L'Oreal is accused of illegal selling in a French court

By Guy Montague-Jones

- Last updated on GMT

Related tags: L'oréal, Appeal, Lindsay owen-jones

L'Oreal faces renewed accusations in the French Court of
Appeal in Paris that it illegally sold luxury cosmetics in Russia
and then diverted the profits through screen companies and tax
havens.

The former trading partner of the world's largest cosmetics company, Temtrade, presented the same allegations to the French appeal court in 2002, but the case was dismissed. Temtrade had accused L'Oreal of intentionally breaking a distribution agreement so it could illegally sell its brands on the grey market and siphon off the profits to unidentified beneficiaries via screen companies and tax havens. L'Oreal's former trading partner, which distributed L'Oreal brands exclusively in Russia, Ukraine and Belarus between 1974 and 1999, estimates that the allegedly illegal sales to amount to €110m for the 1994-1999 period, L'Oreal was back in the Paris appeal court this month to listen to its former trading partner apply for a revision of the original judgment. The application is based on recently discovered documents. Temtrade claims that the new evidence demonstrates that senior management at L'Oreal, after experiencing disappointing sales in Russia in 1996, masterminded the plan to sell its products illegally in the country. Temtrade says that in all likelihood Sir Lindsay Owen-Jones, the chairman and CEO at the time, was fully informed by February 1999 at the latest. In a statement, L'Oreal showed little sign of anxiety saying that all of Temtrade's accusations had been dismissed in court on separate occasions in 2000, 2002 and 2005. "L'Oreal is waiting with confidence and serenity for the normal outcome of these proceedings,"​ added the company. The Court of Appeal in Paris is expected to come to a decision on the case in mid-October. Despite enjoying soaring profits, L'Oreal has been best by legal worries over the past few months. In July, the company was found guilty of racism and ordered to pay a €30,000 fine in a French court and in the same month it was told to remove misleading mascara advertising in the UK.

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