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Folli Follie – the heart of the Greek fraud was, as expected, in China

By Tom Winnifrith | Saturday 21 July 2018

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Another day, another release from fraud Follie Follie to the Greek Stock Exchange and, as we all suspected, it is the bogus Chinese operations that were at the heart of this fraud.

You will remember that almost all group EBITDA came from China and $296.7 million of cash apparently sat in the HK subsidiary at the end of 2017 out of a claimed group total of $446 million meaning that without HK FF would have had net debt.  And in his original report Gabriel Grego showed clearly that vast numbers of claimed Chinese outlets just did not exist.

And of course the China/HK subsidiary was audited by a small two partner firm. What could possibly go wrong?  Er.. the latest announcement by the Bubbles to the Hellenic Stock Exchange is clear ( the underline is mine):

Folli Follie Commercial Manufacturing and Technical Société Anonyme (the “Company”) following its yesterday’s announcement on 17/7/2018, as regards the Athens Stock Exchange’s letter dated 16 July 2018, hereby further announces that its statutory auditor, Ecovis VNT Auditing Certified Public Accountants Business Consultants S.A. (“Ecovis”), informed the Company that they revoked their support to their audit opinion dated 26 April 2018 on the Company’s consolidated financial statements for the financial year ended 31 December 2017 (the “2017 Consolidated Financial Statements”), because the Company’s subsidiary, Follie Follie Group Sourcing Limited (“FFG Sourcing”) and its statutory auditors, Th. NG Chi Wa & Co, have not provided Ecovis with the documentary and other information that Ecovis has requested to be able to confirm the financial statements of FFG Sourcing and in particular the cash balances of FFG Sourcing as at 31 December 2017. As a result, Ecovis has expressed doubts as to the accuracy of the audit opinion of Th. NG Chi Wa & Co dated 14 April 2018 on FFG Sourcing’s financial statements for the financial year ended 31 December 2017, and according to Ecovis’ opinion this, in turn, may adversely impact accuracy and reliability of the 2017 Consolidated Financial Statements.

The Company takes Ecovis’s revocation seriously, will continue pursuing extraordinary independent audits and reviews currently conducted by Ernst & Young and Alvarez & Marsal (as announced on 25 June 2018) and take necessary decisions in relation to the 2017 Consolidated Financial Statements upon the outcome of these audits and reviews, which will be submitted to the Ordinary General Meeting of the shareholders’ of the Company. The Company will also continue cooperating with the Hellenic Capital Market Commission and other competent authorities.


Jail time for some bubbles beckons. Meanwhile my doorstepping at Folli’s North of Athens HQ four days before its shares were suspended will go in my career collector’s items file.

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