The annual results finally published by Belgian fashion group FNG raise more questions than they answer: despite admitting to “dubious” affairs, no one is talking… Even the new CEO Yves Pollé seems to have something to hide.
Suspicious transactions in Hong Kong
The heavy losses recorded by FNG are largely attributable to accounting items that are literally labelled “dubious”: the net loss of 292 million euros includes some 94 million euros of “questionable” origin, made up of “several complex international transactions and structures whose underlying documents are missing, incomplete or ambiguous, or whose economic justification is unclear”, the group admits.
The exact nature of these transactions remains unknown: for the time being, all we know is that they concern central purchasing agencies in Switzerland and Hong Kong, with links to Turkey and India. According to Belgian business newspaper De Tijd, these are contracts with suppliers promising commissions through a complex structure of agents and intermediaries. FNG would thus be granted a refund of certain discounts if the group managed to sell set volumes. The newspaper also speaks of FNG selling business data to suppliers.
In any case, it is a given that these transactions are qualified as “dubious” because it is far from certain that the group will one day recover the promised money. For some transactions there are not even any written contracts, according to inside sources. In any case, the matter will be further investigated by an external adviser appointed by FNG.
Silence is consent?
As nobody seems to know what exactly happened, the next question is: who did know? The board of directors claims to be kept in the dark and receive too little information, or too late. They also say they were not (made) aware of the financial difficulties or the concerns of the Belgian stock exchange’s watchdog FSMA, who began asking questions last August.
But that same board of directors also asked too few critical questions and allowed itself to be fooled, critics claim. De Tijd quotes: “More people knew. The silence of the board of directors has allowed management to hide numerous dysfunctions by dazzling them with the company’s growth rates.”
Yves Pollé reviews his CV
Eyebrows are also raised as to why the external auditor systematically kept approving the company’s annual financial statements, especially since corrections did have to be made after the FSMA sounded the alarm. Moreover, this might not be the end of it: the highly controversial operating results for 2019 have still not been officially approved by an auditor, which means that the stock has not yet been re-listed on the Brussels exchange.
The group now promises transparency and transformation, and has appointed a transformation manager for this purpose: Yves Pollé, a graduate of the prestigious INSEAD and former employee of the Boston Consulting Group. Or is he? Despite what his LinkedIn profile used to say, Pollé has never worked at BCG, RetailDetail learned from inside sources. The consultancy firm reportedly sent him a lawyer, and the reference suddenly disappeared from his LinkedIn profile – as the photos below show. A fresh start in full transparency, they say?
“It is true that Yves Pollé never worked for the Boston Consulting Group”, a source familiar with the case replied to our article. “But he was an independent contractor for BCG Turn, a division of Boston Consulting that assists companies in restructuring. It was not very clever of him to put such a reference on his LinkedIn profile. But he did not lie on his official CV and his integrity is not in doubt.”
Insolvency looms?
What is the future of FNG and its more than 3,000 employees? Management has persuaded a small group of creditors to extend a ten million euro deadline to 2023 – instead of next year – but it is questionable whether the other shareholders will be as accommodating. According to some sources, some bondholders have already hired a lawyer, while others demand a clear recovery plan.
In addition, government investment fund PMV has invested 25 million euros in the owner of the CKS and Brantano brands, and there are hundreds of millions in outstanding loans from banks. In view of the many question marks and continuing uncertainty, it will not be easy to gain confidence in the future. Insolvency proceedings with judicial protection and major restructuring seem almost inevitable.
Screenshots LinkedIn 12/06/2020:
