AA offers to drop £5m scam lawsuit
Ex-finance manager is asked for £250,000 to settle ‘tainted leases’ row out of court
The Architectural Association is understood to have asked for £250,000 in exchange for dropping legal action against the accountant it blames for causing losses of more than £5 million.
Moves to head off the threat of a High Court trial next summer were begun by the AA at the beginning of October.
It is suing Stephen Livett for 16 breaches of contract and is claiming damages and compensation. The former finance manager left in February last year after nearly nine years at the AA.
The legal action comes after the AA was caught up in an alleged accounting scam involving leased office equipment which, in court papers, it said will end up costing it more than £5 million. But the cost of the AA’s legal action is already believed to be more than £100,000, and could be five times as much by the time it goes to court next July.
In its offer, the AA is also understood to have asked Livett to admit responsibility that he breached his duties when 14 leases for equipment such as computers and photocopiers were signed with a series of finance houses.
Livett has said the blame should be pinned on alleged institutional failings at the AA, and added that it knew about the leases “because of the monthly budget reports presented [by Livett] to [director] Brett Steele”.
The AA has been forced to take out £4 million in loans in order to cover the cost of the scam, and in September Steele confirmed to BD that one of the finance houses had begun legal proceedings against it.
Shortly before issuing its own proceedings, the AA managed to get a worldwide freezing order in place limiting the amount of cash Livett can withdraw from his bank account and putting a block on savings accounts, as well as preventing him from selling items such as a house or car.
Both the AA and Livett declined to comment.
THE COSTLY COPIERS
In a complicated scam, the AA and a number of other educational establishments have ended up paying far more than expected for humble office equipment.
The AA says it has ended up with 14 so-called “tainted leases” — which it is trying to renegotiate with the finance houses — one of which will see it hand over more than £280,000 for two photocopiers and a television.