Less than a year after Prada and Dolce & Gabbana got themselves into hot water for tax evasion, Chanel is the latest luxury brand to have landed itself in a tricky spot with the law. Turkish news sites are reporting that the fashion house is under investigation with Turkish Customs for intentionally avoiding taxes on products entering the country.
As the Hürriyet Daily News reports from Instanbul, a document sent from the Customs Directorate to the chief public prosecutor in the Bakırköy district of Istanbul claims that some of the products sold in those two stores were smuggled in by Chanel employees in suitcases and thus not taxed appropriately.
For that tax evasion, three Chanel employees could be given two to 10 years in prison, the Hürriyet Daily reports.
Chanel has confirmed that an investigation by Turkish customs is indeed underway, but it denies allegations of tax evasion. The brand wrote in a statement that it was "very surprised to find a number of accusations in the media."
"To date, we have at no time received any official notice claiming that we have committed acts alleged to be contrary to Turkish law," the statement continues.
Chanel does, however, note that following an internal audit in 2012, it did find "major irregularities and failings" in the local management of two storefronts in Turkey. As a result, Chanel fired the manager of is Turkish boutiques. From Hürriyet Daily's story, it's unclear when the alleged tax evasion took place and whether those three employees cited include the manager that Chanel terminated.
According to Chanel, it is cooperating with the Turkish authorities.