They don’t wear suits, white shirts, ties. They do not organise fifty meetings a day, do not produce summary notes and do not finalise recommendations for management. And for good reason: Fage’s consultants do not exist.
However, according to the latest annual report of the Greek industrialist published in the trade register and audited by EY, Fage has signed two consulting agreements with two Luxembourg companies, Theta Phi and Alpha Phi, since 2012. For $300,000 a month each ($7.2 million a year), the two “consultants” agreed “to provide consulting services to support the international activities of the company,” says the annual report.
Only, there is a slight problem. According to the annual reports of Theta Phi and Alpha Phi, the firms have never employed anyone since they were registered in Luxembourg in 2012, and therefore have--logically--paid neither salaries nor social charges, nor borne any other costs related to these employees.
An analysis of the two companies’ eight annual reports reveal consultancy fees totalling $53.4 million have been paid out.
Move abroad
The idea of consultants to assist in international development made sense back in 2012, when the Filippou family, which has been in charge of the company since 1926, decided to leave Greece. Analysts and commentators had been predicting the failure of the Greek state and its withdrawal from the eurozone.
In an analysis, Standard & Poor’s even believes that the Greek group did the right thing by transferring its core operations to Luxembourg in order to continue to access capital markets if required. Fage was already generating two-thirds of its sales from abroad--Italians and Brits love its yogurt. And since 2008 Fage has also been targeting the US market.
At that time, the Dairy Reporter states that maintaining 50% of its production in Greece was problematic--an analysis also supported by S&P.
Eight years after their registration in Luxembourg, who is hiding behind these two holding companies? Both Theta Phi and Alpha Phi are so-called SOPARFI (Société de Participations Financiéres). Since the beginning of August, two accounting managers from Intertrust have become their managing directors. Each entity them holds 50% of the shares of Fage International, the parent company based in Luxembourg.
Shareholders
Theta Phi’s sole shareholder is a Luxembourg company, Kappa Alpha Phi, while Alpha Phi is owned by another Luxembourg company, Iota Alpha Phi. These two family wealth management companies have the same reference shareholder, Iota Kappa, based in the US state of Delaware and the same executive… Athanassios Kyros Kyriakos Filippou.
The use of Fage funds has not been in the company’s interest, but in the interest of manager or another corporation. Under the amended 1915 Corporations Act it would have been necessary to clarify the interest of Filippou Adelfoi Galaktokomikes Epicheriseis (Fage) to spend $7.2 million a year for consultants who do not exist and who would therefore have trouble delivering valuable advice.
Questions addressed to both the generic email address listed on the company’s website refers and to the group’s new CFO, Robert Shea, were not answered by the time we went to press.
Fage makes yogurt but communicates little. There was a brief statement from the grandfather who founded the business when it first moved to Luxembourg in 2012. And then a little more from his grandson, the aforementioned Athanassios-Kyros Kyriakos Filippou, in 2016 when he sat alongside the then minister of the economy Étienne Schneider (LSAP) to announce the investment of €100 million in the Bettembourg industrial zone plant that is now the subject of so much planning permission controversy.