Versailles 'siphoned £15m through Virgin Islands'

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The Independent Online

Versailles, the trade finance company which went into receivership this week, is understood to have siphoned £15m of investors' money through a shadowy company based in the British Virgin Islands.

Versailles, the trade finance company which went into receivership this week, is understood to have siphoned £15m of investors' money through a shadowy company based in the British Virgin Islands.

Versailles, now being investigated by the Serious Fraud Office, is also thought to have channelled money through fictitious or dormant client accounts.

Receivers from PricewaterhouseCoopers spent all day at Versailles' Hammersmith headquarters in west London yesterday attempting to establish the extent of the "black hole" in the company's accounts although it is thought to run to tens of millions of pounds.

PwC has already said that there appears to have been a "complex, extensive and long-running fraud inside the company of a very material nature".

On Wednesday this week, following information passed to it by one of the investigating accountants, Versailles suspended its finance director,. Frederick Clough. Versailles' founder, the black businessman Carl Cushnie, is helping PwC in its investigations.

The Virgin Islands connection centres around a company called Versailles Traders Limited which was set up in the mid-1990s after the parent company ran into financing difficulties.

After the Prudential withdrew funding from Versailles in 1995, the company approached a group of wealthy individuals who put up around £15m. This money was put into a bank account in the Virgin Islands opened under the Versailles Traders Limited name and the investors were paid interest on it.

Most of the money in the account can no longer be accounted for and, according to some estimates, there might be as little as £1m remaining.

The alleged fraud is also believed to have involved channelling money through some of the accounts that Versailles' UK clients held with it. Versailles' clients were typically small firms who were unable to get bank loans to carry out orders for retailers.

Versailles provided them with bridging finance to enable them to meet those orders. When their accounts were not being used for this purpose, it is understood that other money was passed through them from Versailles. It is also possible that some of the client accounts were fictitious, but this has yet to be established.

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