Hague and Coe sports firm in £3m write-off

They are political allies once so close they practised judo together.

But relations between the Olympics chief, Lord Coe, and the Foreign Secretary, William Hague, are likely to be distinctly frostier after Mr Hague saw potentially disastrous losses in a business in which he had invested £30,000 and has Lord Coe as its sole director. The sports consultancy Lord Coe heads has written off nearly £3m of assets.

As a shareholder in the business, Mr Hague's stake could now prove effectively worthless. The latest accounts filed at Companies House this month show the Complete Leisure Group (CLG), of which Lord Coe is the director, has debts of £280,000. The previous year its assets stood at £2.375m.

Company reports describe CLG's activities as the "exploitation of the intellectual property and image rights relating to Lord Coe and the provision of consultancy advice on sports-related activities". But the accounts, filed almost five weeks late, show that its operations appear to have suffered considerably recently. During 2010, company investments of £2,886,153 were written off. CLG reported debts of £279,205 at 31 December last year.

For Lord Coe, who earns £357,000 a year as chairman of the London Organising Committee of the Olympic Games (Locog), the news will be embarrassing as he prepares for London 2012, raising questions about his financial acumen. He has been instrumental in all of the commercial deals for the Olympics.

Lord Coe refused to explain why the company wrote off £2.8m from its value but one accounting source said the figurerepresented the amount by which its perceived value had dropped. A company report from August 2011 reveals that Mr Hague, the former Tory leader who installed Sebastian Coe in the Lords in 2000, owns 300,000 CLG shares. He bought them in 2005 and 2006 for £30,270.

Another firm of which Lord Coe is a director, 0800 Reverse (Operations), has recently been wound up. It provided support to 0800 Reverse Limited, which makes money from reverse-charge calls from phone boxes. In 2007, 0800 Reverse Limited was criticised by the Advertising Standards Authority for breaching its rules about misleading advertising. Latest accounts for 0800 Reverse Limited show debts of £19,219.

Lord Coe has taken on more corporate work this year but may face questions about whether he is cashing in on his role as chairman of Locog. The Lords register of interests shows he became non-executive director of a computer software firm, AMT-SYBEX in February, which is thought to pay him about £100,000 a year. The consultancy provides IT services for transport and utility companies including London Underground and Thames Water.

Three months after his arrival at the firm, one of its clients, Thames Water, became a "tier-three" Olympics sponsor, like all Olympics sponsors, putting it in a potentially lucrative position. It will provide all water utility and waste water services at Olympics venues, receiving exclusive marketing rights in return and the use of the Olympics logo to use in its marketing materials.

A spokesman for Locog said: "The contract was awarded by the London Organising Committee of the Olympic Games and Paralympic Games following a rigorous procurement process."

The Complete Leisure Group said: "The accounts submitted to Companies House are abbreviated accounts and all that is shown is a summarised balance sheet. The profit and loss figure quoted is the historical losses and not the loss for the year. Complete Leisure Group made a small trading profit for the year. There was no realised loss of funds. It is a technical result of accounting treatment for write off of investments."

Mr Hague refused to comment.

In numbers....

£30,270

Value of investment in CLG made by William Hague in 2005 and 2006

£3m

Value of assets written off Lord Coe's sports consultancy

£357k

Lord Coe's salary as chair of London 2012 organising committee