Broker Brewin in £30m 'fraud' claim

STOCKBROKER Brewin Dolphin Securities faces £30m of claims from one of its wealthiest former private clients relating to misuse of his funds amid accusations of fraud and falsification of records.

In a dramatic admission during pre-trial proceedings in the High Court yesterday, Brewin's lead barrister said one of the broker's former employees appeared to have acted 'dishonestly' when looking after the affairs of Chuhermal Dayladas Krishnani.

A full trial could start this Thursday, but Krishnani wants more time to examine shocking new evidence revealed only in the past week from Brewin which details a history of collusion between his former personal financial adviser and a young Brewin administrator to falsify his dealing records.

Krishnani broke off relations with Brewin, headed by chief executive John Hall, in June 2000, when the firm revealed that month's dealing sheet on his account contained numerous trades which he had not authorised.

This and various other trades carried out in Krishnani's name going back two years, allegedly without his permission or knowledge, left him nursing around £25m of liabilities via his trading account, Reachbyte, for hundreds of short sales, rollovers and late calls on trades.

Within weeks, Brewin had sacked Vicky Cornish, a young administrator and its most junior employee to look after the account.

By the autumn of 2002, Brewin faced two lawsuits which have since been rolled together - one from Krishnani via Reachbyte, and another from a pension fund he acts for as trustee and was a guarantor for his Brewin account, totalling £30m.

In court yesterday, however, the full scale of a cover-up between Cornish and Krishnani's own former financial adviser, Seema Mehta, were revealed from transcripts of 18 tapes of recordings of dealings between the two women relating to his account.

One conversation read out in court between the two women about Krishnani read: 'It's crap what I have at the moment,' Mehta said, referring to Krishnani's account records.

Cornish responded: 'So it's turning in a few porkie pies then?' Mehta answered with: 'Yeah, yeah, between you, me and the gatepost.'

Brewin's barrister quickly admitted: 'The substance of intention is that Vicky Cornish and Mehta were acting dishonestly to deceive Krishnani.'

Krishnani wants the trial delayed until October to extend the claim amid accusations of Brewin being responsible for 'fraudulent documents' and 'dishonestly assisting' Mehta in her falsification of his records.

Cornish's boss, Stan Lock, is still in employment with Brewin. Both lock and Brewin are thought to have earned several million pounds of commission from the hundreds of unauthorised trades on Krishnani's account.

Mehta and Cornish may now be called to give evidence in person.