Saffery faces Guernsey cash crisis

Saffery Champness, one of the UK's oldest established and most prestigious accountancy firms, is facing a cash crisis in its Guernsey office, which makes up a quarter of the partnership's turnover.

The firm, whose best-known client is Chelsea Village, owner of Chelsea football club, has a court hearing early next month in Guernsey of a legal action by four former partners who left earlier this year. They are claiming £612,513, which they say is owed to them. But two affidavits lodged with the courts in St Peter Port suggest the Guernsey arm of Saffery is not able to pay.

The affidavits were sworn by Clive Nicholson, senior partner of the entire Saffery partnership, one on 6 November, the other on 7 December. The first testimony argues that the money is not due to the four former partners and adds: "Further, were such monies to fall due there is presently not sufficient funds in the Saffery Champness Guernsey Partnership to pay the monies to the plaintiffs."

The second affidavit gives more detail, saying: "By way of illustration of the Guernsey Partnership's current cashflow difficulties, the Guernsey Partnership is at or near the limit of its borrowing capacity with its bank." A letter from Barclays in St Peter Port states that not only is the partnership at the limit of its borrowings but also "there have been, on several occasions, excess positions arising".

Neither the Guernsey partnership, nor the practice as a whole, have completed their partnership accounts, despite Saffery's year-end being 31 March. This is because of of defections, not only in Guernsey but in its Harrogate office. They have lost seven partners and more than 30 other staff. The partnership agreement of Saffery requires it to lodge its accounts within three months of the year-end. The Guernsey partnership has traditionally been the engine of Saffery's success. Until recently, it accounted for a quarter of the partnership's turnover and, at times, more than half its profits.

It is known for acting for a number of trusts, charities and wealthy individuals. Until a couple of years ago, it administered the largest single shareholding in Chelsea Village and a former partner of the firm, Patrick Murrin, sits on the board of the company. Saffery is also the auditor to the company.

A spokesman for the accoun-tancy firm denied that there was a financial crisis at Saffery. Though he did not deny the comments made in the affidavit, he said that "cashflow difficulties" did not mean the firm was in financial trouble.

The firm released a statement saying: "Saffery Champness has tried to resolve the difficult and complex matters between the firm and the four Guernsey partners who resigned earlier this year. It is a matter of regret that these matters should have to go before a court of law but that is where these complex issues should be resolved.

"The Saffery Champness practice, including the Guernsey practice, is in robust good health. Its business book is strong. Staff numbers in Guernsey are roughly back to where they were before the former partners left on 1 April. The firm is absolutely committed to the future of its business on the island. "The partnership has always paid all its debts when they are due and properly payable. This is exactly what this case is about."

Saffery is one of the oldest-established accountancy firms, founded by Joseph John Saffery at Guildhall Chambers in the City in 1846. It has a reputation for advising wealthy individuals rather than firms, although it also has a niche in working with sporting institutions, notably the MCC.