German sports-goods maker Puma has accused its Greek joint venture of financial irregularities. Cleaning up its Greek business is expected to cost the group well over 100 million euros.
Millions of euros are missing at Puma's Greek unit
Europe's second-biggest sporting goods maker, Puma, is experiencing its very own Greek financial crisis. Its two business partners in Greece, brothers Giorgos and Antonios Glou, allegedly deceived the company for years on end, withholding or misappropriating millions of euros from the group's Greek unit, Puma Hellas.
Puma hasn't published any details as to what happened exactly, but the company said it would launch civil and criminal proceedings against Puma Hellas' former manager, its financial executive officer and the two Glou brothers, who each owned 15 percent of the company.
"Puma is the victim of systematic fraud and embezzlement," a Puma spokesperson said.
"It is suspected that the Greek joint venture partner, along with members of the Greek local management, committed a series of criminal acts."
Puma Hellas was set up in 2005. Puma retained a 70 percent share in the business.
Puma chief Jochen Zeitz spoke of "irregularities" at the Greek joint venture
Forced to write off 115 million euros
Puma said internal and external audits both revealed irregularities at its Greek operations, but it did not explain how the Glou brothers were able to steal money repeatedly without being noticed.
The affair has caused considerable damage to the company. On Monday Puma announced it would write off up to 115 million euros ($160 million) as a result of the alleged fraud.
"Unfortunately, the discovery of irregularities committed by our Greek joint venture partner is casting a shadow on our solid financial performance in the quarter," said Puma chief Jochen Zeitz.
The company released its latest results on Tuesday. Third-quarter net profit climbed to 77.6 million euros after revenue rose 16.5 percent to 784.3 million euros.
Puma is now forecasting sales growth in the mid-to-high single digits after previously predicting a rise in the low-to-mid single digits. Profit margins are also expected to widen, the group said.
Puma sells sports goods worth millions of euros in Greece
Zeitz said the Puma will not step out of the Greek market, where the company generates turnover worth tens of millions of euros. But the group has introduced measures to cope with the effects of the crisis.
It has appointed Miguel Andrade, its long-serving manager of French operations, as the new head of the Greek unit. A new internal control system specifically designed for Puma Hellas is also being tested.
Puma said it has learned important lessons from the affair. In future the group will not rely on its partners to the same extent anymore. According to media reports, Zeitz is planning to buy the remaining 30 percent of share in Puma Hellas.
Author: Nina Haase (dpa, Reuters)
Editor: Sam Edmonds