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| 4 minutes read

Patisserie Valerie: How the Allegations Unfolded

Patisserie Valerie is a British patisserie and café chain. In 2018, the company found itself at the centre of an alleged accounting scandal. In 2019, Patisserie Valerie announced that its board had been notified of accounting irregularities and potential fraud. The company went into administration, resulting in the closure of 70 stores and the loss of more than 900 jobs.

The allegations centred on the business having overstated its monetary position by £94m but also revealed the issuance of previously undisclosed shares to Senior Executives, shares that were subsequently sold before the accounting irregularities were revealed. Furthermore, following the allegations of fraud, the auditors were sued for negligence by the administrators.

On 13 September 2023, the Serious Fraud Office (SFO) brought charges of fraud against four individuals, including the Chief Financial Officer, his wife and accountant as well as the Financial Controller.1 But how did a company with 200 stores, employing over 2,800 people, and generating annual sales of £100 million find itself in this position? 

This article delves into the Patisserie Valerie scandal, examining the key events, the impact on the company and its stakeholders, and the lessons to be learned.

The Scandal Unfolds – What Happened?

  1. Initial Discovery: The situation began to unravel in October 2018 when Patisserie Holdings, the parent company of Patisserie Valerie, announced it had discovered “significant and potential fraudulent” accounting irregularities. These irregularities related to the company’s financial statements and the discovery that the company owed His Majesty's Revenue & Customs (HMRC) £1.4million in tax. This resulted in the company facing a winding-up petition over unpaid taxes.
  2. Hidden Debts and Overstatement of Assets: The investigation subsequently revealed the existence of secret overdrafts and unreported liabilities. Between 2015 to 2018, the company reported holding £28 million in its accounts but had concealed £10 million in debts from its investors and creditors. These debts had been kept off the balance sheet, making the company’s financial health appear much stronger than it was. The SFO charged suspects with conspiring to inflate the cash in Patisserie Holdings’ balance sheets and annual reports from 2015 to 2018.
  3. Forgery of Documents: To perpetrate the fraud, it was discovered that fake invoices and forged bank statements had been used to conceal the existence of the hidden debts. 
  4. Role of the Alleged Perpetrators: The Finance Director, Financial Controller, and internal accountant allegedly played a central role in orchestrating the scheme. They have been charged with five counts of fraud by false representation as well as one count of making and supplying articles for use in fraud.  
  5. Audit Failures and Regulatory Scrutiny: False documentation was provided to the company’s auditors. The scandal has raised questions about the role of auditors and the effectiveness of the auditing process. The company’s auditors faced significant criticism for not detecting the fraud earlier. 

How Was This Able To Happen?

This appears to be a case of systemic failure in corporate governance, with company directors able to circumvent controls to deceive auditors and investors by manipulating accounting records to show a more favourable position. For example, it appears that off-balance sheet loans were able to be taken without oversight from the board. Further controls around incurring debt might have prevented this. 

What Can Be Done To Prevent?

Controls Assessment

It is often the case that companies do not consider fraud prevention until they have become the victim. As a first step, fraud risks should be identified. Then policies and procedures should be implemented to mitigate them. However, fraud detection/prevention methods are only effective when they are implemented in a way that makes them difficult to bypass. One solution is better oversight from internal audit functions or using external consultants to perform periodic audits of all business functions to ensure controls and policies are working as intended. This will make it more difficult for misrepresentations to be made to the statutory auditors. 

Ankura can help clients assess the effectiveness of their internal controls and compliance systems and assist in all stages of control issues, from proactive measures to remediation monitoring.


Although there is no indication that this was the situation at Patisserie Valerie, it is common that individuals not involved in criminal behaviour have suspicions that something untoward is going on. These individuals can be scared of speaking up for fear of retaliation or losing their jobs. A whistleblowing hotline is a confidential and anonymous way for employees to report misconduct and could potentially have avoided or reduced the impact of the fraud on investors and employees. Having effective compliance procedures is crucial, and a confidential whistleblowing system provides anonymity and protection in the reporting of misconduct. 

Ankura can assist in independent whistleblower and fact-finding investigations to protect whistleblowers and ensure investigations are carried out and documented appropriately. 

What Can Be Done Post-Event?

In cases of financial fraud, a coordinated effort involving the company, regulatory authorities, and other stakeholders is essential to uncover the truth, hold responsible parties accountable, and prevent future occurrences. Timely and thorough action can help restore confidence in the affected company and the broader financial markets.

Forensic Accounting and Investigation

If irregularities are uncovered, companies should conduct a comprehensive forensic audit of their financial records to establish the full extent of the issues they may be facing. Forensic accountants/auditors specialise in unravelling complex fraud schemes. Furthermore, an internal investigation led by an independent committee of forensic experts should be performed. This can help to identify the extent of the fraud, the individuals involved, and the methods used. Detailed root cause analysis can detect control gaps, uncovering how the fraud was made possible and enabling preventative measures to be put in place.

Ankura’s collaborative approach to investigations draws upon our accounting, auditing, technology, and analytics expertise to assist clients in tailoring and executing efficient and effective forensic investigations. Our detailed root cause analysis can detect the control failures that allowed the fraud to be perpetrated, allowing adjustments to be made, controls strengthened and confidence to be restored. 


© Copyright 2023. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.


emea, uk, fraud & recovery, finance, financial services, financial services disputes

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