Financial authorities failed to act on allegations of fraud at the jeweller Vashi before the company collapsed with debts of £170 million ($230 million), The National can reveal.
John Ames, a senior manager based in London, told the Insolvency Service he believed investors were being shown wildly exaggerated sales figures and were falling for false claims that the “disrupter” jewellery company held huge stocks of diamonds.
The whistleblower's warnings were made in May 2022 but ignored, and investors, many of whom are from the Middle East, subsequently invested millions into the jeweller. The company’s founder, Vashi Dominguez, disappeared as his firm was wound up in April 2023.
An investigation by The National first revealed a £200 million diamond hoard investors believed existed as financial security turned out to be worth only £114,000. Last week, in a BBC Panorama television programme, they repeated their demands for authorities to examine whether Mr Dominguez’s behaviour amounted to fraud.
Those who put money into the company included some of the most prominent figures in the UK business world, such as mobile phone billionaire John Caudwell and Clive Schlee, former chief executive of the sandwich chain Pret a Manger.
Mr Ames has now revealed he contacted the Insolvency Service in May 2022, after he left his job as Vashi's chief technology officer in January that year. The organisation has the ability to investigate reports of serious corporate abuse such as significant misconduct, fraud, scams or sharp practice in the manner a company operates, as well as administering bankruptcy.
Mr Ames said he was willing to present evidence, including an internal sales report, which showed the sales figures were around £5.4 million for 2020 and £5.09 million for 2021. That contrasts with the last available public accounts filed with Companies House, which show Vashi’s stated sales for the year ending 2020 were £53.63 million and £105.42 million in 2021.
In his complaint to the Insolvency Service, Mr Ames alleges that the firm was “being dishonest about the source of the revenue they report to Companies House”. He also raised his suspicions that the diamond stock was a small fraction of what the company claimed, but the agency wrote back to say it was "not appropriate to use the powers available to the Insolvency Service to investigate the company at this time”.
“I honestly thought, what's the point?” Mr Ames told The National. “You’ve got a business, which in my opinion was falsifying its company returns, and I would have thought that would be something they would have been all over.
“I thought that would garner some kind of response, at least a phone call, and I could have shared a lot of information with them at that point.” He believes the failure to act on his concerns was a “missed opportunity” for the body to protect the investors. “I was probably a bit naive,” he said.
A representative for the Insolvency Service said the organisation became involved the following year, but by that stage it was unable to make progress with its inquiries. “We carried out an investigation in 2023/2024 following the liquidation of Diamond Manufacturers Ltd,” a statement read.
“It revealed irregularities that we were unable to clarify due to the principal director leaving the country. We have shared our findings with law enforcement partners.”
Bitter pill
For Mr Ames, this amounts to cold comfort. After leaving the company, he was motivated to contact the authorities about what he had seen on the inside. Mr Ames' fears had been stoked when diamond suppliers began seeking overdue payments.
By December 2021, he had reason to believe the company was raising investment on the basis of sales figures he felt did not match the numbers he was seeing. Colleagues also began to tell him the company safes were too small for the storage of the quantity of diamonds it claimed to possess.
“I was angry on behalf of my colleagues, but also, perhaps more importantly, the investors, because I just didn't think it was right,” he said. “The fact that they just didn't play by the rules and then just got away with it irritates me immensely.”
Investors have been calling for the Serious Fraud Office to look into the collapse of Vashi, but no investigation has been forthcoming. One investor, Michael Moszynski, who lost “tens of thousands pounds”, said he is “very angry” that the Insolvency Service failed to act on the warning.
“I invested after that report to the Insolvency Agency. So I personally feel aggrieved that had they acted, I wouldn't have invested and lost my money,” he said. Mr Moszynski said that “no one being held to account over this” was “disgraceful”.
Mr Dominguez's larger-than-life personality earned him a spot as the in-house diamonds expert on This Morning, a popular TV show in the UK.
His grand plan was to shake up the jewellery business by attracting younger customers with in-house workshops visible from the street at a central London shop that would tailor jewellery to embrace “the fundamental emotions of the wearer”. Mr Dominguez laid out plans for expansion into the US, saying the $300 billion jewellery industry was “ready to be disrupted”.
The company recorded a sales increase of 365 per cent in May 2021 and had ambitious plans to expand to fit out shops in New York. Creditors, including diamond suppliers, gradually lost patience, and court records show they were petitioning to have the company wound up from May 2022.
A former employee revealed on the Glassdoor employment website, which reviews companies, that staff were made to pretend to be customers in November 2022.
