Manuel Fernández de Sousa leaving the courts
Pescanova's former executives tried for falsification of accounts
Tuesday, December 03, 2019, 05:30 (GMT + 9)
The top managers of Pescanova between 2009 and 2013 are sitting in the dock almost seven years after the bankruptcy of the company. The process, which now reaches its climax, will analyze how its accounts were made up to keep an industrial "giant" beset by debt afloat.
The trial starts Monday in Madrid and is scheduled to last until March, four months during which the 19 defendants and numerous witnesses and experts will pass through the headquarters of the National Court in San Fernando de Henares.
At the head of all of them will be the former president of the Pescanova group, Manuel Fernández de Sousa, whom the prosecutor considers the leader of a network aimed at hiding the group's millionaire debt and thus deceiving investors, creditors and regulatory bodies.
Accused of eight crimes, the prosecution claims a total of 32 years in prison. Fernández de Sousa has seen how the case also splashes his wife and two sons, since in a separate case the National Court has decided to open an oral trial against them for money laundering and against the Public Treasury. Among the defendants is also former CEO Alfonso Paz Andrade, the entire leadership of the Vigo-based company, as well as the auditor of the company, BDO.
Paz-Andrade, who directed Pescanova until 2007, told FIS at the time that he did not agree with the direction taken by Pescanova management, then directed by Fernández, mentioning in particular, multi-million dollar investments in farms in Portugal and Central America. This situation led him to resign from his position and distance himself from the company to focus on other projects.
On the other hand, he also clarified that since it was not, since 2007, CEO of Pescanova the decisions and control of the company was totally out of his responsibility. Finally, he said that, as of 2007, he relied on the accounts of the external auditor of Pescanova, BDO, who did not inform the shareholders of any irregularity in the company's accounts at that time.
According to the prosecutor's documint, to which EFE has had access, the “descent into hell” of Pescanova starts in 2007 with an ambitious investment plan aimed at expanding its aquaculture business, especially in Ecuador, Central America, the Southern Cone, Galicia and Portugal. With an estimated disbursement of EUR 833 million, the company initially financed this expense through loans granted by its parent companies to different companies that were part of the same group.
Pescanova Stock Price Feb-Mar-April 2013 | Source. Cinco Dias/El País
From 2010, coinciding with the outbreak of the crisis, the lack of resources forced the company to decide to resort more to bank financing, and then bet on “alternative financing mechanisms with short-term maturity”, in a vicious circle that kept on increasing its debt. To hide the sensitivity of their situation, according to the prosecutor's investigation, Pescanova executives commanded by their president executed "irregular business practices." The volume of its debt in 2010 and 2011 was between three and almost four times higher than stated, according to the documentation. The 2012 accounts, which were not approved, also pointed to an alleged benefit of EUR 36.6 million, far from the EUR 791 million of losses it carried.
The house of cards eventually collapsed in March 2013, when in a meeting of the Board of Directors two of its members revealed that Fernández de Sousa had summoned them days before to recognize the "delicate situation" of the company and urged them to contribute EUR 50 million.
The firm then initiated pre-bankruptcy proceedings and the CNMV decided to suspend the contribution shares, a situation in which it remained for more than four years. The restructuring of the company was closed in 2015 with its split into two parts: the productive part was under the control of the creditor bank, grouped in Nueva Pescanova, while the “Old” continues as a holding company in the hands of minorities.
The process will also sit in the dock the auditor during those years, BDO, since the prosecutor believes that its partner Santiago Sañé gave his approval to the accounts despite "being aware" that they "could not reflect the true economic and patrimonial situation" of the company.