Troubled Chinese scallop producer and seafood distributor Zoneco Aquatic has received critical financial support in the form of a loan from a major bank this week, at the same time as the country’s securities regulator has sent a case surrounding corporate misgovernance at the firm to prosecutors.
The company, also known as Zhangzidao and which is listed on the Shenzhen Stock Exchange, has mortgaged its scallop stocks against the CNY 90 million (USD 13.5 million, EUR 11.7 million) loan from Minsheng Bank as it seeks to get its business back in order.
The China Securities Regulatory Commission – which penalized Zoneco with a CNY 600,000 (USD 84,000, EUR 78,000) fine earlier this year – is handing a file on its investigation of the firm over to the prosecutors.
Also this summer, the regulator fined several managers at Zoneco, which CSRC accused of misrepresenting its 2016 and 2017 annual reports with inaccurate scallop harvest data. The CSRC also forced long-time boss Wu Hougang to depart his position; he was one of 15 executives censured by the CSRC with fines and bans from directing a listed firm. The firm is also facing lawsuits from investors for damages relating to the Zoneco results from 2016 and 2017.
In other bad news for the firm, the Marine Stewardship Council has kept in place a suspension of its certification of Zoneco’s scallop fishery, which was removed in January 2020. The certification, awarded in 2015, was a coup for Zoneco and a first for a Chinese fishery. The third-party certifier who certified the firm for the MSC has yet to announce if the suspension will be lifted or made permanent. Acoura suspended the fishery due to contractual issues between Acoura/Lloyds and Zoneco relating to allegations and investigations into financial fraud.
