Sports Direct faces probe over deal with Mike Ashley's brother's firm

Mike Ashley's Sports Direct faces a probe by the accounting watchdog over an arrangement between the company and a delivery firm owned by Mr Ashley's brother.

The Financial Reporting Council (FRC) said it had begun investigations into the "preparation, approval and audit" of the sportswear giant's financial statements for the year to 24 April.

It said the probe followed "reports of an arrangement between Sports Direct and Barlin Delivery Limited which was not disclosed as a related party in the company's financial statements".

Sports Direct pays Barlin Delivery, run by the founder's elder brother John, a share of revenues from overseas orders.

It emerged in August that the firm's accounts did not disclose the relationship.

Mr Ashley, majority owner of Sports Direct, has come under intense pressure over the way he runs the firm from both shareholders and politicians.

It follows allegations that workers at its Shirebrook warehouse in Derbyshire faced Victorian conditions.

Mr Ashley, who also owns Newcastle United, has pledged to make changes and invited MPs (BSE: MPSLTD.BO - news) to come and see the site.

But a visit by members of a Commons committee earlier this month was overshadowed by claims that a recording device was hidden in a tray of sandwiches in a room where they were meeting.

Sports Direct denied knowledge of any device.