Hennes and Mauritz, popularly known as H&M, is facing a criminal investigation surrounding a custom duty fraud in Russia. The company has allegedly evaded a sum of 3.1 billion rubble ($42 million).
The Russian customs service said that the company has been avoiding paying tax when it exports retail goods from its Swedish parent company for the past 4 years (2016-2020) and this has led the country to open an investigation in December of last year.
H&M has recently paid up 3.1 million rubble to cover up the irregularities but reports suggest that the matter can get worse as a potential jail sentence for a senior executive is imminent.
This has drastically affected the stock exchange value of the company – The company registered a drop in 1.7% decline in Stockholm’s OMX 30 index. Company officials from H&M headquarters have recently confirmed the ongoing Russian investigation.
There was a similar incident back in 2014 when a Swedish beauty product producer – Oriflame was charged 1 billion rubbles by the Russian government. The European market experts are concerned and they say that these kinds of discrepancies don’t bode well for the European trade market.