Not all swindlers are evil, said cake shop boss, before £20m vanished

PATISSERIE Valerie’s executive chairman claimed “not all fraudsters are evil” just weeks before the company mysteriously lost £20million to a potential fraud.

The cream cake chain was left fighting for survival yesterday as it suspended its chief financial officer over a “black hole” in its books, before admitting it had a £1.14million unpaid tax bill, resulting in a winding up order.

Luke Johnson, the company’s executive chairman and largest shareholder, admitted to “deep concern” about accounting irregularities, which were brought to the attention of the board on Tuesday. The incident is likely to be hugely embarrassing for Mr Johnson, who is a go-to commentator on fraud and how to prevent it in business.

Writing in The Sunday Times in July, Mr Johnson said: “Many fraudsters do not set out to cheat investors and customers, but they over-promise and cannot deliver – so they lie, and the cover-ups and fiddles grow until the fraudster is overwhelmed. Few swindlers are truly evil.”

Mr Johnson also recently compiled a list of his top 20 books on fraud and published it on his website, which is now down “down for maintenance”.

Shares in the Aim-quoted café chain were suspended yesterday morning after it announced a “potential material mis-statement”. Specialist consultants from PWC were sent in to review the company’s books amid reports of a “£20million or more” black hole. The City was left flummoxed by Patisserie Valerie’s announcement.

Octopus Investments, the company’s second-largest shareholder, was unable to comment. A spokesman for the fund manager said: “We don’t have any more information than is in the public domain.” Other City sources pointed to a clean set of accounts filed earlier this year, signed off without qualification by auditors from Grant Thornton. Business: Page 1