Issa brothers are under scanner again as MPs have raised concerns that Asda’s ownership structure could be limiting the supermarket’s ability to support shoppers through the cost of living crisis.
In a letter to Mohsin Issa, one of the billionaire brothers who bought the supermarket with a private equity partner, TDR Capital, in 2020, Darren Jones, the chair of parliament’s business and trade select committee, has asked for details of the retailer’s corporate structure, capital investment and profit margins on petrol.
“The committee has concerns that the complex company structure within which Asda sits, and associated decisions on financing, may restrict your ability to help meet cost of living pressures on your customers,” Jones writes in the letter published on the committee’s website.
In the letter he also seeks details on loans from the Issas’ petrol forecourt operation, EG Group, which helped fund the buyout of Asda, the UK’s third-largest supermarket, and the purchase of two private jets for the brothers from Blackburn.
Scrutiny of the Issas’ finances has been prompted by concerns that the company’s complicated structure and high debts may leave Asda customers facing higher than necessary prices.
The Issas owned petrol station group EG before buying Asda. The supermarket subsequently bought the UK business of the Issa’s forecourt empire in a £2.3 billion deal earlier this year.
Jones has also asked for details of loans worth “tens of millions of euros” reportedly granted to the brothers by EG Group to purchase private jets, Telegraph reported. Jones asked Issa whether the interest-free loans were used to purchase the jets as reported, whether partners TDR Capital and EG bondholders were aware of the arrangements, whether interest was added to the loans at a later date and whether the debts were paid off following the sale of EG to Asda.
“These questions are to help us understand if you are enabling Asda to do all that it can to help keep costs down during a cost-of-living crisis,” stated the letter.
Asda and other supermarkets have been criticised for taking high profits on fuel. An investigation by the Competition & Markets Authority (CMA) earlier this year found Asda’s profit margin targets at the pumps had tripled since 2019.
There are fears that the structure of the Issa takeover, which has reportedly doubled Asda’s debts and increased interest payments from £90m in 2021 to more than £400m this year, is restricting the chain’s ability to invest in low prices.
An Asda spokesperson said: “Asda will continue to cooperate fully with the business and trade committee’s inquiry and will respond to its follow-up questions. Asda’s owners are committed to the long-term sustainable growth of the business and are investing in both supporting customers and colleagues during these challenging times.”