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£14tr Investor Body To‎ Mount Attack On Ashley's Sports Direct

A powerful City group whose members manage assets worth a staggering £14 trillion‎ will on Thursday take the unprecedented step of publicly criticising corporate governance and working practices at Sports Direct International (Other OTC: SDIPF - news) .

Sky News has learnt that the Investor Forum, which was set up in 2013 following a review instigated by Sir Vince Cable, will make its first-ever statement following protracted efforts to engage with the high street chain's independent directors.

The Investor Forum's intervention will signal a ‎major escalation of hostilities between the City and the company led by controversial tycoon Mike Ashley.

Sources said the ‎Forum would express bitter disappointment that Sports Direct had failed to act on repeated warnings about investors' concerns, and would urge shareholders to consider carefully whether to support a board which had failed to deliver meaningful reform.

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Sports Direct is due to hold its annual general meeting on September 7 , with many City institutions ‎saying they will oppose the re-election of several board members.

Legal & General Investment Management, the single-biggest investor‎ in blue-chip UK companies, has voted against the company's chairman, Keith Hellawell, for the last two years, with a larger revolt next month now inevitable.

The intensifying row ‎follows months of damaging revelations about Sports Direct, including the disclosure that it was effectively paying many workers below the minimum wage, with MPs (BSE: MPSLTD.BO - news) who investigated the company accusing it of being run like a "Victorian workhouse".

Sports Direct said last week‎ that RPC (NYSE: RES - news) , a law firm, would conclude a report on working practices at the company ahead of the AGM.

Its claim that the project was independent was greeted sceptically by investors because RPC undertakes other work for the retailer.

Shareholders will vote on a resolution tabled by a group of trade union‎s demanding an audit of Sports Direct's "human capital management", which many City investors are likely to support.

Mr Ashley, who owns 55% of the company after floating it on the stock market in 2007, has also faced intense criticism over key business relationships Sports Direct with his relatives and friends.

The Financial Times reported on Monday that a company owned by Mr Ashley's brother is involved in distributing products sold by Sports Direct, while his daughter's boyfriend has been put in charge of its vast property portfolio.

"The City has had enough of the way this company is run," one‎ institutional investor said on Wednesday.

"The Forum's decision to speak out has not been taken lightly, and ‎is hugely significant."

The Investor Forum's board members include the chairman of Marks & Spencer (Frankfurt: 534418 - news) and representatives of institutions including The Wellcome Trust‎ and Capital Group, which employs the husband of Theresa May, the Prime Minister.

Th‎e group is said to have engaged with approximately ten major companies since it was established but it has never been motivated to make a public statement until now.

Mr Ashley cut an occasionally contrite figure when he appeared before MPs in June, but City investors are furious that he has done so little to overhaul the running of the company despite the fact that its shares have fallen by 59% over the last year.

Sports Direct now has a market value of just £1.82bn.

Under new rules, companies with controlling shareholders must win the support of a majority of independent investors in order for resolutions to be approved.

However, even if Sports Direct did see non-executive directors opposed by minority shareholders, the company could hold another meeting three months later at which Mr Ashley could vote his shares in favour of their re-election.

The company announced late on Wednesday that it was inviting members of the public to its Shirebrook headquarters on the day of its AGM in order to "enable the board to engage with as many people as possible in an open discussion about the business".

A Sport‎s Direct spokesman could not be reached for comment, while the Investor Forum declined to comment.