Patisserie Valerie auditor faces probe

Grant Thornton to be quizzed on £40m scandal

BEAn- CoUntER Grant thornton is under investigation over its audit of the scandal-hit owner of Patisserie Valerie.

In a fresh setback for the troubled accountant, the Financial Reporting Council has launched an inquiry after a £40m black hole was discovered in the accounts of Patisserie Holdings.

the watchdog is also investigating the company’s former finance director Chris Marsh who was arrested on suspicion of fraud as the scandal unfolded. Marsh, who resigned shortly after the irregularities were uncovered, is an accountant and a member of the Institute of Chartered Accountants in England and Wales.

the FRC’s probe comes just days after the chief executive, Paul May, was replaced by Stephen Francis, the former boss of British pork producer tulip. May and Marsh came under fire after it emerged that the pair were awarded twice as many share options as expected, allowing them to cash in a combined £4.6m.

the FRC will investigate Patisserie Holdings’ accounts for the years ended September 30, 2015, 2016 and 2017.

A spokesman for Grant thornton said it would fully co-operate with the probe. Grant thornton’s chief executive Sacha Romanovitch stepped down last month, just days after the scandal emerged, and left Patisserie Holdings teetering on the edge of administration.

the FRC’s latest probe adds to a string of investigations Grant thornton has faced in recent years.

Earlier this year it was slapped with a record £3m fine for misconduct over its audits of Vimto maker nichols and the University of Salford.

It is also the subject of an ongoing inquiry into its audit work at Sports Direct, which saw it sign off undisclosed payments between the retailer and owner Mike Ashley’s brother.

Patisserie Holdings shares have been suspended since the alleged fraud came to light on october 10. Executive chairman Luke Johnson said the cafe chain was ‘three hours from bankruptcy’ when he plugged it with £20m of his own money to prevent it going bust.

the entrepreneur will get £10m back from a share issue to institutional investors which is expected to raise £15.7m.

the remaining £10m is on loan to the company interest-free for three years.

Johnson was branded ‘ arrogant’ by investors at a heated shareholder meeting to approve the rescue deal this month.

Critics have called for him to step down from the board and hand over an internal inquiry to an independent party.

the Serious Fraud office is conducting a separate criminal probe into an individual at the firm.