October 10, 2018 / 1:50 PM / 2 months ago

Folli executives' bank accounts frozen during investigation

ATHENS, Oct 10 (Reuters) - Current and former executives at Greek jewellery maker Folli Follie have had their bank accounts frozen pending an inquiry into its 2017 financial statements, court documents seen by Reuters showed.

Folli, an upmarket Greek brand with a distinct peach curvy logo, has been in the spotlight after a hedge fund raised concerns over its financial statements for last year.

The hedge fund, Quintessential Capital Management, said in a report last May that the company overstated the number of its outlets. It also questioned its accounting practices in Asia where the company had expanded rapidly.

The report sent shares in the company into a tailspin, prompted a fine from the Greek securities commission and an investigation and the resignation of its founders last month.

A Greek court ruled this week that the bank accounts of the Koutsolioutsos family, who are the founders, and other incumbent and former board members and executives should be frozen, according to the decision seen by Reuters.

A Greek investigating prosecutor had sought the order, citing “enough indications” that the results for 2017 that Folli’s executives approved and published were inaccurate in terms of sales, profit and cash reserves, according to the decision.

The company and the founding family declined to comment.

A preliminary audit ordered by Folli revealed last month wide discrepancies in its Asian business for 2017, prompting Chairman Dimitrios Koutsolioutsos and vice-chairperson Ekaterini Koutsolioutsou, the couple who jointly founded the firm in 1982, to step down.

Chief Executive George Koutsolioutsos, the son of the founders, has distanced himself from his father. He has vowed to stay on to help reshape the company and protect its employees, partners and suppliers who he said numbered more than 10,000.

A shareholders meeting that was due to approve 2017 financial results on Wednesday was postponed for failing to muster the necessary quorum and was rescheduled for Oct. 30.

It is the third time a shareholders meeting has been postponed pending the completion of a full audit in last year’s statements.

Folli has won a temporary protection of its assets from creditors until November and has hired Deloitte to help it prepare a restructuring plan and in talks with potential investors.

Dimitrios Koutsolioutos holds a 35 stake in Folli, Fosun International a 15 percent stake and Fidelity a 6 percent, according to Refinitiv Eikon data. (Reporting by Constantinos Georgizas and Angeliki Koutantou Editing by Keith Weir)

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