Fozzy becomes the second retail chain to run into problems with authorities
Just a month after tax authorities closed a number of stores belonging to Eldorado household appliances retailer, another large retail chain became the subject of investigation.
The Prosecutor General’s Office announced Feb. 3 that it had opened several criminal cases against Fozzy Group for alleged tax evasion.
“We’ve opened five criminal cases against Fozzy’s affiliates in Cherkassy and Odessa Oblasts,” said Tetyana Kornyakova, deputy prosecutor general.
Fozzy operates the Silpo supermarket chain with 23 outlets across the country. It also owns the Nezhyn pickling plant and Myagkov vodka brand. The company has opened a Silpo supermarket in Moscow, the first of the country’s retail chains to do so.
Volodymyr Kostelman, president of Fozzy Group, said he was shocked to learn a criminal case had been opened against his company. Fozzy circulated a press release on Feb. 4 accusing the tax authorities of fudging the figures and damaging the company’s reputation.
“They clearly have their numbers wrong,” said Kostelman.
In fact, Fozzy was not the first retail chain in Ukraine to run into problems with authorities. Tax officials closed a number of Eldorado’s stores throughout the country in December, citing financial improprieties in the Russian chain’s books. The stores still remain closed.
Fozzy has questioned Kornyakova’s statement that the company paid only Hr 58,000 in taxes all last year, while its turnover in six months alone equaled Hr 270 million.
Kostelman argued that his company paid Hr 3.9 million in taxes, which is 70 times higher than the figure provided by Kornyakova.
Prosecutors’ charges also included an illegal sale of equipment in Cherkassy Oblast and a large batch of counterfeit vodka in Odessa. Kornyakova said Fozzy acquired a flour mill in Zvenigorod, Cherkassy Oblast, and sold the factory’s equipment that was under arrest by tax authorities. She said Fozzy’s supermarket in Odessa also sold 13,000 bottles of artificial Myagkov vodka.
Kostelman said Fozzy provided investigators with all necessary documentation regarding the deal in Cherkassy Oblast and denied allegations that the company’s supermarket traded counterfeit vodka. He said his chain has always had strict control over product quality, and vodka in particular.
In another accusation, prosecutors claim the company laundered money through Yugbank. Kostelman said his company has operated for five years and never dealt with Yugbank.
He hinted that his company was framed by tax officials and that Ukrainian businesses are currently not safe from corruption. He said he hoped a fair investigation would be able to save the good reputation of the company.
