Pescanova chief defends actions despite audit pointing to possible fraud

The dismissed chairman of Pescanova, Manuel Fernández de Sousa, said Thursday that all the decisions made by his company, "mistakes included," were done to keep the Spanish seafood processor afloat.

Fernández de Sousa was speaking after the release of a forensic audit Wednesday that pointed to possible fraudulent accounting at the company. Fernández de Sousa said his conscience was clear because he himself ordered the report to be carried out.

The audit by KPMG, which was filed with the National Securities Commission (CNMV), reveals the group is technically bankrupt with financial debt of 3.281 billion euros — almost four times the amount the company had acknowledged — and a net negative worth of 927 million. The auditors' report paints a tale of systematic and deliberate maneuvers by the company's managers to hide the real state of its finances.

Pescanova failed to file its audited accounts for last year and made a surprise announcement revealing its financial problems on February 28. It eventually ended up in receivership with the majority of the members of its board, including Fernández de Sousa, implicated in an investigation of possible financial fraud by the National High Court.

Fernández de Sousa has acknowledged what he called discrepancies between the way Pescanova presented its accounts and normal practices.

"Over the past few years, accounting practices have been designed and executed whose end was to present the financial debt of the group below what was the case, and consequently earnings higher than those generated in reality," the KPMG report says.