Allegations are emerging of trade-based financial criminality at the recently bankrupted fishing conglomerate, Pacific Andes group.

The Hong Kong based conglomerate allegedly used offshore companies to engage in a trade finance fraud to fund its 2013 purchase of fishmeal maker Copeinca, a US bankruptcy trustee has said, citing liquidators’ tentative conclusions.

Documentary contradictions

Two Pacific Andes subsidiaries were engaged in “trading of frozen seafood products”, the company declared before filing for bankruptcy.

But the British Virgin Islands (BVI) registered subsidiaries may have used millions of US dollars lent for the purpose of buying fish to finance the conglomerate’s US$806 million takeover of Copeinca.

Denial

A document filed with the New York bankruptcy court reaches a “tentative” but “troubling” conclusion that funds were “raised by way of potential trade finance fraud done through Pacific Andes Enterprises (BVI) Limited (PAE) and Europaco Limited.”

These were highly likely the source of funds used to help finance the acquisition of Copeinca by the group in August 2013 according to the document prepared by the conglomerate’s liquidators. Pacific Andes has denied this allegation.

Report clarification

A forensic report currently being drafted by the Hong Kong office of RSM Corporate Advisory could shed further light on the group’s accounting.

Pacific Andes has said that progress is being made on the report, which creditor Malayan Banking Berhard (Maybank) reckons is seven months overdue, but there is no fixed date for its publication.

Allegations

Creditor banks alleged last year that the group’s accounts included more than US1 billion of “substantial fabrications of revenue and payments.”

Maybank has already alleged trade finance fraud in a court filing stating that it had extended finance to PAE that was guaranteed by other companies in the Pacific Andes group, Parkmond and Pacific Andes Resource Development.

Trade abuse

Under this trade finance, PAE agreed to buy fish and promised to pay Maybank when the fish sold.

Maybank reckons it is owed US$47.8 million in principal under the credit line, but has no idea of the whereabouts of the fish or proceeds derived from the sale of fish supposedly acquired through its trade finance.

Categories: Trade Based Financial crimes News