In addition to the three founders and some advisers, Belgian fashion group FNG itself is now also officially a suspect in its fraud case. The fashion group is trying a restart, but it is highly uncertain whether that will succeed.
Pulled along
FNG announced an unusual general meeting last week to present a recovery plan for the fashion group, to make a clean break from the past. The company’s structure and articles of association are being amended so that the power of the three founders – still the largest shareholders, but also all suspects in their own right – is curtailed. A new board of directors is supposed to be created around CEO Paul Lembrechts.
The chances of all shareholders agreeing to that have, however, suddenly decreased now that Belgian newspaper De Tijd found out that the company FNG itself is also under suspicion for all fraudulent practices at the former Brantano owner. These include forgery of the annual accounts, market manipulation and abuse of company assets. Especially the market manipulation, of which there may have been traces leading back to 2018, can come with hefty fines of up to three times the capital gains.
Tough dilemma?
FNG was allegedly already placed under suspicion last week – so before the announcement of the relaunch plans and the shareholders’ meeting. For Lembrechts and his associates, it is crucial to give the company a future, especially now that a legal agreement has finally been reached with Nordic Capital, the former owner of Ellos. In this particularly favourable settlement agreement, Nordic is still advancing money so that Ellos can soon be listed on the stock exchange.
The shareholders may face a difficult choice at the special meeting on 16 June: if they want to see some of their money, there is little choice but to take Ellos public as soon as possible, but what if FNG is still facing heavy fines and prosecution? “In the judicial investigation, indications have come to light that may point to the involvement of the company itself”, Kristof Aerts, spokesman for the Antwerp public prosecutor’s office, told De Tijd.
