The troubled Folli Follie company’s major shareholders, the Koutsolioutsos family, reaped the benefits of a well-orchestrated fraud scheme that lasted for at least 17 years, under the nose of the supervisory authorities, generating hundreds of millions of euros in profits, according to an audit report by PricewaterhouseCoopers.
The roughly 220-page report shows that the group’s management had, from 2001 to 2017, inflated its sales, profits and equity, through virtual purchases and sales from/to both affiliated companies and completely nonexistent ones.
These fictitious transactions, even using fake bank documents, between 27 companies in different parts of the world, mainly in Asia, were called the “merry-go-round” by company executives.
In 2017 alone, sales were inflated by 1 billion dollars and equity by €2 billion. The falsified financial data led to an increase in shares, which were sold by shareholders, making them profits. According to the PwC report, from 2004 to 2017, Dimitris and his son George Koutsolioutsos earned €130.5 million and €3.8 million respectively from the sale of their shares, while they received dividends and capital returns of €44 million and €2.2 million euros respectively. There are also suspicions they bought and sold shares through third parties. The company’s treasury was also used to pay for a luxurious lifestyle including boat trips, expensive cars and helicopters.
All this would not have been possible without a fully controlled and completely inactive board, several members of which did not attend a single meeting. The drain on company funds seems to have continued even after Folli Follie was embroiled in the scandal, during which time negligence of the Hellenic Capital Market Commission was equally scandalous.
Meanwhile an acrimonious political confrontation has erupted in the wake of the report which suggests senior officials of the then SYRIZA government provided behind-the-scenes political cover to Folli Follie, with the knowledge of the prime minister at the time, Alexis Tsipras.
The report that was forwarded to the Athens prosecutor’s office included a series of emails in 2018 that implicated two SYRIZA ministers, as well as the PM’s office.
One email in particular between a Folli Follie security director and the company’s then major shareholder, George Koutsolioutsos, includes a reference to the then prime minister, stating, among other things, that “the instruction from above is to assist the [Folli Follie] Group. This is the position of Maximos Mansion [the PM’s office]. The prime minister was also informed.”