused to comment on the arrangement, including the budget allocated to Statesman.

In addition, Statesman Accounting, controlled by the directors of the travel firm, provided the latter with accounting and administrative services, for the sum of pounds 227,331.

During his time at Wickes, Mr Sweetbaum has also been paid some of his remuneration through HASS Corporation, a US registered company. Mr Sweetbaum has retained his US nationality since he took over at Wickes in 1983.

Payment through HASS (Henry Alan Sweetbaum Services), would have provided him with an efficient way to minimise his tax bills, in the UK and the US. HASS, says a representative for Mr Sweetbaum, was used only for payment of work carried out overseas by Mr Sweetbaum. Otherwise, his remuneration for work in the UK was paid directly to him, he says. A brief mention of HASS's existence came in the listing circular of 1987, at the time of Wickes's stock market flotation. It states that HASS would be paid an annual fee of pounds 40,000 a year, plus a discretionary bonus, by Wickes BV and Wickes NV - the company's Dutch and Belgian subsidiaries.

However, HASS crops up elsewhere, as the owner of Huntingdon Securities. Huntingdon bills itself as an "investment and financial consultancy". It adds that associated undertakings have carried on the business of travel agents. It is unclear what role Huntingdon serves in Mr Sweetbaum's private interests.

Mr Sweetbaum became a director of Statesman Travel in 1975, where he joined chartered accountant Richard Boddie. The two have a well-established business relationship. As well as serving on the board of Statesman, the two share directorships of Huntingdon Securities, and Rutland Securities - another Sweetbaum vehicle. Mr Boddie is also a director of Arlington Enterprises, the business of Anne Sweetbaum, Mr Sweetbaum's wife. His son, Barry, has also become a director of Statesman.

The arrangements Mr Sweetbaum had between his private interests and the quoted company he served call into question the commitment of the company at the time to the Cadbury Code on corporate governance. The 1995 report and accounts states: "For many years, the Board ... has conducted the company's affairs in accordance with the principles expressed in the Cadbury Committee." It emphasises that the compensation committee, which sets boardroom pay, consists entirely of non-executives. However, of the three non-executives who run this committee, one of them, Mr Sanford Sigoloff, aged 65, worked with Mr Sweetbaum when Wickes was a US business. Another non-executive, Mr Sanford (sic) Kaplan, aged 79, also lives in Los Angeles, making regular, direct contact with the business harder to maintain. Peter Humphries, aged 75, the only British national on the compensation committee, is a former partner of Ernst & Young, auditors to Statesman Travel.

Mr Sweetbaum's pay package in 1995 was pounds 1.2m, of which only pounds 296,000 was basic salary. Some pounds 750,000 came from a longer-term incentive scheme, linked to the rise in share price. The final sum was topped up by various benefits and incentive schemes.

Mr Sweetbaum was co-founder, with Saul Steinberg, of Leasco - the computer leasing company that later became notorious when Steinberg sold it to Robert Maxwell, and it became the subject of a DTI investigation after it then went bust.

In 1982, he was called in to save the non-US parts of Wickes. It was eventually floated in 1987 on the Stock Exchange. But Wickes has had a chequered career as a listed firm. In 1988, it bought Hunter Timber from Hillsdown Holdings, but had to sell it for just pounds 45m last year, forcing it to write off pounds 186m.

Managers planning

buy-out

Managers at Wickes are contemplating a management buy-out of the UK business. A source close to the company says a group of senior managers are trying to gather the backing to purchase the UK retail operations from the company.

Shares in the group were suspended after accounting irregularities were uncovered in June. It is believed that up to pounds 30m of profits, reaching back at least to 1993, may have been distorted by the practice of booking the profit in the year one, whereas the money was to have been paid over two to three years.

The news will fuel speculation that a full-scale bid, or break-up of the group, is the most likely outcome of its present woes.

Michael Corner, a Wickes director, who is in charge of group operations, is understood to be leading the MBO efforts. Other senior managers who are believed to have a close involve- ment include Terry Carson, finance director of Wickes Building Supplies, and Richard Bird, the acting trading director.

Arkadi Bykhovsky, a former board director, who ran the Hunter Timber subsidiary, has also expressed interest in a new role at the business.

The news of the MBO will concern shareholders, however, who have seen the value of their investment fall 41p, before the shares were suspended at 69p a month ago. Institutional shareholders would want to be sure that any deal was in their best interests, and that the core business would be sold off at a fair price.

However, an MBO may prove a long shot. The on-going investigation into supplier discounts, by Price Waterhouse, and Linklaters & Paines, would deter investors, analysts say. One shareholder predicted a trade sale as a more likely outcome. "You can do a lot with capital structures in these situations, but with up to pounds 30m in doubt, I think they'll find it hard," he says. Kingfisher - through B&Q - and RMC are the two leading bid contenders.

Start your day with The Independent, sign up for daily news emails
Sport
sportSo, how closely were you paying attention during 2014?
Arts and Entertainment
Dennis speaks to his French teacher
tvThe Boy in the Dress, TV review
News
One father who couldn't get One Direction tickets for his daughters phoned in a fake bomb threat and served eight months in a federal prison
people... (and one very unlucky giraffe)
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
film
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
i100
Arts and Entertainment
The Plaza Theatre in Atlanta, Georgia was one of the 300 US cinemas screening
filmTim Walker settles down to watch the controversial gross-out satire
Arts and Entertainment
Amy Adams and Christoph Waltz in Tim Burton's Big Eyes
film reviewThis is Tim Burton’s most intimate and subtle film for a decade
Life and Style
Mark's crab tarts are just the right size
food + drinkMark Hix cooks up some snacks that pack a punch
Arts and Entertainment
Jack O'Connell stars as Louis Zamperini in Angelina Jolie's Unbroken
film review... even if Jack O'Connell is excellent
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

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

Day In a Page

Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

Aren’t you glad you didn’t say that?

The worst wince-and-look-away quotes of the year
Hollande's vanity project is on a high-speed track to the middle of nowhere

Vanity project on a high-speed track to nowhere

France’s TGV network has become mired in controversy
Sports Quiz of the Year

Sports Quiz of the Year

So, how closely were you paying attention during 2014?
Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

From Armstrong and Miller to Pointless
Sanchez helps Gunners hold on after Giroud's moment of madness

Sanchez helps Gunners hold on

Olivier Giroud's moment of madness nearly costs them
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect