Russian footwear retailer and producer Zenden froze the project to build a factory in Crimea. Local authorities have sued them and could get back the tax benefits granted to Zenden from 2016 til today.
The case
In the spring of 2016 Zenden announced its intention to build a factory in Crimea, investing 13 million euros. The plant would have employed around 500 people, produced a million pairs of shoes and opened by the end of 2017. However, Crimea Shoes project was frozen. In the meantime, Zenden had received the investor status in a free economic zone (FEZ) which allowed him to receive some tax benefits.
The complaint
Checks and verifications carried out by the government of the Autonomous Republic of Crimea have shown that “Crimea Shoes company is not fulfilling the contractual obligations for which the Ministry of Economic Development of the Republic has filed a lawsuit against the company itself, requesting the termination of the contract, specifying that it will be up to the local court to decide about the question of reimbursement of tax benefits so far benefited by the company”.
Pavlov’s reply
Andrey Pavlov, CEO of Zenden group (the second largest footwear company in Russia: over 23 billion rubles cashed in 2017) during an interview with Forbes at the end of last March, denounced serious defects in the construction of the plant, with cracks and damage of concrete structures. So the matter ended up in court with a complaint against the construction manager, the contractor and the subcontractor. A dispute that has lasted for at least two years.
In the image, from russianconstruction.com, Crimea Shoes design model
