A reconstruction of events and an outlook on how to avoid them.
When the icing falls off: reconstructing the events at Patisserie Valerie
Let’s take a look at the incidents that lead to the downturn of the British baking empire.
Where did it start?
As early as February 2018, when the company’s shares hit new peaks, the CEO Paul May, the finance director Chris Marsh, and the non-executive director James Horler cashed in shares amounting to almost £5.9 million. In May, the company reported that the chain was performing well – despite peers such as Cote and Carluccio’s having announced closures. In June, various members of the board again sold £7.2 million worth of shares. In retrospect, it now seems as if the events were foreseeable. An article in This is Money, published in October 2018 aptly asked: “After Patisserie Valerie bosses sell £13 million shares months before scandal, why didn’t ANYONE in charge see their cakes were sinking?”.
Avoiding unethical practices: Why all companies need an independent whistleblowing channel
The fight against unethical practices and the protection of honest employees should always be in the interest of companies. Minimizing risk is crucial to maintaining investors’ confidence and the integrity of financial markets. Once lost, the confidence of investors and employees is hard to rebuild.
For this reason, companies need to have a system that enables employees to report irregularities. Many employees fear retaliation when reporting abuse within their company. To help alleviate this fear it is advisable to implement a confidential whistleblowing system that provides whistleblowers with adequate protection (total anonymity if required). Only by having effective internal systems for reporting misconduct can companies identify risk at an early stage and take action.
It is a false economy for a company not to provide a confidential whistleblowing system to their employees. The decision might save money at the beginning, however, over the longer term, losses related to financial, reputational and other damage can be significant when issues are not identified.