BAUGUR vowed yesterday to fight “politically motivated” fraud charges against its chief executive as a fresh scandal engulfed the Icelandic retailer and investor.

A senior Baugur source insisted that Jon Asgeir Johannesson would be “fully vindicated” and that the company would continue the aggressive UK business strategy that has seen it snap up Hamleys, Oasis, Karen Millen, Iceland, Booker and Goldsmiths in less than three years.

“[Mr Johannesson] has been charged with allegedly defrauding Baugur,” the source said, “but his family owns the company, so he has basically been charged with defrauding himself.”

Minority Baugur shareholders, including Kevin Stanford, co-founder of Karen Millen, who holds an 8 per cent stake, also pledged their support. “We all know that this has been going on for a long time and it’s about politics,” Mr Stanford said yesterday. “We totally trust and back Jon and his family.”

The comments came after the National Commissioner of the Icelandic police said on Friday that six people — including Mr Johannesson, his father, sister and two auditors from KPMG Iceland — had been charged with 40 counts of breaking the criminal code, commercial code and other statutes. The charges will be filed at Reykjavik District Court on August 17 and a trial is likely to start this year.

Baugur, with Robert Tchenguiz, the property entrepreneur, and Apax and Barclays Capital, the private equity firms, is finalising a £1 billion-plus takeover bid for the Somerfield supermarket chain. Baugur, which is supposed to provide 25 per cent of the equity funding for the bid, played down reports at the weekend that it had offered to withdraw from the consortium. “We have been dealing with the issue over the weekend,” the source said. “There have been no suggestions that we would volunteer to drop out.”

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