Investments  

Large sums 'written off' at Harlequin, says former accountant

Large sums 'written off' at Harlequin, says former accountant
 

An accountant spotted large sums of money had been "written off" while working for an investment company at the heart of a £226mn scam, a court has heard.

David Ames, 70, is accused of three counts of fraud by abuse of position while sole director of Harlequin Management Services South East Limited.

The former boss allegedly encouraged investors to purchase overseas properties in the Caribbean before they were built and then failed to give them anything in return.

The prosecutors claim he persuaded investors to sign contracts without revealing the true state of affairs at the company, causing a total loss of £226mn.

Thousands of investors lost £398mn of their own savings and pensions between 2006 and 2015, jurors at Prospero House crown court has heard.

Adela Blake, hired as an accountant by Harlequin in August 2010, told the trial she visited a development site in the Caribbean to assess the management accounts.

Former Harlequin chief financial officer Michael Slade had sent requests to the director of finance at the Buccament Bay development in St Vincent asking to see the management accounts, but nothing came through.

Ames asked Blake to visit Buccament Bay in May 2011 to obtain the management accounts.

Giving evidence Blake said there were no accounts upon her arrival and she was told that "the bank accounts had not been reconciled since October 2010".

Bank reconciliations were provided two days into her trip, but the documents were "very worrying".

"I noticed that they had written off differences," said Blake.

In one case, this amounted to 250,000 East Caribbean Dollars - approximately $93,000.

She reported it to Ames and within a couple of months, most of the local finance staff were asked to leave and the UK office took control of book-keeping.

In an email to colleague Jim Baker dated February 18, 2013, Blake expressed concerns that there were "significant inadequacies of the general book-keeping and lack of management review".

She continued: "Virtually every account had errors in it.

"On questioning these with Sarah [Tricker, the accounts manager] she was surprised and needed to have a look.

"I don’t think the accounts staff have adequate knowledge of what they are doing."

Baker forwarded the email to Ames.

In April 2012, Richard Kelly, from auditors BDO, sent a lengthy email raising numerous concerns about the company’s accounts.

He wrote that BDO was "unable to obtain sufficient appropriate audit evidence" and concluded that they were unable to determine whether accounting was complete.

BDO later resigned as the company’s auditors, citing "lack of context and communication" as the reason.

Ames was interviewed twice, initially in 2013, and then in December 2015.

He denied he had in any way acted dishonestly, and continued to promote the Harlequin business model as a viable enterprise which he believed in.

Ames maintained that he always put the interests of his investors first, throughout the entire Harlequin enterprise.

He also told investigators he had relied throughout upon advice provided to him by the professionals he employed.