France’s Decathlon operates in Russia through a cunning sanctions evasion scheme

The French sports and leisure goods chain Decathlon continues to supply its products to Russia through a shell company despite its official withdrawal from the market. An investigation by Disclose provides evidence of its sanctions evasion scheme.

Decathlon, a sporting goods retailer, ceased operations in Russia in 2022 after a full-scale invasion of Ukraine. This year, the company sold its network of stores in Russia to a local business.

However, on December 19, Disclose journalists published an investigation claiming that Decathlon had created a secret scheme to continue supplying its sporting goods to Russia.

Decathlon sells goods to Russia through its subsidiary in Singapore and a fake company in Dubai

A fake company in Dubai, a subsidiary in Singapore… Despite its announced departure from the country, the French sports giant has set up an opaque system to continue selling its products in Russia with complete discretion. Revelations on a secret contract that has already enabled Decathlon to pocket at least $12 million, according to internal documents obtained by Disclose, was published by the investigative project.

Documents and testimonies obtained by the publication allowed journalists to identify a channel through which sportswear and footwear brands of the French company Quechua, Wedze, and Kalenji, produced in Bangladesh, re-enter the Russian market. The scheme involves representatives of Decathlon’s management, the company’s branch in Singapore, and a firm in Dubai.

Disclose claims that the French company began “secretly exporting” goods to Russia in early November. The journalists estimate the amount of revenue received at least $12 million. The investigators rely on internal documents of the retailer, testimonies of former employees of the French company, as well as open data (including videos confirming the presence of Decathlon products on the Russian market).

The “secret project” with Russia is rapidly taking shape, as evidenced by an email sent in September 2023 by a Decathlon production manager in Europe, which was seen and published by Disclose. 

In this email, which Disclose has obtained, the group’s executive talks to employees about the forthcoming signing of “a supply contract with its new buyer” from Russia. The expected value of this confidential agreement is $12 million (€11 million) for 1.2 million products to be sold as quickly as possible in Desport stores.

Decathlon’s sanction evasion scheme

Decathlon’s subsidiary in Singapore Desipro orders goods from Decathlon’s main supplier in Bangladesh, then the items are sent to Dubai to a fake company called Phenix Limited, which transfers all the Decathlon products to Russia to the newly-created company Desport. So, the Russians get what they need, while Decathlon makes money.

The French group of companies Mulliez owns the Decathlon sports store chain. This group also controls the Auchan and Leroy Merlin retail chains. Auchan stores continue to operate in Russia after the start of the full-scale invasion of Ukraine. Reports indicate that the Russian market accounts for 10% of the global sales of this retail chain.

On July 21 this year, Deputy Head of the Ministry of Industry and Trade of the Russian Federation, Viktor Yevtukhov, announced that a special “government commission for control over foreign investments” had approved the sale of the Russian business to Decathlon. The deal involved 36 facilities (35 stores and a warehouse).

The new owner of Decathlon’s business in Russia is ARM, a clothing company that owns a franchise of the Spanish company Mango. ARM CEO Vyacheslav Mareev is also involved in the restaurant and real estate businesses.

In November of this year, sports stores sold by the French company reopened in Russia under the Desport brand. And Decathlon-branded goods reappeared.

Decathlon’s response to the Disclose investigation

In response to a request to comment on the investigation, the company’s management said that Decathlon “has no stores or employees in the Russian Federation and does not own shares in companies operating in this territory.”

“Decathlon is also doing everything possible to stop the resale in the Russian Federation of products purchased in Europe by third parties,” the French sporting goods retailer said in a commentary.

All European companies should understand that any trade with the aggressor state and circumvention of sanctions means contributing money to the Russian war.

Supplying goods to Russia and working in the Russian market means participating in Putin’s bloody war, in which Ukrainian children are dying. All sanctions circumventions help Russia gain an advantage in the war and increase the likelihood that the war will spread to the EU.

Thus, the authorities of European countries must investigate such cases and punish the companies involved in helping Russia circumvent sanctions.

Total
0
Shares
Related Posts