The government of Crimea has brought a case to court against Zenden, a major Russian footwear manufacturer and retailer, for abandoning a project to build a big shoe factory on the peninsula. It wants the court to force Zenden to pay certain taxes that were due between 2016 and 2019.
The Economy Development Ministry of Crimea claims that Zenden got some major tax breaks and the option to import raw materials and components duty-free in exchange for the investment in a special economic zone of Crimea.
Zenden is running several stores in Crimea, and it recently announced plans to open a new 1,000-square-meter store in Sevastopol.
Zenden originally announced in the spring of 2016 that it was planning to build a factory in Crimea with a capacity to make around one million pairs per years. The company estimated the cost of the investment to be close to one billion rubles (€14.1m-$15.6m). Andrey Pavlov, then the owner of Zenden, said the rationale behind the project was to help improve the Crimean economy, but it soon became clear that it was not going to be profitable.
Construction began in 2016 but was frozen after several months, reportedly because of serious violations of construction regulations by the contractors. Zenden was unable to find the right construction company and decided eventually to cancel the project.
In an interview earlier this year Pavlov said that Zenden was not using any of the tax breaks and benefits granted to it as a resident of the Crimean Special Economy Zone. The company has not yet made an announcement in regard to the lawsuit.