DX Group failed to take sufficient disciplinary action against employees who had offered a bribe for confidential competitor information and “curtailed” a probe into the bribery allegations, according to the findings of an internal investigation, published today (20 September).
Launched by DX Group in November last year, it found evidence that confidential competitor information was obtained “over a period of time” and that an isolated offer of payment of “de minimis financial amount” for the information had been made by employees. The rival competitor was not identified by the report.
It also revealed that “insufficient importance was attached to ensuring that the investigation was conducted according to best practice and to its fullest extent, in particular with the investigation being curtailed and information flows restricted.”
It also found the group had not taken appropriate action to discipline those involved in the bribery. It said: "Insufficient disciplinary action was taken at the time in respect of the employees involved in the allegation of bribery. These issues and management failures were identified as barriers to achieving an appropriate outcome for the Group and in a timely manner.”
The investigation concluded that there may have been a breach of the Bribery Act 2010 by the employees concerned and that DX Group needed to take action to improve compliance procedures and to mitigate the risk of potential future incidents.
It stated: “Further disciplinary action is being taken with certain staff involved in the relevant events, and the board is taking additional corrective actions to improve management protocols, internal processes, and training in specific areas so as to ensure best practice in corporate governance.
“The board's objective is to ensure that all appropriate improvements to its processes are made, not least so that any future internal investigations are completed in full and to appropriate timescales.”
Ronald Series, DX executive chairman, said: "This period has been highly unsettling for shareholders and for the company. We are pleased to draw a line under past events and to focus on DX's ongoing development and growth. We are also implementing changes to strengthen the Group's corporate governance policies and procedures. Trading continues to be encouraging, and we remain ambitious in our growth plans."
The investigation's conclusions come just two weeks after DX chief executive Lloyd Dunn resigned with immediate effect. News of the investigation emerged in December last year when the group announced that its auditor Grant Thornton could not sign off DX’s 2021 accounts as there was an ongoing internal investigation into a “corporate governance inquiry” at DX.
The delay resulted in DX’s shares on AIM being suspended in January this year. Shortly after Grant Thornton resigned as auditor, citing concerns about “actual or potential breaches of the law and/or regulations” by DX or DX employees; the performance of the investigation and the corporate governance inquiry; concerns about the “action” taken by DX in response to the evidence generated by the investigation and inquiry; and the “provision of inaccurate information”, which Grant Thornton believed “did not give a full picture of the scale and seriousness of the facts”.
The auditor's resignation came in the same month that DX non-executive directors Ian Gray and Paul Goodson resigned.
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The investigation’s conclusion has resulted in DX Group’s long delayed accounts being published today. Despite the turmoil of the past few months the company has performed well. Revenue for the 53 weeks ended 3 July 2021 rose by 16% to £382.1m (2020: £329.3m), adjusted pre-tax profit also showed a significant improvement, rising to £12m (2020: £0.2 million). The statutory profit before taxation was £10.6m compared to a loss of £1.3m in 2020.
The company also reported that at the financial year end £6m (2020: £10.4m) of agreed coronavirus-related payment deferrals, which are mainly VAT, were outstanding adding that these will be repaid “over the next few months.” A total of £4.4m of payment deferrals were repaid in the financial year.
In light of the group’s strengthening performance and financial position during the year, DX said it had also taken the decision to repay £0.6m of government furlough payments received in 2021.
Announcing the annual results Series said: “Growth was primarily driven by the DX Freight division, which outperformed management objectives for the year. DX Express’s performance was significantly impacted by the second national lockdown; however, it made very strong progress in its parcels activity.
He added: “We have also launched a major new capital investment programme to further expand our depot network and support our growth plans.”