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Harrods perfume supplier arrested for selling luxury products to Russia

By

Bloomberg

Published


July 11, 2024

A perfume supplier to Harrods has been charged with continuing to sell its expensive products to Russia, in a sign that luxury goods are still being shipped to the country in defiance of British sanctions.

Harrods

The company’s director, David Crisp, is accused of knowingly breaching export bans after continuing to offer his perfumes to Russia until 2023, according to a London civil court ruling published last week. Evidence presented to the court apparently showed Crisp told an undercover detective that the Russian market was doing “really well” and that he had ignored “government edicts”.

Details of the accusations came to light during a court hearing brought by another executive who successfully campaigned to replace Crisp on the board of the perfume company.

The ruling also said Crisp was arrested by British tax authorities last October on suspicion of violating Russian sanctions and remains under criminal investigation. No charges have been brought against him.

Crisp’s lawyers told Bloomberg that he had vehemently denied that he knowingly engaged in trade that violated export controls, but they could not comment further because the investigation was ongoing.

This is the first public criminal investigation by HMRC into sanctions breaches uncovered since Russia invaded Ukraine.

The British government quickly targeted luxury goods in its rush to impose sanctions on Russia after the invasion. Governments around the world have seized superyachts, art and billions in assets linked to Russia in a bid to strip citizens and businesses of their wealth. Meanwhile, UK exports to Russia have fallen by 73% since February 2022, the UK said last month.

In a March 2022 statement, the UK said it was committed to ensuring that “oligarchs and other members of the elite who have grown rich under President Putin’s rule” are barred from accessing luxury goods. However, questions have since been raised about the effectiveness of these sanctions, with many Western luxury brands still available in Russia.

Crisp admits he continued to ship the perfume to Russia but said he did not realize he had broken rules against selling expensive goods, the judge wrote in the decision. Attorneys told the judge he did not understand the restrictions placed on the price per volume of perfume.

Crisp’s attorney said he plans to appeal the decision “at the earliest opportunity.”

“We are confident the judge will dismiss the claim and protect Mr. Crisp’s reputation through full disclosure and evidence at trial,” they said in a statement.

Crisp’s company produced and sold a range of expensive perfumes called Boadicea The Victorious, which were sold in Harrods and Selfridges department stores, as well as on Emirates airline, at a price of £900 per 100ml, according to the ruling. Harrods itself sent Crisp a warning about trading with Russia in May 2022.

The case came to light when Crisp’s co-CEO, David Garofalo, became concerned that the company was continuing to export perfumes to Russia in violation of sanctions. He hired a private investigator to put Crisp under surveillance and secretly taped him at a Dallas, Texas, hotel.

A month later, Moscow investigators discovered that the branded products were currently on sale in the Russian capital at various department stores, according to the ruling. The judge said Garofolo’s efforts led to evidence showing that a distributor linked to Crisp imported the perfumes in 2022 and 2023.

In his July 5 ruling, a London judge said there was what he called a strong case that Crisp traded with Russia while knowing he was breaking sanctions. He said it was a final process for the allegations to be conclusively proven, but that he had a “high degree of certainty” that would happen. He ruled that Crisp could be stripped of his directorship while the investigation continued.

Judge Clive Freedman said there was likely to be “an existential threat to businesses’ operations unless action is taken swiftly to isolate the offender from businesses”.

Following his arrest, Crisp, who lives outside the UK, was told he was no longer eligible for bail, according to the ruling. An HMRC spokesman said the agency would not confirm or deny the investigation.

“We had no choice but to seek this unprecedented injunction given the extent of Crisp’s misconduct,” Garofalo said in a statement. “We are incredibly grateful to the court for its decision, which has allowed us to ensure that the company will no longer be subject to the abuse and wrongful conduct of its former rogue CEO.”