Folli Follie Owners Say Blameless for Greek Company’s Collapse

(Photo by Eurokinissi staff)

ATHENS – The Koutsolioutsos family who are the main owners of beleaguered Greek jewelry and accessory company Folli Follie reportedly will tell a Sept. 10 shareholders meeting they are not responsible for its demise.

The meeting’s agenda includes approval of the 2018 financial statement and the release of the board members and the certified accountant from any liability for the period when  sales, profits, cash flow, reserves and even the extent of the company’s sales network had been grossly inflated, said Kathimerini.

Despite their claim of being blameless, they could still face charges of stock manipulation and money laundering, but these charges will be hard to prove, sources among the firm’s smaller shareholders believe, the paper said without explaining why if there are financial records detailing the collapse.

Even the extent of the family holdings is disputed:  according to Athens Stock Exchange filings, they own 35 percent, but market sources said their holdings are closer to 40 percent although not a majority.

Sources from inside the company who weren’t identified told the paper that approval of the 2018 statements is essential for the restructuring to proceed, in agreement with creditors who said there isn’t any agreement and likely won’t be one.

The paper said the family likely will be released from liability by the shareholders’ assembly which could face a challenge from the second major shareholder, Chinese investment firm Fosun, which also is a partner in the long-delayed 8-billion euro ($8.99 billion) development of the abandoned Hellenikon International Airport site.

COURT STEPS IN

In May, Folli Follie’s cash reserves were reportedly running out despite getting extended credit and a court seized 1.8 million euros ($2.02 million) in the company’s last line of reserves.

The Athens-based company has sold-off assets, including a building in Hong Kong, and cashed in on dividends from its stake in the Swiss multinational Dufry for 10 million euros ($11.21 million) said the business newspaper Naftemporiki, citing other media reports.

The company is also selling off shops and e-shops, with cash reserves sufficient for another two months, according to company executives.

In December, 2018, their company in near-ruins, the founders and seven executives of the bankrupt Folli Follie were charged by a prosecutor with fraud, money laundering and felonies as part of a probe into its troubled finances.

The upscale brand that is among the most known in Greece and has a big presence in Asia and elsewhere, came under investigation after a hedge fund raised questions over the company’s financial statements, charging the number of outlets was overstated and its finances dubious.

A prosecutor moved to make the charges, the news agency Reuters said, with Folli Follie on the edge of going under after its shares plummeted and assets seized while locked out of the Athens Stock Exchange.

In October, 2018, a Greek court ruled the bank accounts of the Koutsolioutsos family, Folli Follie’s founders, and other incumbent and former board members and executives should be frozen.

The charges were laid against Dimitris Koutsolioutsos, founder of Folli, his wife and his son George Koutsolioutsos, who was the CEO of the company and a member of its board, a judicial source told the news agency.

Charges were also reportedly brought against the Chief Financial Officer, the chief of accounting, the head of its Asian operations and three other board members, the source added, saying that the prosecutor also ordered that all of the persons charged not be allowed to leave the country.

Folli has previously said the claims in the hedge fund report were unfounded and misleading. The company’s assets were frozen after an audit found $1.29 billion was missing from an Asian subsidiary, lost a bid for protection from creditors when an Athens First Instance Justice ruled against the company.

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