A former LPP executive described the company’s CEO and founder, Marek Piechocki, as someone who “didn’t care about some kind of war between Russia and Ukraine.”
Polish clothing retailer LPP, which includes brands such as Reserved, Cropp, House, Mohito and Sinsay, made a fictitious “asset sale” to continue making money in the Russian Federation. This is stated in a March 15 report from Hindenburg Research.
LPP is claimed to be the largest fashion company in Central and Eastern Europe, with a turnover of $8.4 billion.
Important
Before the large-scale war, Russia was the company’s largest international market, generating approximately 19.2% of revenue. However, on April 28, 2022, LPP announced its intention to sell its assets in Russia, and on May 19, 2022, the company announced the completion of negotiations with an unnamed buyer.
As the authors of the investigation note, the company said that they lost about 20% of their revenue due to leaving the Russian Federation. At the same time, LPP’s total revenue increased by 13% in the 2022/23 financial year.
“We believe that LPP was able to show such extraordinary results because its sale of the Russian business was a complete lie,” the report said.
The authors of the investigation noted that LPP had announced that it would sell its assets in Russia to a “Chinese consortium” in a deal worth about $382 million. But the buyer was Dubai-based shell company Far East Services, which was registered just a day before the Polish retailer announced it had reached a sales agreement, according to Hindenburg Research.
According to a former LPP employee, the deal was “a front to hide the truth about the non-sale of Russian assets.” He emphasized that all operations in the Russian Federation are still “directly controlled by the headquarters and board of directors of the LPP.”
A former LPP executive also described the company’s CEO and founder, Marek Piechocki, as someone who “didn’t care about some kind of war between Russia and Ukraine.”
Hindenburg Research will also open a new project in Moscow and St. Petersburg in December 2023. He stated that they sent secret shoppers to stores in St. Petersburg, who sold products identical in design to the new collections in the Polish LPP online catalogs, and confirmed that the Russian internal product codes exactly matched the product codes. In the Polish LPP catalogue.
Additionally, LPP reportedly attempted to conceal clothing exports to the Russian Federation with the help of two shell companies, Singapore-based Asia Fashion Import Export and Turkish Fashion Group Tekstil. Investigators also believe LPP used Kazakhstan as a backdoor to supply products to Russian stores.
“Overall, we believe that the LPP engineered an elaborate sham ‘asset sale’ to continue making money in Russia despite a devastating war, while also attempting to defraud investors and consumers in Poland, Ukraine and other key markets,” the newspaper said.
Let us recall that on December 6, Russian media reported that a store would be opened in Moscow offering Adidas and Reebok products, which left the Russian market due to the war in Ukraine.
According to journalists, as of September 18, 1,410 foreign companies were operating in Russia. These include, in particular, the German pharmaceutical company Stada and the Fresenius group of companies specializing in the production of medical equipment.
Source: Focus
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