The family of Şemsi Erkman, business partner of Ektam Kıbrıs Ltd., one of the largest beverage companies in the Turkish Republic of Northern Cyprus (TRNC), filed a multimillion lawsuit against PepsiCo Inc. alleging its officials knew about a billing company reportedly inflating the invoices of Pepsi, a several Turkish media reports indicated recently.
The family filed a $95 million lawsuit against PepsiCo Inc. in New York, alleging that Güngör and Melih Sipahioğlu, with whom they had a partnership, aided and abetted in a fraudulent billing scheme by producing fake invoices over many years, thus depleting Ektam's resources, a special report by Sabah daily said.
In the complaint submitted to the New York Supreme Court, it was stated that an offshore shell company called Infima, owned by Güngör and Melih Sipahioğulları, had the sole purpose of inflating Pepsi invoices by 50% for the benefit of the majority shareholders of the bottling company.
According to the complaint, Ektam Kıbrıs Ltd., based in Lefkoşa, has been the sole bottler and distributor of Pepsi products in TRNC since 1981.
It was mentioned that the Erkman family owned 25% of the company, with the remaining shares being owned by Tamek Holding A.Ş., controlled by Melih and Güngör Sipahioğlu.
It was described in the complaint that Ektam made payments for concentrated syrup where water and carbonate were added to make nonalcoholic beverages for Pepsi.
Melih Sipahioğlu, who is alleged to have a close business relationship with Pepsi CEO Indra Nooyi, reportedly informed Ektam bottling company officials that Pepsi wanted to use Infima Holding NV for invoicing, without disclosing to the Ektam board of directors that Infima was an offshore shell company owned by himself and his wife Güngör, with no employees, offices or assets.
The report also indicated that Sipahioğlu did not disclose to Pepsi that an agreement had been made with Infima granting exclusive rights to the territories of the TRNC.
In the complaint, the Erkman family accused the Sipahioğlus of inflating invoices, siphoning $80 million from the bottling company, and withholding $15 million annually from minority shareholders as dividends. They also accused the minority shareholders of aiding and abetting Pepsi in fraud and breaching fiduciary duty.
The Erkman family filed a $95 million lawsuit against PepsiCo Inc. for allegedly aiding and abetting the fraudulent billing scheme. They claimed that Pepsi officials directly inflated the beverage company's invoices by up to 50% and funneled the money to the owners of Infima.