The financial auditing and consulting firm PricewaterhouseCoopers will be in charge of creating the viability plan for embattled Spanish seafood producer Pescanova, with plans to reveal the outline for the company’s future in September or October, according to media reports in Spain.
The new directive follows Pescanova’s last board meeting on 17 July, where Manuel Fernández de Sousa (pictured) — son of the company’s founder and chairman of the fisheries giant for more than 30 years — resigned as CEO. It also stems from a preliminary forensic report by auditing firm KPMG, which reinforces what many have suspected about allegations of financial malfeasance by Pescanova executives.
Since February of this year, when Pescanova failed to disclose financial statements as required, the company has been under investigation by the Spanish Comisión Nacional de Mercado de Valores (CNMV), the financial regulatory body in Spain.
Within months, Pescanova declared bankruptcy, and financial auditing firm Deloitte was placed in charge of managing the bankruptcy proceedings. In response to being asked to appoint “a financial adviser to design a viability plan for the company,” Deloitte chose PricewaterhouseCooper, according to a copy obtained by SeafoodSource of a notification Deloitte issued to CNMV.
Sousa’s resignation and the appointment of PricewaterhouseCooper follow the release of KPMG’s preliminary report on Pescanova’s finances. According to a copy of that report, also obtained by SeafoodSource, KPMG’s initial assessment “confirms serious discrepancies between the accounting and the financial debt.”
According to KPMG’s assessment, the Group’s net financial debt amounted to EUR 3.3 billion (USD 4.4 billion) at the end of December 2012, and a negative equity valued at EUR 927 million (USD 1.2 billion) was confirmed.
Furthermore, according to the report, “accounting practices designed and executed during the last financial years were aimed at showing (Pescanova’s) financial debt inferior to the real one and, as a consequence, financial results superior to the actually generated ones.” The report also referenced some of Pescanova’s actions “that may be considered as irregular from an accounting and financial point of view” in order to finance itself. According to the report, instead of considering those practices accidental, they were deemed to be “the result of a voluntary planning carried out for several years by Pescanova’s management.” Finally, it is also considered that “there is evidence which justifies that some managers from Pescanova have promoted, executed, carried out or been aware of those practices to a greater or lesser extent.”
The question of who will replace the chairman since his resignation has not yet been answered. The company may choose a successor on 12 September at Pescanova’s next extraordinary shareholders’ meeting. Manuel Fernández de Sousa will attend it as a director. According to media reports, he will be in court on 15 October, when a judge will take a statement from the ex-chairman, charged with annual accounting falsification and abuse of relevant information.
