The recent searches at the FESTrepublic restaurant chain offices are connected to a suspected tax evasion scheme used by the company, which could have deprived the state of UAH 50 million ($1.37 million) in tax revenue, Ukraine’s Economic Security Bureau (ESB) said in a message on its website on Oct. 17.
According to the ESB, the holding company, which owns around 60 restaurants across the country, paid its employees in cash. The scheme involved approximately 2,000 workers receiving a part of their salary in an official capacity and the remaining part unofficially. For the latter, they would issue duplicate bank cards, through which one or two payments were deposited into their accounts per month. These additional payments were not reflected in FESTrepublic’s accounting.
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According to the investigation, this allowed the company to avoid paying several taxes, including the military tax. In addition, some of FESTrepublic’s establishments did not use cash registers during transactions with customers. During the searches in Lviv, evidence of illegal activities was discovered, ESB officials said.
Should these charges be proven in court, those responsible could face up to three years in prison.
Earlier on Oct. 17, FESTrepublic co-founder Yurko Nazaruk said that armed law enforcement officers were conducting searches at the company’s head office in Lviv.
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Ukrainian MP Yaroslav Zheleznyak said the Ukrainian parliament will look into the investigation to ensure it’s done in accordance with the law.
The !FEST restaurant chain was established in Lviv in 2007 by Andriy Khudo, Yurko Nazaruk, and Dmytro Herasymov. The network includes well-known establishments such as P’yana Vyshnya, Rebernya, Lvivski Plyatsky, Lviv Chocolate Workshop, Kryjivka, and others.
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