Report unveils Decathlon’s covert clothing supply to Russia through Dubai shell company and Singapore-based subsidiary

SINGAPORE: Decathlon, the renowned French sports retail giant, faces allegations of secretly continuing to sell clothing in Russia despite publicly withdrawing from the market in protest against Russia’s war in Ukraine.

The investigative report published on Disclose on Tuesday (19 Dec) uncovered a covert scheme involving Decathlon’s continued supply of products to Russia.

This scheme, as revealed through internal company documents, open-source videos, and statements from former employees, suggested that Decathlon was clandestinely providing products to Russia under the guise of a supply contract with the Russian local brand Desport, estimated at a value of at least US$12 million.

Decathlon, which recorded sales of 15.4 billion euros (S$22.4 billion) last year, swiftly declared its intention to exit the Russian market in response to Russia’s invasion of Ukraine.

In a move portrayed as the conclusion of its Russian operations, the company sold its 60 local outlets in Russia to Desport in October of this year, as reported by the investigative media site Disclose.

“Officially, Decathlon’s presence in Vladimir Putin’s Russia was history. Officially only,” the report noted.

However, despite this public withdrawal, the report highlighted that Decathlon continued to supply Desport with its prominent brands—Quechua, Wedze, and Kalenji—very discreetly in recent weeks.

Decathlon’s strategy allegedly involves a Dubai shell company and Singapore-based subsidiary

The key elements of this strategy include the utilization of a shell company registered in Dubai, and the engagement of a subsidiary of the Decathlon brand based in Singapore.

“I heard that Decathlon wanted to keep selling its products in Russia in the summer of 2023,” the media quoted an unnamed source who recently left the company as saying. “I immediately realised that this was a secret project.”

According to the Disclose report, Decathlon initiated a covert “secret project” aimed at ongoing product sales in Russia.

To execute this without raising suspicion, the company diverted items intended for European stores to be repurposed for the Russian market. Employees were instructed to reserve certain European-bound products for redirection to Russia.

Decathlon resorted to a Singapore-based subsidiary, Desipro. With its help, the group ordered goods urgently from its Asian suppliers.

Due to the conflict in Ukraine, products couldn’t be exported directly to Russia. Instead, Decathlon instructed its Asian partners to fly consignments to Dubai.

Upon arrival, a company named Phenix Limited in Dubai received the cargoes before rerouting them to Moscow.

Phenix Limited acted as a shell company, seemingly without a website or visible employees. Goods shipped from Bangladesh never left Dubai airports but were promptly redirected to Moscow, as reported by Disclose.

“In an internal logistics table dated October 2023, Disclose identified references for Kalenji running jackets, Wedze ski jackets and Quechua trousers and shoes, all flown from Bangladesh to Russia, via Dubai. Tens of thousands of goods are involved.”

The first batch of Decathlon products reportedly reached Moscow in early November, successfully passing through customs.

Subsequent communications verified the efficient delivery of a substantial volume of goods from Bangladesh to Russia, indicating the sustained operation of this covert supply chain.

Decathlon’s response

According to Disclose, when reached for comment, Decathlon stated that it is “doing everything possible to put an end to the resale of [its] products on Russian Federation territory”.

This statement addresses the illegal resale of its items by individuals on Russian e-commerce platforms.

However, there was no mention from Decathlon regarding the company’s direct shipment of goods to Russia, despite the investigation’s findings. Despite attempts to seek further information, Decathlon did not respond to Disclose’s inquiries.

The investigation also uncovered that Decathlon’s efforts to conceal its deliveries to Russia were not confined solely to Bangladesh.

Screenshots from the group’s logistics databases revealed that since October of the previous year, the company’s branches in Vietnam and China have also been arranging shipments labelled for Sports_R, the code used for Desport stores.

Source: Disclose

The statement released by Decathlon on Tuesday, as published on its official website, emphasized that since October 2023, the company has completely ceased operations, employment, and ownership stakes in any businesses within the Russian Federation.

As part of its withdrawal from the region, Decathlon said they placed a priority on maintaining employment for its former teammates under the new ownership.

To facilitate this, Decathlon opted to transfer all of its operations and assets to ‘ARM,’ the company that owns the Desport brand.

“To finalise the transaction, it was agreed, in accordance with current local and international regulations, to supply a limited quantity of products for a limited period of time, to support the buyer in the launch of its new operations, thereby preserving the jobs of former teammates.”

“Decathlon reaffirms its commitment to complying with all applicable local and international regulations, ” the company added.