Founded in a Madrid tailor’s shop on the cusp of the civil war, there are few things that suggest stability and longevity quite like El Corte Inglés, the ubiquitous department store group that dominates Spanish shopping habits.
But now there is trouble at the top of the group (which translates as “The English Cut”) that survived the upheaval and isolation of Franco’s dictatorship to flourish – becoming the largest such business in Europe.
Earlier this week, a small family shareholder group was unceremoniously voted off of the company’s board for having the temerity to object to the way a Qatari investor had muscled in on this most storied of Spanish institutions. The shareholder group, Corporación Ceslar, was booted off the board by other members, a spokesperson told Reuters, who added that Ceslar was not fulfilling its role.
El Corte Inglés has seen a rise in sales despite boardroom strains (Getty)
The spokesperson declined to comment on whether the move was connected to the deal with Sheikh Hamad bin Jassim bin Jaber al-Thani, the former Qatari prime minster, who bought a 10 per cent stake in the group by way of convertible loans worth €1bn (£735m) in July, which by 2018 will become equity in the group.
A later statement said the move against Ceslar was related to its loyalty towards the traditionally publicity-shy company and because it allegedly revealed details of the company’s operations that ought to have been kept secret.
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Dimas Gimeno, the chairman said on Sunday that the Qatari money was a vote of confidence in the group, but Ceslar, which holds a 9 per cent shareholding, argues that not only does the Gulf money undervalue the chain, there were questions to be asked in how the deal was brokered.
Carlota Areces, who represents the rebel shareholders told the Financial Times that she worried about the structure of the deal, which she said, allows for the Qatari investors to end with a much larger stake if the conditions of a tough business plan are not met.
Ms Areces also drew attention to a payment of as much as €17.5m (£12.9m) – a figure reported by the Spanish media – that is said to have been paid to a middleman to help secure the deal. Neither the identity of the broker nor the amount paid has been disclosed by El Corte Inglés. “The question I have is: who received this commission?” she told the FT. “I asked, and I was not given an answer.”
Qatar, the tiny Gulf nation, has been spending with abandon on blue ribbon acquisition across Europe. The Sheikh is the former head of the country’s spectacularly wealthy sovereign wealth fund, the Qatar Investment Authority, which has assets worth more than $170bn, including Harrods, the British department store, and the French football club, Paris Saint-Germain. It also holds a majority of shares in the Canary Wharf Group, which owns the financial district in east London.
It is not the first time Qatar’s spending has proved controversial. The award by Fifa of the 2022 World Cup has been met with a chorus of opposition by the football world and Prince Charles was a vocal opponent of plans for a development at Chelsea Barracks, which was bought by the Qataris in 2007. The boardroom ructions seem to be having little affect on shoppers’ confidence. As well as announcing the dismissal of Ceslar on Sunday, the group reported a bumper growth in sales last year.
The company is hoping that it will see a rise in profits as the Spanish economy emerges from recession. The International Monetary Fund predicts that the Spanish economy will grow by more than 3 per cent this year, one of the strongest rates in the eurozone.
