Walker accused of profit 'sham': Former head of leisure group alleged to have masterminded bogus deals and orchestrated cover-up

GEORGE WALKER, former head of the Brent Walker leisure and property empire, was yesterday accused of being the 'moving force' behind a conspiracy to massage the company's profits and steal more than pounds 17m.

On the opening day of his trial for theft and false accounting, the 65-year-old former boxer was said to have arranged bogus deals designed to inflate profits, and then orchestrated a cover-up to mislead the company's investors and bankers.

Mr Walker, chairman and chief executive until 1991, and Wilfred Aquilina, 41, former group finance director, each face two charges of false accounting, one of theft and one of conspiracy to falsify accounts. Mr Walker is further charged with three counts of theft. Mr Aquilina faces an additional charge of false accounting. They deny the charges.

Peter Rook QC, prosecuting, told the jury of 10 men and two women at Southwark Crown Court that the dishonest activity spanned six years and centred on Brent Walker's film and television division.

He said Brent Walker created 16 bogus business transactions with customers, including the sale of film, television and video rights. One of the more sophisticated devices was to guarantee loans to fictitious companies, the largest being for pounds 7.5m. 'Then, at the end of the day, who pays off the loans? None other than Brent Walker itself,' Mr Rook said.

The loans, he said, were provided by the Tunis International Bank, whose chairman Ibrahaim al Ibrahaim, was a close associate of Mr Walker's. To conceal its source, some of the money was routed through overseas accounts in the US, the Bahamas and Canada. Other sums were 'laundered' through one of Mr Walker's offshore family trusts.

Mr Rook said that from 1984 to 1987, the company's auditors were Leigh Carr. 'In simple terms, auditors should play a watchdog role but in this case it seems the bogus transactions were accepted, and at the very least, the auditors were asleep.'

He said suspicion about some of the transactions was raised in 1988, in an article in the Independent. Brent Walker began legal action against the paper and issued a statement to the Stock Exchange saying the deals were bona fide.

'Great efforts were made to cover up the situation. But as we shall see, each time the defendants and co-conspirators tried to paper over the cracks, cracks appeared elsewhere and further measures had to be taken,' Mr Rook said.

Mr Aquilina 'played an essential part to ensure that the money movements were recorded in the accounts in such a way to conceal their true destination and origin', he said.

Mr Rook said Donald Anderson, a chartered accountant and a director of the group's film division, was a loyal henchman of Mr Walker's, acting as a 'Mr Fixit' during the fraud. Mr Anderson was paid pounds 750,000 for his role. He left Britain in 1992 and has not been traced.

Between 1984 and 1987, pounds 19.3m worth of 'false, sham income' was included in Brent Walker's accounts as either turnover or reduction in costs. In effect, Brent Walker was 'funding its own profits'. But the cover-up operation cost Brent Walker another pounds 13m, he said.

If the bogus profits had not been included, the effect on the balance sheet would have been dramatic. 'In short, the reported profits would have been substantially reduced and the subsequent history of the company might have been very different,' Mr Rook said.

For example, the group's film and television division would have made a substantial loss in 1987 rather than contribute 44 per cent towards operating profits.

The case, brought by the Serious Fraud Office, is expected to last up to five months. The trial continues today.

(Photograph omitted)