AFL founder Alec Finch defends false accounting claim in London fraud dispute

The founder of AFL Insurance Brokers Alec Finch defended claims he manipulated his former firm’s accounts before selling the business as he was cross-examined yesterday in London’s High Court.

Alec and his son Robert (Bob) Finch are defending allegations brought by former Cooper Gay CEO Toby Esser that they used funds from client and insurer trust fund accounts to give an inflated sense of the company’s profitability and value.

The dispute centres on a £3.58mn “black hole" in the accounts of Lloyd’s/regional broker AFL, now known as Ambon Brokers, which Esser’s Guernsey-based Next Generation Holdings vehicle claims was uncovered after it acquired a 58 percent stake from the father-and-son team in 2017.

Under cross-examination yesterday, Finch dismissed the claims made against him, telling the High Court that that far from masking any fraudulent activity, AFL’s accounting practice of recognising income on an accruals basis was “entirely appropriate”.

Finch – who was recently awarded Biba’s 2023 Francis Perkins Award – said that the allegations brought against AFL’s former management highlighted the claimants lack of understanding of how the business was run and how its accounts were put together.

Finch was responding to questions put to him by James Potts of 3 Verulam Buildings, representing Next Generation and Ambon, who also questioned the former AFL chair on a series of email correspondence between the Finches and former finance director Keely Dalfen.

The hearing centred on a particular exchange in September 2014 in which Alec Finch wrote in an email that the business should “do a Tesco’’ while compiling its accounts.

Potts put to Finch that “doing a Tesco” was a reference to the well-publicised accounting scandal in which supermarket giant Tesco was alleged to have incorrectly overbooked future income into the accounts. The scandal was in the headlines a week before the correspondence was sent.

“Doing a Tesco would have been in your mind as inflating and bringing forward income at the same time as delaying your costs,” Potts put to Finch.

But Finch dismissed the allegation. The reference was a “mischievous” and “throwaway” remark made in reference to a former colleague, he said.

“I must insist that this is not the case,” Finch said.

Finch further submitted that he did not have “any operational role” in the business or any direct oversight over AFL’s accounting. He said the financial responsibilities were left to Dalfen and the broker’s auditors.

Potts put to Finch that Dalfen created two sets of accounts which provided “two versions of reality”; one set with the true figures and another containing “fictitious accruals”. Potts argued that this was done on the direct orders of Alec Finch.

“You’re the chair, the FCA-approved person, you're responsible for signing of the accounts, both regulatory and management,” Potts said. “It doesn’t look like you were just sitting back.”

Potts argued that a number of emails between AFL’s senior management showed that Alec Finch was “putting lies in Bob and Keely’s mouth” in order to “mislead” clients, regulators and auditors about the true state of AFL’s finances.

“No. I strongly submit that that is not the case,” Finch replied.

Next Generation and Ambon Brokers Ltd are represented by James Potts of 3 Verulam Buildings, instructed by Devonshires Solicitors.

Alec and Bob Finch are represented by Yash Kulkarni KC of Quadrant Chambers, instructed by Ward Hadaway LLP. Dalfen is represented by Robin Somerville of Clerksroom Direct.

The trial continues.

Written by Henry Wallace and Ryan Hewlett.