French prosecutors are investigating Auchan’s Russian subsidiary over allegations that employees at the food retail group committed fraud and bribery in a scheme to enrich themselves.
The inquiry by France’s financial prosecutor, the Parquet National Financier (PNF), was opened in March 2020, but its existence was only recently revealed by business magazine Challenges.
The case is another problem in Russia for Auchan and its owners, the French Mulliez family, who have come under criticism for remaining in the country after the invasion of Ukraine even as many western companies withdrew. The family also own sporting goods supplier Decathlon and DIY retailer Leroy Merlin.
The prosecutor’s anti-corruption unit, which is leading the investigation, started days after business daily Les Echos in March 2020 reported allegations that Auchan purchasing managers in Russia had colluded with suppliers to siphon money out of the subsidiary through rigged tenders and artificial price increases.
Prosecutors are examining allegations of bribery of a foreign official, bribery by an individual, as well as complicity and concealment of these offences, the company confirmed to the Financial Times.
No indictments have yet been issued. Several executives have been questioned by the PNF, including Auchan’s secretary-general, Pierre Buchsenschutz, its director of international security, Yves Arnault, and its former security director at the Russian affiliate, Eric Galliaerde, as well as other current and former employees.
Auchan has said it is fully co-operating with the investigation. The PNF did not return a request for comment.
“Auchan is a victim in this case and reserves the right to join the case as a civil party,” the company said in a statement. “The investigation aims to clarify facts within the Russian subsidiary of Auchan but it is not directed against Auchan.”
The case involves allegations of “fraud and over-invoicing of products that Auchan Russia buys in Russia and is therefore an exclusively Russian issue”, it added.
Since opening its first store in Russia in 2002, Auchan has developed a network of 230 retail spaces and more than 30,000 employees in the country, accounting for about 10 per cent of its revenues in 2022.
Criticism over its decision to stay in the country mounted in February when newspaper Le Monde reported that Auchan’s network in the country had sent food supplies to the Russian army. The newspaper also reported that Leroy Merlin outlets in Russia had allowed collections in support of the war effort to take place in front of their stores.
Auchan denied all the allegations “without restriction and without ambiguity.”
In March, Leroy Merlin announced that it would sell its Russian operation to the local management, reversing its earlier decision to remain in the country.
Many companies, including several based in France, have faced criticism for their reticence to withdraw from Russia after the invasion of Ukraine. Exiting the country has proven difficult for some, such as Danone, to complete given restrictions and the need for Russian approvals, while others such as Renault took big losses when they sold up.