The former chairman of U.K. café chain Patisserie Valerie said he had no idea of any fraud occurring within the business, distancing himself from the ongoing financial scandal that has pushed the company into administration.
The Financial Times reported on Sunday (June 9) that former Chairman Luke Johnson published a column in the Sunday Times describing his personal struggles as the fraud saga unfolded, saying he developed “chronic insomnia” following revelations of accounting regularities that emerged last October. Johnson lent the chain about $12.7 million to keep it afloat.
Earlier this year, the company acknowledged “extensive” financial misstatements and “very significant manipulation of the balance sheet and profit and loss accounts,” reports recounted.
“I know I was not dishonest,” Johnson wrote in the column. “I was unaware of fraud.”
But the report noted that as chairman, Johnson holds at least part of the responsibility for any errors and fraud in the company finances, and that his remarks could further highlight the lack of internal controls and governance that may have prevented such a scenario.
The U.K. Serious Fraud Office is now investigating the company. A previous probe by auditor PwC uncovered more than $50 million in suspected fraud, involving fake invoices from a vendor enlisted to help propel the scam, reports said. Two unnamed sources told the publication that Johnson was not implicated in that fraud.
Previous reports in the Financial Times quoted one unnamed source that said there is no evidence that the fraud resulted in personal gain for anyone involved, though one added that “They were just making it sound like a better business than it was. People get caught up in a lie. They got deeper and deeper into it.” The investigation found Patisserie Valerie would issue checks ahead of year-end reporting to artificially inflate the company’s cash position.
More than 70 locations of the chain have closed since revelations of the fraud emerged.
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