Audit Finds 280-Million Euro Hole in Follie Follie Finances

FILE - A model presents jewels and accessories by Folli Follie brand, during the Athens Exclusive Designers Week at Zappeion hall, in Athens, Sunday, Oct. 22, 2017. (AP Photo/Yorgos Karahalis)

ATHENS – The embattled Greek jewelry and accessory maker Follie Follie company, already suspended from the Athens Stock Exchange for sketchy financial reports, has an unexplained 280-million euro ($326.32 million) gap in its accounting, an audit showed.

The review by Alvarez & Marsal and Ernst & Young found the discrepancy, unnamed officials told Kathimerini without indicating a reason, although blame was said to be pointed at Chairman, Dimitrios Koutsolioutsos and CEO Georgios Koutsolioutsos.

They were earlier fined 1.2 million euros ($1.39 million) while the company was fined 4 million euros ($4.66 million).

The deficit concerns the Folli Follie group’s cash and cash equivalents that in the controversial financial report of 2017 were 466 million euros ($543.10) million, earlier reports said.

During an investigation by the Capital Market Commission that led to the imposition of a 4 million-euro fine on the group, Folli Follie failed to present documents confirming the whereabouts of some 242.5 million euros ($282.62 million) of total available cash.

“It will be hard for any investor or creditor to accept a solution for the future of Folli Follie that will include in its management anyone with the Koutsolioutsos surname,” the paper said without identifying the source, adding that credit market officials agree.

That is because the Koutsolioutsos family’s shareholding percentage in the new company to be formed after the bankruptcy law’s corporate streamlining process, as well as the family’s role in the group’s future will be two of the main problems in the negotiations with any possible investors and the creditors, who could be forced to take losses.

The fines stem from violations, according to the commission, dealing with market manipulation and failure to provide requested financial data to regulatory authorities, the business newspaper Naftemporiki earlier said.
Follie Follie, founded in Greece and with operations in 25 countries could be targeted by lawsuits from shareholders.

Folli Follie blamed its problems on what it said it was because of a “coordinated dissemination of misleading news” regarding the company, with very negative impressions created, the paper said.

The Hellenic Investors’ Association said on May 8 it would bring legal action also on behalf of bondholders after the company lost 70 percent of its value over the previous month.

The company was established in 1986 in Greece by Dimitris Koutsolioutsos in the commercial district of Athens. Folli Follie started by manufacturing jewelry and in 1994 launched their watch line. In 1995 the first overseas store opened, in Japan. It is now ranked amongst the top 10 brands in luxury goods in Japan with 80 stores.

The company’s design team consists of Italian, Swiss and Greek top designers who work together to present two collections per year to offer a “full fashion concept” of branded, modern jewelry, watches and accessories at more affordable prices. The company also offers a men’s watch collection under the brand name Folli Follie.