German sporting goods maker Puma said it would bring criminal charges against its partners in a Greek joint venture after discovering a swindle that could cost it as much as 130 mln euros.
Puma said on Monday it suspected that its "Greek joint venture partner, along with members of the Greek local management, has committed a series of criminal acts" based on the preliminary findings of an audit.
"This is about systematic evasion and embezzlement," Puma Chief Executive Jochen Zeitz told Reuters in an interview.
He said it was not yet clear how much Puma would seek in damages from its partners, brothers Georgious Glou and Antonius Glou, who own 15% each of the Puma Hellas venture.
Officials at Glou, a non-listed Greek clothing retailer, declined to comment. The two brothers did not immediately return a phone call to their office seeking comment.
Greece is one of Puma's 10 biggest European markets, with annual sales in the tens of millions of euros.
"In the long term, Greece is an important market for us," Zeitz said, but added that Puma would shrink its Greek business — under new management — to reflect tough economic conditions in the southeastern European country.
Greece's economy has been pummeled as the debt-choked country tightens its belt to slash its sky-high budget deficit. The unemployment rate there has risen to 12% and is set to head to more than 14% next year.
Zeitz said that Puma, which is controlled by France's PPR, will exercise an option to take over the Glou brothers' 30% of Puma Hellas and gain full control.
TAKING A HIT
Puma, the world's No. 3 sporting goods maker after Nike and Adidas, said it would have to restate last year's financial accounts as a result of the case.
It will take non-cash write-offs worth up to 115 mln euros, most of which applies to 2009. In addition, it will book a 15 mln euro one-time charge in the fourth quarter of this year as it restructures the Greek business.
Puma's third-quarter results are due on Tuesday. Analysts expect it to report earnings before interest and tax for the three months through the end of September rose 12% to 110 mln euros.
The scandal comes days after Zeitz said he would step down after almost 18 years at the company to lead parent group PPR's drive into the sport lifestyle market.
PPR said in a separate statement on Monday it will take a 20 mln euro hit to its 2010 net profit. The French luxury and retail group's shareholders' equity could be reduced by as much as 70 mln euros.
Puma shares fell 0.7% to 249.65 euros by 1100 GMT while PPR stock gained 1.5% to 117.85 euros. The STOXX European personal and households good index rose 1.4%.
