The Dragons’ Den star is reeling from a fallout with one of his oldest and closest friends, a row that has led to accusations of fraud, unfair dismissal and a possible £10 million court battle. Accounts for Bannatyne Fitness were filed yesterday and they reveal that profits for the past year at his chain of 61 gyms have slumped from £10 million to £3 million.
The Times reports that the accounts are blunt on what is to blame: “During the year, the directors identified that misappropriation of the company and the group’s assets had been occurring for a number of years by former employees.”
The employees are Chris Watson, the former finance chief, and allegedly Nigel Armstrong, the former chief executive. Mr Watson admitted in court to fraud and misappropriation of funds and will face a hearing next month. Mr Armstrong was arrested last year and questioned over financial irregularities. He denies any wrongdoing and is not facing further action from the police. He has lodged a claim for unfair dismissal and a £10 million payoff he claims to be due.
Mr Bannatyne said: “There is no doubt about it, I have been betrayed. I was the best man at Nigel’s wedding. I didn’t have a great relationship with Chris, but I did with Nigel. I thought we were friends.”
Mr Bannatyne, 66, is used to battles. He grew up in a single room in Glasgow that he shared with his parents and siblings, left school at 15 with no qualifications and went into business, buying an ice-cream van. He now has a portfolio of bars, hotels, properties and gyms and is worth £180 million. He’d be worth more but for a costly divorce.
Mr Bannatyne said: “We are going to win that court action, there is no doubt. Nigel has got expensive lawyers, but so have we.”
Sales at Bannatyne Fitness were down slightly to £88 million, but Mr Bannatyne is back in charge as hands-on chairman.
Enemies of Mr Bannatyne might look to a minor detail in the accounts that has a £2.1 million payment from the Fitness business to Bannatyne Brand Management, an offshore company, and ask whether this is appropriate.
“We set the offshore vehicle up because the business needed investment. The shareholders wanted anonymity and the only way to do that is offshore,” he said.
Lawyers for Mr Armstrong and Mr Watson did not respond to calls or emails. However, when the charges were dropped against him, Mr Armstrong said: “I am pleased to be exonerated. My focus always has been the resolution of issues relating to my employment and shareholding in Bannatyne Fitness.”
