The crisis engulfing Sir David Jones, the chairman of JJB Sports, deepened last night when an attempt by the company to defend his £1.5 million loan from the founder of its biggest rival backfired spectacularly.

JJB issued a Stock Exchange statement yesterday morning claiming that a £1.5 million loan taken by Sir David from Mike Ashley, the founder and majority shareholder of Sports Direct, JJB’s main rival, did not amount to a conflict of interest. It said: “The board is clear that the arrangement, that was initiated before Sir David joined the company as a non-executive director, has not given and does not give rise to any conflict of interest.”

However, this version of events was flatly denied by Mr Ashley, whose legal advisers, Mishcon de Reya, were last night preparing a response to JJB.

Mishcon’s response is expected to claim that, contrary to JJB’s Stock Exchange statement, Sir David did not approach Mr Ashley for a loan until after he had begun work for JJB. It will claim that Sir David’s approach to Mr Ashley — via JJB’s then chief executive, Chris Ronnie, a friend of the tycoon — was made on or around October 3, 2007. This was two days after Sir David had joined JJB’s board and two months after the company had announced his appointment.

Mr Ashley told The Times last night: “You can imagine my surprise when David approached me for a loan. He’d been there five minutes and Chris Ronnie was asking me for a loan for him. I thought it was a bizarre thing to ask for.”

JJB’s statement claimed that details of the loan were made known to its executive directors and financial and legal advisers earlier this year. It said that they had seen the matter as private between Mr Ashley and Sir David and not requiring public disclosure.

However, it is understood that five of Sir David’s six fellow JJB directors — Lawrence Coppock, the finance director, Colin Tranter, the retail director, and the non-executive directors David Beever, Roger Lane-Smith and Alan Benzie — did not know of the loan until it was revealed in newspapers last weekend.

The only one of JJB’s current executive directors to have known of the loan before last weekend, apart from Sir David, was Richard Manning, the company secretary. The other executive directors to whom the JJB statement was referring have all since left the company — Mr Ronnie, David Madeley, the former finance director, and Peter Williams, the former chief executive of Selfridges, who was on the board from January to May this year.

Analysts said that uncertainty over Sir David’s position was harming JJB’s plan to raise £50 million through a rights issue. John Stevenson, of KBC Peel Hunt, said: “There was a genuine sigh of relief when JJB appointed a new management team with excellent retail credentials, but behind that, there was the assumption that the company would have no questionable links to Sports Direct.

“Any allegations like these are going to impact on investor sentiment and the company’s ability to raise money in the rights issue.”

Last night there was support for Sir David from Dave Whelan, who in 1971 founded JJB. Mr Whelan, who sold his 29 per cent stake in JJB to Mr Ronnie in 2007, said Sir David was “the most honest businessman I’ve ever met”.

Mr Whelan told The Times: “This [the emergence of the loan] is another attempt to scupper David Jones raising £50 million and rescuing JJB.”

Sir David was defended by David Herro, of Harris Associates, which owns 12.8 per cent of JJB. He said: “This continual harassment of JJB Sports is starting to get ridiculous. The loan was made in 2007 and two years later we’re hearing about it. Why is that? We are supportive of the chairman and his efforts to turn the company round.”

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