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Deloitte quits audit of Asda buyer Issa brothers' company

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2-min read
The Issa Brothers, Zuber, right, and Mohsin. Photo: EG Group
The Issa Brothers, Zuber, right, and Mohsin. Photo: EG Group

Auditors Deloitte have stopped working with EG Group, the company owned by the billionaire brothers who are buying Asda.

The Financial Times reported on Wednesday evening that Deloitte had resigned from its auditing role at EG Group, allegedly over concerns about governance at the company. Rival KPMG has replaced Deloitte on the account.

Deloitte declined to comment. A spokesperson for EG Group confirmed that the company was no longer working with Deloitte.

Watch: Walmart agrees to sell Asda to billionaire Issa brothers

“As in previous years, Deloitte signed a clean audit for EG Group’s 2019 financial statements, and there have been no disagreements on any auditing or accounting matters,” the spokesperson told Yahoo Finance UK.

“We are pleased to be working with KPMG going forward, and remain committed to making continued progress with our internal processes, controls and governance.”

The report will increase scrutiny of the billionaire Issa brothers, who set up EG Group and recently agreed a £6.8bn ($8.8bn) deal to buy Britain’s third biggest supermarket chain Asda. Since announcing the deal, the pair have faced questions over their tax arrangements after it was revealed that Asda will be owned through a company based on the low tax island of Jersey.

LONDON, UNITED KINGDOM - 2020/10/03: Asda's famous slogan 'thats Asda Price' is displayed inside a store UK's third biggest supermarket chain Asda has been sold by its US owner Walmart.Billionaire brothers Mohsin & Zuber Issa and private equity firm TDR Capital won the bidding war in a £6.8billion deal. The Blackburn based Issa brothers own EG Group, which they built from a single petrol station in 2001 to more than 6,000 sites around the globe and an annual turnover of £20billion. It will be the first time Asda has been in British ownership for over 20 years. (Photo by Keith Mayhew/SOPA Images/LightRocket via Getty Images)
Asda's slogan 'thats Asda Price' displayed inside a store. Photo: Keith Mayhew/SOPA/LightRocket via Getty Images

“An offshore company taking on risky debt to buy such an important household brand like Asda - which employs so many key workers – was always a concern, in my view,” Darren Jones MP, chair of the Business, Energy and Industrial Strategy select committee, wrote on Twitter. “If Deloitte has now resigned as auditor, we need to know why.”

The Issa brothers, Mohsin and Zuber, founded petrol station chain EG Group in Blackburn in 2001. The pair have grown the business from just one forecourt to about 6,000 sites around the world, which made sales of €20bn (£18bn, $23bn) last year. The pair, who still own half the business, have become billionaires along the way.

READ MORE: Walmart agrees sale of Asda to billionaire brothers for £6.8bn

The FT said Deloitte had concerns that governance controls had not grown in line with the size of the company in recent years.

EG Group has just four board members, two of whom are the Issa Brothers. The other two board members represent TDR Capital, an investor in EG Group and the company that is financing the Asda acquisition.

The small board “enables extremely effective decision making” and reflects “the entrepreneurial nature of the business,” EG wrote in its latest set of accounts.

The Issa brothers are also co-CEOs of the company and sole directors of the business.

Deloitte signed off on the company’s latest set of accounts, which were filed last month, without any exceptional comments. The accounts show EG Group lost €65m on revenues of €20bn last year.