Pescanova directors hit with massive liability bonds in corporate fraud case

Former chairman ordered to deposit 178.9 million euros

Santiago de Compostela -
Pescanova Chairman Manuel Fernández de Sousa arrives at a shareholders meeting in Vigo.
Pescanova Chairman Manuel Fernández de Sousa arrives at a shareholders meeting in Vigo.Lalo R. Villar (EL PAÍS)

A judge investigating possible financial wrongdoing at failed Spanish multinational seafood processing company Pescanova has imposed civil liability bonds on the company’s former director and six units of the group worth some 1.2 billion euros.

High Court Judge Pablo Ruz ordered former chairman Manuel Fernández de Sousa to deposit a security of 178.856 million euros. Fernández de Sousa and other former board members face possible charges of falsifying Pescanova’s accounts, providing false financial information and of using insider information.

Another former board member, Alfonso Paz-Andrade, was ordered to pay a bond of 125.066 million euros, while six different companies in the group were told to deposit a safeguard of 54.784 million euros.

Judge Ruz is due to question Fernández de Sousa on October 15. In a judicial decision dated May 23, Ruz argued that the managers of Pescanova used information that did not correspond to reality to present an “unreal image” of the company. He said during the period August 2012-January 2013, a number of financial analysts recommended investing in Pescanova on the basis of the information supplied by the company.

Ruz specifically claimed that the annual accounts presented by Pescanova for the years 2008, 2010 and 2011 did not “faithfully reflect” the financial situation of the company, as manifested by Fernández de Sousa’s decision to tell the National Securities Commission (CNMV) that Pescanova would not be posting its financial results for 2012, while saying there were doubts about the viability of the company.

Trading in the company’s shares was suspended in March and in the following month Pescanova sought protection from its creditors.

Judge Ruz also pointed out that Fernández de Sousa sold 1.6 million shares in Pescanova at an average price of 16.26 euros per share between January and February of this year, obtaining 27.4 million euros. Over the same period, Paz-Andrade sold shares worth 5.8 million euros.

Pescanova has net financial debt of 3.281 billion euros, more than four times the amount the company had acknowledged, and negative net worth of 927 million, making it technically bankrupt.

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