Von Essen's sale is hit by 'fraud' claim

The deadline for indicative bids for the von Essen Hotels group, which collapsed into administration in April, has not been extended from today in spite of suspicions of fraud raised by the administrators who have ordered the hotels to be sold.

Ernst & Young has submitted a formal report to City of London Police alleging von Essen Hotels used falsified and inflated accounts of the hotels' performance to borrow £30 million from Lloyds and Barclays.

It claims £10 million of that loan was diverted to building the Hotel Verta at the Battersea Heliport, which is owned by sister company von Essen Aviation. Both companies are controlled by Andrew Davis, whose corporate debt for the hotel chain is £295 million.

An Ernst & Young spokesman refused to comment on the fraud report, but the City of London police confirmed receiving it. The spokesman said the deadline for initial bidders remains as it was before the allegations surfaced.