The collapse this week of the U.K. cafe chain Patisserie Valerie is a timely reminder of the importance of business leaders keeping a close eye on their interests. One interesting aspect of this affair – which began last October with the discovery of accounting irregularities – is that the business is one of several companies controlled by Luke Johnson, a high-profile entrepreneur with a reputation for doing just that. Indeed, a newspaper column he wrote shortly before the problems came to light was a checklist of warning signs that might indicate fraud. For the moment, the company – which went into administration earlier this week – continues to trade, although 70 of the more than 200 outlets are closing immediately and Johnson – who has paid over millions of pounds of his own fortune to keep the operation afloat – is suffering in terms of both his wallet and his reputation. The discovery of “thousands of false entries” in the books has, of course, led to an investigation of the accounting and auditing. But the fact remains that all companies but especially those that grow quickly, like Patisserie Valerie, need close scrutiny by the people running them.
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Author: Roger Trapp