Who is protecting Mr. Nammos? The wild "triangles" of Frantzeskos Zannis – A multi-million party with accounting miracles

A significant "talent" for oversight seems to be possessed by the certified auditor of the financial statements of Mr. Frantzeskos Zannis’s company, Nammos World Single Member PC, since 2022: Mr. Panagis Marinakis of the audit firm KMC. This is because only a talented auditor could sign off on financial statements where no one knows where doubtful receivables originate from while money flows back and forth between the businessman’s various companies, nor how tax liabilities appear settled, disappear, and then reappear. He does not even bother to count the cash, sufficing with a certification from Frantzeskos Zannis that over 1 million euros in cash is held "in hand," presumably in stacks. Nor, of course, does he find it highly dangerous that for three years, the legal advisor has failed to provide documentation regarding potential lawsuits against the company. In short, the auditor appears to be in another dimension, as he either does not know or pretends not to know the indicators of money laundering and his reporting obligations when encountering irregularities like "cash in hand." Let us, however, take things from the beginning.

The observations of 2022

Starting with the 2022 financial statements, the auditor identifies the following, expressing a qualified opinion: "1. The asset item 'Other receivables' includes overdue receivables amounting to 1,584 thousand euros. No impairment has been carried out on these receivables, which we estimate at 1,584 thousand euros. The failure to perform the required impairment results in the value of 'Other receivables' from customers appearing inflated by 1,584 thousand euros and equity appearing inflated by the same amount.

2. The company's tax obligations have not been examined by the tax authorities for the years 2020 through 2022. Consequently, the tax results for these years have not become final. The company has not estimated the additional taxes and surcharges that may be assessed in a future tax audit and has not formed a relevant provision for this contingent liability. From our audit, we have not obtained reasonable assurance regarding the estimation of the amount of the provision that may be required.

3. We did not receive a letter from the company's legal advisor regarding any third-party lawsuits against it. Due to this fact, we maintain a reservation regarding potential lawsuits against the company and the possible impact on operating results and equity."

The surge, the debts, and profit distributions

However, if one reads the financial statements, they realize firstly that in 2022, liabilities from other taxes and fees skyrocketed to 7.8 million euros from 3.2 million in 2021, and liabilities to social security organizations reached 1.5 million euros from 773 thousand. Apparently, according to the auditor, there is nothing overdue, or does he simply not see it? It is worth noting that in the notes to the financial statements, settled tax debts of 6.965 million euros appear, up from 2.9 million at the end of 2021. Furthermore, a settlement for social security contributions of 579 thousand euros is shown. The striking part is that with such debts to the state, a dividend distribution of 5 million euros is proposed—essentially the entire profit for the year. The "poem" concludes with related-party transactions, where receivables from affiliates exceed 17 million euros, yet the transactions do not clarify how these were created. It is, evidently, a miracle.

The observations of 2023

Coming to 2023, where the auditor again issues a qualified opinion and states the following:

1. The asset items 'Trade receivables' and 'Other receivables' include overdue receivables amounting to 2,954 thousand euros. No impairment has been carried out on these receivables, which we estimate at 2,954 thousand euros. The failure to perform the required impairment results in the value of 'Trade receivables' and 'Other receivables' appearing inflated by 2,954 thousand euros and equity appearing inflated by the same amount.

2. The management of the company's cash equivalents is exercised by the Manager, in whose hands, as we were assured, were the cash balances as of 31.12.2023, amounting to approximately 1.3 million euros.

3. The company's tax obligations have not been examined by the tax authorities for the years 2020 through 2023. Consequently, the tax results for these years have not become final. The company has not estimated the additional taxes and surcharges that may be assessed in a future tax audit and has not formed a relevant provision. From our audit, we have not obtained reasonable assurance regarding the estimation of the required provision.

4. We did not receive a letter from the company's legal advisor regarding any third-party lawsuits against it. Due to this fact, we maintain a reservation regarding potential lawsuits and the possible impact on financial results and equity.

With cash in hand

As anyone can see, we have an increase in doubtful receivables to nearly 3 million euros, but the auditor does not bother to investigate how bad debts increase at such a rate without any impairment. Could they concern money given to other companies owned by Mr. Zannis Frantzeskos? The best part follows, stating that the company's money is held by Zannis Frantzeskos personally, as "assured." This is truly the first time we read such a thing in an audit report from a professional who, by law, should perform a cash count and draft the relevant protocol. But these are details, you might say. Studying the financial statements, one finds inventories of 800 thousand euros, which is puzzling for a catering company at year-end. The situation becomes even wilder with "various debtors" dropping to 1 million euros from 17 million the previous year, implying a massive theoretical cash inflow. And now we come to income tax, which dives from 7.8 million euros to 551 thousand, suggesting the company paid it off. The same appears to have happened with the social security funds.

The observations of 2024

In 2024, the auditor continues the miracles and again signs with a qualification, noting the following:

1. The asset items 'Trade receivables' and 'Other receivables' include overdue receivables amounting to 4,092 thousand euros. No supplementary impairment has been carried out on these, estimated at 4,092 thousand euros. The failure to perform the required impairment results in 'Trade receivables' and 'Other receivables' appearing inflated by 4,092 thousand euros and equity appearing inflated by the same amount.

2. The management of the company's cash is exercised by the Manager, in whose hands, as we were assured, were the cash balances as of 31.12.2024, amounting to approximately 1 million euros.

3. No provision has been made for staff indemnity due to termination of service, amounting to 12 thousand euros. The failure to make this provision results in employee benefit provisions appearing understated and equity appearing overstated.

4. The company's tax obligations have not been examined by the tax authorities for the years 2020 through 2024. Consequently, the tax results have not become final. The company has not estimated additional taxes and surcharges for a future tax audit and has not formed a provision. We have not obtained reasonable assurance regarding the estimation of the required provision.

5. We did not receive a letter from the legal advisor regarding any third-party lawsuits. We maintain a reservation for potential lawsuits and the possible impact on financial statements and equity.

Not a care in the world for the auditor

As one can observe, doubtful receivables increase to 4 million, yet it is business as usual for the auditor, who continues to accept the assurance that the 1 million in cash held by the company "in bags" is kept by Mr. Zannis Frantzeskos personally. However, looking at all three reports reveals something else shocking. For three years, the auditor receives no letter from the legal advisor regarding lawsuits and simply records it as an observation instead of issuing a disclaimer of opinion. It seems that in this area, too, Mr. Zannis Frantzeskos convinces him with words that everything is fine. Studying the balance sheet data, we find a surge in receivables from third parties (various debtors) to 6.6 million euros from 1 million. Liabilities to suppliers skyrocket to 3.15 million euros from 1.4 million, while settled tax debts of 3.1 million euros and debts to EFKA near 700 thousand euros reappear. At the same time, extraordinary and non-operating expenses of 6.8 million euros crop up, but for the first time, transactions with affiliated businesses are detailed, showing a frenzy of cash facilities. The company appears to have provided cash facilities of 6.7 million euros to other companies of Zannis Frantzeskos's interests but also received cash facilities of 5.8 million euros. The question is: what is the purpose of all these triangles?

The debt tally

As can be understood, it is literally impossible to make sense of just this one company—the largest in the group—as the accounts change at an outrageous pace from year to year, and the auditor seems to be flying a kite or, rather, sailing along the beach of Nammos. Notably, at first glance of the roughly 40 companies controlled by Mr. Zannis Frantzeskos, the tally of debts to the state and EFKA is lost; it amounts to many tens of millions of euros, far more than the 22 million mentioned in our initial data. It would be interesting to see if the settlements that appear and disappear are actual payments or something else. We are investigating the case and will return.

Nikos Karoutzos
nkaroutzos@gmail.com
www.bankingnews.gr