Fraud in­quiry into Look­ers af­ter ac­counts er­rors found

The Daily Telegraph - Business - - Business - By Alan Tovey and Si­mon Foy

AIL­ING car dealer Look­ers is to suf­fer a £19m hit af­ter er­rors were dis­cov­ered in its ac­counts, spark­ing an in­ves­ti­ga­tion into po­ten­tial fraud.

The com­pany said the ex­tra cash is needed to cor­rect over­state­ments of prof­its dat­ing back sev­eral years fol­low­ing a draft re­port by con­sul­tant Grant Thorn­ton, which was drafted in to as­sess the scale of the dam­age.

It is the lat­est de­vel­op­ment in a lon­grun­ning saga for the com­pany, which is cut­ting 1,500 staff – al­most a fifth of its work­force – and clos­ing 12 deal­er­ships as sales crash due to coro­n­avirus.

At the start of June Look­ers again de­layed an­nual re­sults that were orig­i­nally due in March be­cause of the in­ves­ti­ga­tion into al­leged fraud at the busi­ness. Au­di­tor Deloitte said it would be re­sign­ing and the com­pany warned shares would be sus­pended from to­mor­row un­til fi­nal num­bers were con­firmed.

Grant Thorn­ton was ap­pointed to ex­am­ine Look­ers’ books in March af­ter the deal­er­ship said it had “iden­ti­fied po­ten­tially fraud­u­lent trans­ac­tions in one of its op­er­at­ing di­vi­sions”.

About £4m of the cash set aside yes­ter­day re­lates to mis­rep­re­sented sup­plier bonus pay­ments and “fraud­u­lent ex­pense claims” in a sin­gle di­vi­sion, Look­ers said.

The rest of the cash is needed to tackle in­cor­rect or in­con­sis­tent ap­pli­ca­tion of poli­cies, pro­cesses and ac­count­ing stan­dards, it added.

Look­ers said the Grant Thorn­ton re­port also found ar­eas where tougher fi­nan­cial con­trols and changes to the cul­ture of the com­pany are needed.

The busi­ness has now set up an in­de­pen­dent board com­mit­tee which will over­see ef­forts to fix th­ese prob­lems.

Look­ers said it ex­pects to re­main prof­itable for the 2019 fi­nan­cial year. But it warned that the true scale of the chal­lenge will not be clear un­til a full au­dit has been done.

Last week Look­ers said chair­man Phil White would take on an ex­ec­u­tive role as part of a shake-up, work­ing with chief ex­ec­u­tive Mark Ra­ban. Look­ers shares closed down 0.7pc at 19.7p.

Last sum­mer the car deal­er­ship an­nounced it was be­ing in­ves­ti­gated by the Fi­nan­cial Con­duct Au­thor­ity over its sales prac­tices.

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