A criminal court in Punta Arenas, Chile, has found former executives of salmon-farming firm Nova Austral guilty of environmental crimes but has acquitted them of fraud charges.
The court has unanimously ruled that defendants Drago Covacich, a former regional manager at Nova Austral, and Nicos Nicolaides, the former CEO of the firm, were guilty of the repeated crime of water pollution between December 2016 and June 2019. Further, the judges unanimously issued a guilty verdict against Covacich as perpetrator of the crime of providing false information to the supervisory authority investigating the pollution.
In a majority ruling, the court also found that defendants Isaac Olivet-Besson and Rigoberto Garrido, former area managers at the firm, were guilty as accessories to the crime.
According to prosecutor Sebastián González, the court accepted the public prosecutor's arguments that environmental crimes were committed between 2016 and 2019. The prosecutor alleged that besides the falsification of mortality reports, for which Nova Austral came under investigation in 2019 from Chile’s National Fisheries and Aquaculture Service (Sernapesca), the company had stocked salmon beyond legal limits, and the now-convicted individuals had introduced sand and chemicals into the waters at the company’s salmon farms located in Alberto de Agostini National Park to cover up the pollution caused by that overproduction.
“These events … are extremely serious and have been proven in court,” González said on ITV Patagonia. “This ruling fully validates our claims: Significant environmental damage was proven – the result of abnormal operations – concealed with false statements.”
For these crimes, the prosecutor has reportedly requested sentences ranging from three to five years in prison, as well as fines that could reach an amount equivalent to around CLP 686 million (USD 728,000, EUR 634,000).
The hearing to communicate the sentence – to be drafted by Judge Guillermo Cádiz Vatcky – has been scheduled for 5 July.
The court also acquitted Covacich, Nicolaides, Olivet-Besson, and Garrido of charges seeking to incriminate them with fraud.
In their capacities as executives of Nova Austral, the four were accused of participating in deceitfully obtaining CLP 59 billion (USD 62.5 million, EUR 54.5 million) for the firm through bonuses, using the nation’s Navarino Law to do so. Under the Navarino Law, the government offers a series of tax and customs benefits for industrial companies that operate in Chile’s southernmost Magallanes region. The goal behind the law is to stimulate development in an area that has traditionally been economically depressed.
According to the accusation, the false information provided by the company allowed it to maintain high levels of production, which artificially inflated the Navarino Law bonuses that were based on production.
Prosecutors had asked for criminal penalties totaling CLP 29 billion (USD 30.8 million, EUR 26.8 million) and 11 years of prison time, as well as civil fines of CLP 50 billion (USD 53 million, EUR 46.2 million), ITV Patagonia reported.
Nicolaides's defense, led by attorneys Alejandro Espinoza and Ignacio Sotomayor, expressed their satisfaction with the acquittal.
“For years, we have maintained Mr. Nicolaides's innocence in this alleged multi-million-dollar fraud, and that has been proven today. The accusation by the Prosecutor's Office and the State Defense Council was an artificial one, constructed through serious factual and regulatory errors,” they told local press. “Regarding the conviction for the crime under Article 136 of the Fisheries Law [which establishes sanctions for the introduction of pollutants into bodies of water that may damage hydrobiological resources], we will await the ruling to learn the reasons, but we will file the appropriate appeals, as it is a decision that contradicts the [previous] ruling on environmental matters, which ruled out the existence of environmental damage – a matter upheld by the higher courts.”
Following the events for which the former Nova Austral executives were being tried, the salmon-farming company completely restructured its executive staff and strengthened its internal practices and controls.
There was also a change of ownership in September 2024 following the judicial reorganization that the company underwent, whereby the Larta Investment Group took over as sole owner. As such, the company has a different management team, new shareholders, and a completely different board of directors than those in place at the time of the questioned events.
