French prosecutors are investigating the Russian subsidiary of Auchan over allegations that employees of the food distribution group committed fraud and bribes in order to enrich themselves.
The investigation by the National Financial Prosecutor’s Office (PNF) was opened in March 2020, but its existence was only recently revealed by the economic magazine Challenges.
The case is another issue in Russia for Auchan and its owners, the French Mulliez family, who have been criticized for staying in the country after the invasion of Ukraine even as many Western companies pulled out. The family also owns sporting goods supplier Decathlon and DIY retailer Leroy Merlin.
The prosecutor’s anti-corruption unit, which is leading the investigation, began days after the business daily Les Echos reported in March 2020 allegations that Auchan’s purchasing managers in Russia had colluded with suppliers to divert money from the affiliate through rigged tenders and artificial price increases.
Prosecutors are investigating allegations of bribery of a foreign official, bribery by an individual, and complicity and cover-up in these offences, the company confirmed to the Financial Times.
No indictment has yet been issued. Several executives were questioned by the PNF, including the secretary general of Auchan, Pierre Buchsenschutz, its director of international security, Yves Arnault, and its former director of security for the Russian subsidiary, Eric Galliaerde, as well as others current and former employees.
Auchan said it was cooperating fully with the investigation. The PNF did not return a request for comment.
“Auchan is a victim in this case and reserves the right to bring a civil action,” the company said in a statement. “The investigation aims to clarify the facts within the Russian subsidiary of Auchan but it is not directed against Auchan.”
The case involves allegations of “fraud and overpricing of products that Auchan Russia buys in Russia and is therefore an exclusively Russian problem”, he 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, representing approximately 10% of its turnover in 2022.
Criticism of his decision to stay in the country increased in February when the newspaper Le Monde reported that Auchan’s network in the country had sent food to the Russian army. The newspaper also reported that Leroy Merlin outlets in Russia had allowed collections in support of the war effort in front of their stores.
Auchan has denied all the allegations “unconditionally and unambiguously”.
In March, Leroy Merlin announcement that he would sell his Russian operation to local management, reversing his earlier decision to stay in the country.
Many companies, including several based in France, have been criticized for their reluctance to withdraw from Russia after the invasion of Ukraine. Leaving the country proved difficult for some, like Danone, to meet restrictions and the need for Russian approvals, while others like Renault suffered big losses when they were sold.
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