Asda’s billionaire owners have been asked to provide details about interest-free loans allegedly given to finance the purchase of private planes.
Darren Jones, the chair of the Business and Trade Select Committee, wrote to Mohsin ISSA, who owns Asda along with his brother Zuber. He asked about the “complex structure” of the brothers’ empire of business and questioned specific financial transactions.
Concerns about the complex structure and high debts of the Issas have prompted a review of their finances.
Darren Jones, the chair of the Business and Trade Select Committee, asked Mr Issa for detailed answers to 9 questions regarding the financials of Asda Group and EG Group.
Before buying Asda, the Issas owned the petrol station group EG. The supermarket bought the UK arm of Issa forecourt empire earlier this year in a £2.3bn transaction.
Mr Jones asked for information about the “tens-of-millions-of euros” in loans that EG Group allegedly granted to brothers to buy private jets.
In October 2018, it was reported that EG Group had lent €39m to Isle of Man-based companies owned by brothers. The paper reported that the brothers owned two private jets via the companies.
Mr Jones asked Mr Issa if the interest-free loan was used to buy the jets, as reported. He also wanted to know if partners TDR Capital, and EG bondholders, were aware of these arrangements.
Mr Jones wrote to us: “These are questions to help us understand whether you’re enabling Asda do everything it can to keep costs low during a crisis of cost-of-living.”
The letter was sent after the committee slammed Mr Issa during a heated evidence session held in July. During the session, the executive was asked about Asda’s fuel prices as well as its employment practices.
Mr Jones accused Mr Issa not to answer questions during the hearing. He said: “We have spent an hour in circles, and you have not answered the questions of this committee.”
Asda, as well as other supermarkets, have been criticised for making high profits from fuel. Asda’s targets for profit margins at the pump have tripled in the last year, according to an investigation conducted by the Competition & Markets Authority.
Mohsin & Zuber Issa purchased Asda, UK’s third-largest supermarket, for £6.8bn in 2021, backed by TDR Capital.
Asda is now in debt . Moody’s estimated Asda’s debt at around £7.5bn.
The cost of living crisis is continuing, and this has led to concerns that the chain may be less able invest in maintaining low prices for its customers.
The Issa Brothers have spent a large part of the past year selling assets to reduce the debts they accumulated during their expansion of retail empire.
As well as selling EG’s UK operations to Asda for an undisclosed amount, EG also sold a portfolio in the US of convenience stores to the American chain Casey’s.
Mr Jones wrote that the Committee is concerned about Asda’s complex corporate structure and decisions made on financing. This may limit your ability to meet the cost-of-living demands of your customers.
It is said that the intercompany deal between Asda Group and EG Group will merely take cash from Asda so you can pay back some of the debts you incurred when buying Asda.
Asda’s spokesperson said: “As stated previously, Asda is committed to cooperating fully with the Business and Trade Committee inquiry and will answer its follow-up queries.
“Asda’s owners are committed for the long-term, sustainable growth of their business. They are investing both in supporting customers and coworkers during these difficult times.”
Asda publicly announced that it would invest £36m to lower prices over the past two months.
In July 2022, it will also introduce a “Kids Eat For £1”, offer at its supermarket cafés. Asda claims to have served 2m meals for children since the introduction of the offer and has invested £1.3m to keep the prices at £1.