Foyle's settles £10m 'fraud' by staff

A multi-million-pound fraud action brought by Foyle's, the world's largest bookshop, has ended in settlement without any of the people blamed being prosecuted.

A multi-million-pound fraud action brought by Foyle's, the world's largest bookshop, has ended in settlement without any of the people blamed being prosecuted.

Throughout the Eighties and Nineties, trusted suppliers and staff at the Charing Cross Road store were said to have secretly siphoned off millions of pounds for books which were never delivered to the shop. The profits paid for lives of luxury, helping to buy homes and meals at West End restaurants, in particular the celebrity hangout, The Ivy.

Now, after a costly forensic investigation lasting nearly two years, the family-run business has reached out-of-court civil settlements with all nine of the accused. But despite having recovered barely a fraction of the lost money, the shop's owners will take no further action against them.

Bill Samuel, a nephew of the family's legendary matriarch, Christina Foyle, and the company's new marketing director, said: "The value of our summonses alone totalled more than £10m. It was very documentable and [we think] provable, and we knew it involved substantially more than that.

But he added: "The purpose of taking the action was not to recover what we'd lost. It was to send a clear signal out that things had changed and we were not going to tolerate being ripped off in future. To the best of our knowledge, none of these people had put away huge amounts. They had simply been living very well."

Mr Samuel said the case had been complicated because many of the named defendants were now elderly, and most of the missing money was untraceable. "We are not going to throw pensioners out on the streets, or hound them to their graves," he said.

Expert analysis of the suspects' personal finances suggested the funds were used up gradually, he said. The Ivy name was on cheque stubs and credit card receipts among the extravagances which cropped up frequently.

"We are talking about £500,000 a year roughly among nine people, so that's about £50,000 each per year," said Mr Samuel.

"The suggestion is that they were living a lifestyle which didn't seem to equate with their earnings, and we seem to have helped finance the purchase of houses for a few." For years the losses had been hidden in the shop's complex, and often chaotic, accounting system while it was under the control of Miss Foyle.

Suspicions were aroused shortly after her death in the summer of 1999, when two of her nephews, Anthony and Christopher Foyle, noticed book-buying costs were continually rising while sales figures were falling.

They soon learnt that from 1982 till 1999 suppliers were repeatedly being paid for books the shop never received. Those willing to turn a blind eye within the company are believed to have been handed their own rewards in return for the favour.

The size of the hole in the accounts became apparent only last spring, following an investigation involving months of painstaking research by specialist lawyers and accountants. Then the inquiry became public, with the news that Foyle's had suspended its company secretary and general manager, Francis Steven Boal, and his assistant, Mark Latus.

Dan Morrison, the specialist fraud solicitor who ran the investigation, said: "We knew Foyle's had paid for the books, because we had the bank records and the invoices sent by the suppliers. But we had to prove they were not received."

The investigators named 11 defendants and sought permission from a High Court judge to examine their finances.

The 11 defendants named in the claim form were later reduced to nine. They were John Gordon Smith; Anne Smith; Velimir (also known as Victor) Ivan Stimac; Peggy Irene Stimac; Eton Bridge Books Limited; John Cruickshanks; Francis Steven Boal; Mark Latus, and Joseph Hammond.

At least two of the nine maintain their innocence but are settling with Foyle's. Their solicitor, who did not wish to be named, said: "They made a commercial settlement simply because they could not afford the cost of going to court, and they were refused legal aid."

When asked about the case, Mr Boal told the Independent of Sunday: "As far as I am concerned, the people who matter to me know, and the industry knows. I've moved on to other things now, and I don't wish to be drawn into saying anything."

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