Probe into alleged tax offences by Cherkizovo Group, company denies allegations

By Jane Byrne

- Last updated on GMT

© istock
© istock

Related tags Stock market

The largest vertically integrated meat and feed producer in Russia, the Cherkizovo Group, has been accused by that country's authorities of illegally understating tax rates and the siphoning off $5m to an offshore company.

The Cherkizovo Group denies the allegations, and claimed that any discrepancies were simply due to a technical issue between its executives and the Russian tax authorities.

The Russian Ministry for Internal Affairs (MIA) claimed executives at the company paid dividends to a Cypriot shareholder through illegal offshore schemes.

An article on the MIA website​ noted: “In the course of operational search activities, the police found that the offenders used illegal offshore schemes when paying out dividends to the Cypriot owner of shares in the agricultural holding, which was a technical dummy company, aiming to illegally reduce the tax rate from 15 to 5%.

That MIA article did not identify the Cherkizovo Group by name; it just referred to a large agriculture holding. However, Russian media outlet, Crime Russia​, citing sources from the Russian news agency, TASS,​ revealed that the large agriculture holding was actually the Cherkizovo Group.

Company statement 

In a statement sent to FeedNavigator today, the Cherkizovo Group said it strictly complies with all legislative, fiscal and regulatory requirements; it added that it always pays all of its taxes in full and in a timely manner.

In relation to the probe over alleged tax duty violations, it said, “a technical dispute recently arose between the tax authorities and Group management over changes in the practice and application of tax rates for the payment of dividends. These changes were not explained to the Group management in a timely way. The Group’s auditors also did not alert the management to these new requirements on time.

“As soon as the Group was informed of the new requirements, applied retroactively, Cherkizovo Group immediately paid the assesses taxes and penalties on all paid-out dividends for the entire period in question and fulfilled all of its obligations to the Russian budget.

“At present, the management of the Group is actively working with the fiscal and regulatory authorities, providing them with all necessary documents and all information. The Group’s management is applying all possible efforts to quickly resolve this technical issue.”

As part of the investigation into the criminal case, government officials reportedly carried out searches at the offices and the homes of the Cherkizovo officials.

Production capacity, revenue 

The Cherkizovo Group encompasses eight poultry production facilities, fifteen pork production facilities, six meat processing plants, eight feed mills and more than 287,000 hectares of agricultural land. It also includes Tambov Turkey facility, a joint Russian-Spanish venture.

Its consolidated revenue reached RUB 82.4bn (US$1.43bn) in 2016. Its shares are traded on the London Stock Exchange (LSE) and the Moscow Exchange (MOEX).

Related news

Show more