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Russian federal officials raid major alcohol vendor’s offices and warehouses, days before crucial holiday sales

Meduza
Alexey Zotov / TASS

On December 26, officials raided several stores that belong to the Krasnoe & Beloe (“Red & White”) alcohol sales chain. Officers from Russia’s Federal Tax Service, the Federal Alcohol Market Regulation Service, the Federal Security Service, and the Special Police Force carried out searches of the liquor vendor’s offices in Moscow and Chelyabinsk and company warehouses across the country on the morning of December 26, Red & White’s spokespeople told reporters. The searches lasted until late in the evening. According to the relative of a company employee working at a warehouse in Yekaterinburg, people in masks armed with automatic weapons “burst in and ordered everyone to the ground,” and then “herded” more than 300 staff into the cafeteria, where they were detained all day and forbidden from eating.

Federal officials seized documents and computers, as well as one bottle from each specific alcohol shipment, which were sent for analysis. Outside warehouses in various regions, delivery trucks formed long lines, waiting to pick up and drop off their cargo. On the evening of December 26, a spokesperson for Red & White said the company’s operations had come to a complete standstill, though the chain’s storefronts were still open for business. The following morning, the company’s central office in Chelyabinsk announced that staff were back on the job.

Red & White is suspected of trafficking in counterfeit labels and evading taxes, according to a company spokesperson. A source in Russia’s alcohol industry told the magazine RBC that the tax fraud accusations arose after the company licensed its stores under different legal entities. The source says this resulted in a 1.9-billion-ruble ($27.6-million) tax penalty on the company “Absolute” (which belongs to the Red & White corporation). The Chelyabinsk Arbitration Court’s website indicates that the company is trying to challenge this decision, and the next hearing is scheduled for January 25.

Mikhail Biryuk, the head of the Federal Tax Service’s Chelyabinsk branch, says “Absolute” has paid all its taxes and has no debts in the region, though he says he knows nothing about any potential tax fraud charges against the company elsewhere in Russia. The newspaper Vedomosti has reported that the case against Red & White is being conducted by the Federal Investigative Committee. Sources told the Ural-based news website Ural.ru that experts from Federal Alcohol Market Regulation Service are searching for counterfeit booze. Spokespeople for Red & White say federal officials found no evidence that the company stores or sells counterfeit alcohol.

The leaves K&B drivers to sleep overnight outside a warehouse
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Other unconfirmed reports suggest that the company is suspected of selling alcohol taken from a police evidence room or smuggled goods. One source told the website Znak.com that officials are investigating the disappearance of alcohol from an Interior Ministry physical warehouse in Chelyabinsk. According to this unverified rumor, former police officers were able to offload the stolen alcohol through Red & White stores. Another source offered a different version of events to the news agency Interfax, claiming that law enforcement are investigating reports that Red & White is selling smuggled goods.

One day of delays might have cost the company 100 million rubles ($1.5 million) in revenue, according to Mikhail Burmistrov, the CEO of INFOLine Analytics. Burmistrov told RBC that the company’s losses will only grow, the longer its operations are interrupted, as supply chain problems emerge. He estimates that Red & White could lose as much as five billion rubles ($72.5 million), if full operations aren’t restored before January 1.

Text by Alexander Baklanov

Translation by Kevin Rothrock