Prada and Dolce & Gabanna have already faced fashion law problems over tax evasion issues. Now Chanel is accused of having its employees double as mules.
Now, Chanel and some of its employees are facing charges of systematic smuggling in Turkey. The fashion house is being accused of importing goods without customs declarations. An investigation into whether Chanel smuggled products to be sold in its two Istanbul boutiques is underway.
Three Chanel employees/Chanel mules allegedly evaded customs tax by smuggling in suitcases. Possible prison time for these fashion law crimes is between two to ten years for knowingly participating in the scheme.
The suspects are accused of “systematically and consciously” acting with the aim of not paying required customs taxes to the Turkish state.
The total value of products packed into two suitcases (the allowed baggage amount) can yield up to 1 million euros. To compare, Chanel stores worldwide have a 1 billion euro turnover.
It is unclear whether discovery proceedings have occurred; however, intra-company e-mail correspondence between the employees of Istanbul stores and Chanel’s Paris headquarters is already being planned as evidence of this alleged fraud.
This correspondence is supposed to show that one of the suspected Chanel mules in Istanbul asked her Chanel colleague (located in Paris) how to register the goods that were free of duty payments. The instructions given by the employee in France are included in the complaint file, which also includes claims that documents were forged to evade duty payments.
Chanel did not admit to any such wrongdoing but did declair that an internal audit in 2012 presented “major irregularities and failings” in the local management of its Turkey based stores. In response Chanel fired the manager of its Turkish boutiques. It is unclear if the alleged smuggling took place before, during, or after that mnager’s reign.