Patisserie boss was warned he’d taken too many key roles
THE boss of stricken chain Patisserie Valerie came under fire from City advisory groups for his controlling influence at the firm just months ahead of a crisis that engulfed it last week.
Reports obtained by The Mail on Sunday show that Luke Johnson was told in January his 37 per cent shareholding conflicted with his other roles at the company, which include executive chairman and a key position on the audit committee.
The former Channel 4 chairman, who made his £260million fortune by building up companies such as Pizza Express, is battling to save the café chain this weekend after a scandal that saw Chris Marsh, his finance director, arrested and released on bail.
Serial investor Johnson offered Patisserie Holdings a £20million lifeline loan on Friday after the company uncovered ‘significant, and potentially fraudulent, accounting irregularities’. Following an investigation, the company announced that it had a net debt of £9.8million, rather than net cash of £28 million as previously reported.
Johnson’s funding package was designed to meet the immediate needs of the business. Patisserie Valerie will now be under pressure to pay up front for deliveries. But its full funding requirement was still not known when the company said it had raised around £15.7million from investors. City advisory groups warned about Johnson months ago. Reports sent to investors advised he was not a suitable executive chairman of Patisserie Holdings because his major shareholding raised questions about his ‘independence’. They expressed concerns that Johnson had fingers in too many pies. Glass Lewis and Pirc told investors to vote against Johnson at the annual general meeting of Patisserie Holdings in January. Glass Lewis also raised concerns about Johnson’s other commitments, which include chairing the Brighton Pier Group.
A friend of Johnson said: ‘If Patisserie Valerie hadn’t had a large and very committed shareholder as chairman, 2,500 people would have been out of work this weekend.’
In February, Johnson slammed ‘corporate governance zealots’ like Glass Lewis and ISS after the latter said investors should vote him off the board of Elegant Hotels Group. He suggested the groups were not equipped to give such advice and compared them to ‘eunuchs giving sex lessons’. He added: ‘Surely it is helpful to have an unpaid non-executive director with more than 25 years’ experience in the hospitality industry, especially when there are millions of pounds at stake.’