The big four


Gucci owner faces €1.4 billion tax claim

Kering S.A., the French luxury goods group (and owner of Gucci), owes €1.4 billion (HK$12.5 billion) to Italy in back taxes, according to the conclusions of a government audit. The probe scrutinized the business practices of Kering’s Swiss subsidiary, Luxury Goods International, from 2011 through to 2017. Italian tax authorities opened an investigation into the subsidiary in 2017 for allegedly avoiding tax on earnings generated elsewhere. The probe was largely centered on Gucci, Kering’s biggest revenue driver, Reuters reported. Kering said it contests the findings of the audit, and that the company does not have the necessary information to record an accounting provision for any potential bill for back taxes or penalties.

Sweden, Estonia jointly probe Swedbank

The financial supervisory authorities of Estonia and Sweden opened a joint investigation in response to a media report linking Swedbank to a Baltic money-laundering scandal involving Danske Bank, the watchdogs said on 21 February. A television documentary on Sweden’s public broadcaster SVT alleged at least 40 billion Swedish krona (US$4.3 billion) had been transferred between accounts at Swedbank and Danske in the Baltics between 2007 and 2015. Danske is being investigated in five countries over US$226 billion in payments found to have flowed through its Estonian branch from Russia, former Soviet states and elsewhere. Swedbank appointed EY to carry out an external investigation into the allegations, and the results will be reported to the bank by the end of March.

Kraft Heinz accounting investigated by SEC

Food giant Kraft Heinz announced that it received a subpoena in October last year from the United States’ Securities and Exchange Commission (SEC) in relation to its accounting policies. The SEC’s probe focuses on the company’s “accounting, policies, procedures and internal controls” in procurement. Kraft Heinz revealed the investigation in its annual results for 2018. In response to the document request, the company launched an internal investigation into its procurement practices, and increased the costs of its products sold by US$25 million as a result. “We should have recorded the US$25 million in prior periods, which we booked in Q4 2018,” the company said in a conference call. It also said it was fully cooperating with the SEC.

HKMA chief executive to retire

Norman Chan will retire as the Hong Kong Monetary Authority’s (HKMA) chief executive at the end of September upon the expiry of his contract, the Hong Kong government announced this month. Financial Secretary Paul Chan will head a selection panel to identify his successor. “Norman has been leading the HKMA since 2009 and has worked tirelessly over the years to strengthen the city’s mon- etary and banking systems and promote Hong Kong’s position as an international financial centre in Asia. I respect his wish and decision to retire upon completion of his second term as Chief Executive of the HKMA,” the secretary said. Norman Chan, aged 64, joined the government as an administrative officer in 1976, and was appointed as an executive director of the HKMA when it was established in 1993. 

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