Versailles founder denies deceit

CARL Cushnie, founder of collapsed trade finance group Versailles, was among directors who falsely inflated trading figures, allowing the company to borrow £70m from banks including NatWest, Royal Bank of Scotland and Barclays, Southwark Crown Court heard today.

Prosecuting counsel Anthony Evans said Cushnie conspired to modify the company's accounts, overstating turnover by issuing cheques to subsidiary companies and receiving cheques from them on a daily basis.

Evans said auditors Nunn Hayward, stockbroker Raphael Zorn Hemsley and the company's backers were 'deceived' by Versailles' accounts.

The court heard that sales were inflated to £79.7m from £4.9m in its final trading year.

Evans also said that Cushnie told the company's private backers days after Versailles' shares were suspended in 1999 that their cash was 'ring-fenced' and 'not at risk'.

Versailles' market capitalisation was £630m at its peak, and it was a member of the FTSE 250 index.

Cushnie denies conspiring to defraud the company. Former finance director Frederick Clough has already pleaded guilty to a similar charge. Clough's assistant, Lorraine Jones, has pleaded not guilty. The case continues.