Ex-McDonald's France directors questioned in fraud inquiry

·2-min read
French authorities are looking into a 2009 accord on royalty payments.

French police on Wednesday questioned three former executives of the McDonald's restaurant chain in France on suspicion they helped shift profits to the US in order to cut French tax bills, prosecutors said.

The executives, including former McDonald's France and later McDonald's Europe CEO Denis Hennequin, were summoned by anti-fraud investigators at the behest of the National Financial Prosecutor's office, said the prosecutors, confirming a report in the Canard Enchaine newspaper.

A source initially told AFP that four former directors had been detained for questioning but the financial prosecutors later made clear that just three were being quizzed.

As well as Hennequin, they are the fast food chain's former France chief Jean-Pierre Petit and Salvatore Perri, another former director for France and southern Europe.

The inquiry focuses on a 2009 agreement between the subsidiary of the American fast-food giant in France, its second-largest market in the world outside the US, and its parent company.

Under the terms of the accord, McDonald's France doubled the royalty payments to the US headquarters to 10 percent of its sales from five percent.

Investigators say the move deprived French tax authorities of millions of euros that instead went to American shareholders.

They are also looking into a 400-million-euro payment ($470 million) under the 2009 accord to the US group for "intangible assets", money that was nonetheless routed through McDonald's European headquarters in Luxembourg.

But Luxembourg authorities have refused requests from French police for details on the transfer, the Canard Enchaine reported.

According to the report, prosecutors are seeking restitution of 300 million to 600 million euros.

In a statement, McDonald's told the paper that it is "cooperating" with the French authorities on the "complex question of the royalty values for the brand and its know-how."