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Spain’s Bankrupt Fishing Giant Pescanova- Cooking The Books

With a financial debt of USD 4.4 billion calculated at the end of 2012, Pescanova, one of Europe’s three largest seafood companies, has been put in the hands of auditing firm PricewaterhouseCoopers to decide the fate of the company’s future. The company had consistently been underreporting its huge debt position, thus showing highly inflated, non-existing, financial results.
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.
The plans for the Spanish group with an over 90-vessel-strong fishing fleet will be announced later this year, after an assessment by auditing company KPMG which revealed the colossal debt of Pescanova and calculated its negative equity at USD 1.2 billion.
The preliminary report from KPMG on Pescanova’s finances prompted the company to announce bankruptcy and the appointing of PricewaterhouseCoopers to advise what steps should be taken next. 
According to the report, “accounting practices designed and executed during the last financial years were aimed at showing Pescanova’s financial debt much lower to the real one and, as a consequence, financial results were significantly superior to the actually generated ones.”

The report also referenced some of the fishing company’s practices, “that may be considered as irregular from an accounting and financial point of view” in order to finance itself.

Manuel Fernandez de Sousa -  former CEO of Pescanova

KPMG’s investigation in part also stemmed from the resignation of Manuel Fernandez de Sousa, who had been in the CEO position of Pescanova for more than 30 years.

Who will replace the chairman is yet to be decided, but the successor may be announced on September 12 at Pescanova’s next shareholders’ meeting. Manuel Sousa will attend as a director and he is also expected to appear in court in October, accused of annual accounting falsification and abuse of relevant information.
In 2010, Pescanova’s U.S. subsidiary pleaded guilty to illegally importing USD 1.2 million worth of toothfish.

The decisions made for the company’s progress will not only directly impact the group’s future but rippling effects will come from how banks and government will go on to evaluate the Spanish fishing industry, including its large tuna fishing companies with a fleet of around 60 purse seiners and longliners, responsible for catching 289,616 tons of tuna in 2011.