EssilorLuxottica discovers costly fraud at Thai plant

[webfact]

EssilorLuxottica discovers costly fraud at Thai plant

 

FILE PHOTO: Ray-Ban sunglasses on display at a shop in Hanau, Germany, March 18, 2016. REUTERS/Kai Pfaffenbach/File Photo

 

PARIS (Reuters) - Eyewear group EssilorLuxottica (ESLX.PA) has discovered fraudulent money transfers at a plant in Thailand, which could hit 2019 results by as much as 190 million euros ($213 million).

 

The news comes as the group formed from the 2017 merger of French lens maker Essilor and Italian glasses company Luxottica conducts a shake-up to unite the supply chains of both companies and reorganize senior management.

 

The 2017 deal was presented as a “merger of equals” but developed into a row between Luxottica’s founder Leonardo Del Vecchio and Essilor Chief Executive Hubert Sagnieres.

 

The group has said it aims to appoint a new CEO by the end of 2020, though an activist hedge fund owned by billionaire investor Daniel Loeb has urged the company to “accelerate leadership transitions”.

 

EssilorLuxottica, known for brands including Oakley and Ray-Ban, said on Monday that its Essilor International business recently discovered fraudulent financial activity in Thailand and that employees suspected of involvement had been sacked.

 

Shares in the group were down 2.8 percent at 1544 GMT.

 

“Essilor International filed complaints in Thailand and in other jurisdictions and mobilized all available internal and external resources to put an immediate end to these fraudulent activities and implement remedial actions,” the company said.

 

EssilorLuxottica added that the negative impact from the Thailand fraud would be recorded in its 2019 operating results.

 

Luca Solca, a senior research analyst at Bernstein, said that Monday’s news is likely to provoke further investor pressure for speedy post-merger integration.

 

“Management indicate that the fraud was organized by Essilor’s local management via cash payments to fictitious suppliers in a relatively short amount of time,” Solca added.

 

(Reporting by Matthieu Protard and Maya Nikolaeva; Editing by Sudip Kar-Gupta and David Goodman)

 

 

-- © Copyright Reuters 2019-12-31

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[Colabamumbai]

No corruption here, just the cost of doing business. 

[RichardColeman]

2 hours ago, webfact said:

activity in Thailand and that employees suspected of involvement had been sacked

How about arrested and charged with fraud ? 

[Damrongsak]

So who is driving around in a new Ferrari or Lamborghini and wearing Oakley or Ray-Ban sunglasses?

 

$213 million ???!!! 

[BobinBKK]

Fraud in Thailand does not exist!!!

[jastheace]

12 minutes ago, BobinBKK said:

Fraud in Thailand does not exist!!!

it does. at every level and around every corner,

you confuse with prostitution? that does not exist apparently...

[klauskunkel]

3 hours ago, webfact said:

fraudulent financial activity in Thailand

the fraud was organized by Essilor’s local management via cash payments to fictitious suppliers

New Year Lucky Money Envelopes, it's cultural

[fruitman]

I'm amazed that i haven't seen Raybans in thailand who were made in the real factory on sunday.

 

See that from many brands, also from vietnam/cambodia....they are b-choice or sunday products for a much lower price.

[hotchilli]

5 hours ago, webfact said:

“Management indicate that the fraud was organized by Essilor’s local management via cash payments to fictitious suppliers in a relatively short amount of time,” Solca added.

 

5 hours ago, webfact said:

Essilor International business recently discovered fraudulent financial activity in Thailand and that employees suspected of involvement had been sacked.

Welcome to Thailand

 

[mercman24]

anyone got an address. i have a complaint, my (genuine) Ray Bans, the logo wore off in a week,????

[cnx101]

2 hours ago, jastheace said:

it does. at every level and around every corner,

you confuse with prostitution? that does not exist apparently...

I think Bobin was joking haha

[judokrab]

Brake failure.

[SOUTHERNSTAR]

Must be foreigners.

[Yadon Toploy]

Thais being Thai.

[Mavideol]

6 hours ago, Colabamumbai said:

No corruption here, just the cost of doing business. 

correct, no corruption here, nobody cheats here.... just the way of doing business in Thailand

[neeray]

3 hours ago, fruitman said:

I'm amazed that i haven't seen Raybans in thailand who were made in the real factory on sunday.

 

See that from many brands, also from vietnam/cambodia....they are b-choice or sunday products for a much lower price.

I think I bought a pair of them. Didn't buy because my name (part of) or a designer name was on them. They just seemed to do the job.

[madmitch]

2 hours ago, mercman24 said:

anyone got an address. i have a complaint, my (genuine) Ray Bans, the logo wore off in a week,????

I had no idea Raybans and Oakleys were made here. And if they are, why are they more expensive in Thailand than anywhere else in the region?

 

As for the logo coming away, it does make you wonder whether official suppliers are being stocked with dodgy merchandise. Fake bills to so-called genuine suppliers, buy instead from some Chinese operation?

 

Remind me not to buy any "original" sunglasses here.

Edited December 31, 2019 by madmitch

[Yadon Toploy]

2 minutes ago, madmitch said:

I had no idea Raybans and Oakleys were made here. And if they are, why are they more expensive in Thailand than anywhere else in the region?

 

As for the logo coming away, it does make you wonder whether official suppliers are being stocked with dodgy merchandise. Fake bills to so-called genuine suppliers, buy instead from some Chinese operation?

 

Remind me not to buy any "original" sunglasses here.

Like most things that are made here, luxury cars; motorcycles; designer goods, the tax makes them at least double the price.

[fruitman]

13 minutes ago, neeray said:

I think I bought a pair of them. Didn't buy because my name (part of) or a designer name was on them. They just seemed to do the job.

Yes the 100 baht sunglasses do the job untill you have tried a real one with super glass....then you won't go back to the cheap ones.

 

Especially polaroid glass is great but i also like the automatic darkening function..And real glass doesn't scratch easy.

[TallGuyJohninBKK]

Foreign owned company. Local Thai management.

 

A rip-off opportunity ripe for the taking.... Someone out there was thinking, "they've got money to burn. They're farangs. Won't even notice a couple hundred million dollars missing!"

[fruitman]

1 minute ago, Yadon Toploy said:

Like most things that are made here, luxury cars; motorcycles; designer goods, the tax makes them at least double the price.

Yes Raybans are very expensive in thailand but not in the USA....just ask a friend to bring them...

[shy coconut]

8 minutes ago, TallGuyJohninBKK said:

Foreign owned company. Local Thai management.

 

A rip-off opportunity ripe for the taking.... Someone out there was thinking, "they've got money to burn. They're farangs. Won't even notice a couple hundred million dollars missing!"

It isn't unusual for a foreign owned company based in Thailand to have Europeans (in this

case) working at the top level here, therefore being "local" rather than based in Europe.

 

I may well be wrong, of course, but it doesn't state the nationality of the people involved 

in the the fraud, and has very little by the the way of information in the dramatic headline.

[Yadon Toploy]

Local bosses stole 190 million euros ($213 million).

 

That is a staggering amount of money. 

 

However, sneak thievery and fraud by Thai employees is common, I have seen it first hand (and rectified it) at a few Thai companies, but not on this scale. 

 

The normal MO is to collude with local suppliers to jack up the price of items, pay them and receive 'commissions'. This will happen with small, regular, petty cash purchases all the way up to the big ticket items. Some employees are not happy unless they are stealing.

 

If you have a purchasing dept. that colludes it can get expensive until it is caught. 

 

One of the reasons I get to run Thai companies is I know the game and know what to look for. Often these thefts go on for years without the international parent bosses having a clue. 

 

In my last job I oversaw the curtailing of spending during my first month on unecessary items to the tune of B3m. Not a lot, but a start.

 

The staff tested me by giving me purchases to approve from an overpriced local supplier, hoping I would be stupid/careless and just approve them and then it was going to be business as usual. I stopped and scrutinised all purchases, found numerous irregularities and sourced the bigger ticket items from overseas. Even with import duty they were 70% cheaper than the local supplier. 

[Yadon Toploy]

14 minutes ago, TallGuyJohninBKK said:

Foreign owned company. Local Thai management.

 

A rip-off opportunity ripe for the taking.... Someone out there was thinking, "they've got money to burn. They're farangs. Won't even notice a couple hundred million dollars missing!"

My first and immediate question would be, "What idiot though it would be a good idea to let Thais manage it?" 

[Yadon Toploy]

6 minutes ago, shy coconut said:

It isn't unusual for a foreign owned company based in Thailand to have Europeans (in this

case) working at the top level here, therefore being "local" rather than based in Europe.

 

I may well be wrong, of course, but it doesn't state the nationality of the people involved 

in the the fraud, and has very little by the the way of information in the dramatic headline.

It says they are pursuing legal action in Thailand and abroad. 

 

Could very well be nasty furriners involved.

[fruitman]

8 minutes ago, Yadon Toploy said:

If you have a purchasing dept. that colludes it can get expensive until it is caught. 

 

My wife works for a large thai company, they had a thai director to do the sales...after 5 years they found out that he had doubled the salesprice for the very large projects and half of it went in his own pocket.

 

Also did you notice that in restaurants the staff is never allowed to carry a wallet? And how IKEA handles it with their payment machines?

 

You can't trust them....

 

I think it's very annoying after a dinner to ask for the bill and pay it...takes 10-15 minutes....i would rather go to the cashier and pay myself but that's not possible most times.

[ParkerN]

Fraud? Not in Thailand surely....?

 

rotfl

 

In the real world, if you've lived here more than 10 minutes, the gold has already been extracted from your teeth...

 

 

 

 

[ParkerN]

19 minutes ago, Yadon Toploy said:

Local bosses stole 190 million euros ($213 million).

 

That is a staggering amount of money. 

 

However, sneak thievery and fraud by Thai employees is common, I have seen it first hand (and rectified it) at a few Thai companies, but not on this scale. 

 

The normal MO is to collude with local suppliers to jack up the price of items, pay them and receive 'commissions'. This will happen with small, regular, petty cash purchases all the way up to the big ticket items. Some employees are not happy unless they are stealing.

 

If you have a purchasing dept. that colludes it can get expensive until it is caught. 

 

One of the reasons I get to run Thai companies is I know the game and know what to look for. Often these thefts go on for years without the international parent bosses having a clue. 

 

In my last job I oversaw the curtailing of spending during my first month on unecessary items to the tune of B3m. Not a lot, but a start.

 

The staff tested me by giving me purchases to approve from an overpriced local supplier, hoping I would be stupid/careless and just approve them and then it was going to be business as usual. I stopped and scrutinised all purchases, found numerous irregularities and sourced the bigger ticket items from overseas. Even with import duty they were 70% cheaper than the local supplier. 

 

Welcome to the Thai way of doing business.

 

 

[TallGuyJohninBKK]

28 minutes ago, shy coconut said:

I may well be wrong, of course, but it doesn't state the nationality of the people involved 

in the the fraud, and has very little by the the way of information in the dramatic headline.

 

Fair point. I looked at other news reports, and none of them seem to give any specific indication of whether those involved were Thai or foreigners.... Except, the news reports say it was an Essilor factory, not a corporate office type setting. So my presumption -- not founded in fact as yet -- was that locals were involved.

 

[SteveK]

They are allowed to embezzle money and lie about it - it's called saving face.