Page 8 - Patisserie Valerie Teaching Note

With many bricks-and-mortar stores struggling due to a

combination of rising rents and increasing online

competition and given Ashley’s business portfolio it may not

be surprising that he did not pursue Patesserie Holdings’

acquisition.

The nationwide chain of 96 Patisserie Valerie outlets was

sold to Causeway Capital and in total the group sold for

£13.5m this compared with a stock market value some three

months earlier of £440m.

Based on these figures Luke Johnson suffered a personal

loss of £180m. However, questions over the speed of the

collapse and the level of misstatement emerged as Grant
Thornton’s chief executive, David Dunckley was questioned

by MPs in a House of Commons committee, the Business,

Energy and Industrial Strategy committee (BEIS). Dunckley
claimed that it was not the auditor’s job to detect fraud. The

resultant debate firmly opposed this view.

Some responsibility however must lie with the company for
not detecting a fraud that could not have happened

overnight but would have been at least a couple of years in

the making. Where were the internal auditing system of

corporate governance?

The unanswered question is, was the business successful

because of the fraud or was it a successful business but

defrauded to such an extent that it couldn’t continue to

trade.