The National Court has sentenced 8 years in prison for the former president of Pescanova Manuel Fernández de Sousa-Faro for carrying out irregular practices to obtain bank financing. The ex-president of the Galician company and eleven other people who were at the top from 2009 to 2013 manipulated the accounts of the entity in order to attract investors, who ended up losing their money. The penalties for the rest of the eleven convicts range from six months to three and a half years in prison. On the other hand, seven of the accused have been acquitted.
The penalties for those convicted are lower than those requested by the accusations. Specifically, the magistrates of the Fourth Criminal Section understand that the crimes of falsification in commercial documents, fraud, falsification of annual accounts and falsification of economic and financial information were committed in media bankruptcy and cannot be punished independently.
In addition to natural persons, the National Court has sentenced, among others, legal persons Pescanova SA and BDO Auditores to fines and to pay different amounts for civil liability that, in some cases, reach the more than 51 million euros for the amounts that some of the investors ended up losing.
The 610-page sentence recounts a series of irregular practices carried out by the Pescanova management, headed by its executive president and president of the Board of Directors, Manuel Fernández de Sousa-Faro. It had the collaboration of the heads of the most relevant departments, such as the administration department, Alfredo Pérez Uros, the financier, led by Antonio Taboas and certain trusted employees such as José Manuel Gil González or Ángel González Domínguez.
Thus, the proven facts of the judgment relate how, as a result of the financial crisis that began to be detected in 2008, the president of the entity, in order to continue to enjoy the bank financing on which Pescanova depended for the investment effort exercised in previous years, planned, together with a group of people he trusted, including those responsible for the administrative and financial departments, keep getting funding through a series of irregular financing mechanisms or practices in order to continue obtaining bank financing.
Once this financing was obtained, another series of manipulations were carried out in the annual accounts or other official documents that reflected the financial situation of the company “to achieve positive results that did not correspond to the real situation and, after being officially published, allowed to attract new investors and displace bank financing and its excessive commissions, “according to the ruling.
Among the illegal mechanisms devised by the convicted persons, the court highlights the international trade operations with overseas subsidiaries that allowed Pescanova to obtain bank financing through millionaire “documentary credits”, behind the backs of the subsidiaries themselves and without their amounts coinciding with the data that appeared in Pescanova’s accounting.
In addition, the defendants created a series of fictitious companies, the so-called “holding companies” with which they also simulated purchase and sale operations of fish that allowed them to contract credit policies and factoring lines that were paid with promissory notes that they discounted in the banks, allowing them to have treasury during the term of the bank financing.
Those non-existent purchase and sale operations that were reflected in the accounting with the knowledge of the internal auditor and that largely hid the bank liabilities, points out the Chamber, together with the continuous offsetting of assets with liabilities and credits with debts and the lack of adequate control by the head of the external auditor motivated that once the good results fictitiously prepared by the entity were published, individuals and legal entities invested significant sums of money that they lost as a result of the fact that the reality of the economic and financial situation of Pescanova was very different from the one published in the accounts.
As explained by the magistrates throughout their sentence, the first phase of the strategy carried out by the accused consisted of the creation of the illegal forms of financing and the fictitious creation of a series of commercial sales operations; these operations would constitute a crime of falsification in a commercial document committed by individuals.
In the second phase, in which bank financing is developed through factoring lines or bank discount policies, the crime of fraud was carried out, of which falsification was the means. The ones deceived by society were the banks and the mechanism of the deceit was the invoices, “transformed into remittances of invoices supposedly linked to non-existent contracts for the sale of fish.”
From there, the third phase consisted of transferring an image with benefits and little financial debt to the annual accounts, «Very different from the real, which was perfectly transmitted to the general public and investors in particular. Once that unreal good image was achieved, it was about attracting investors that would allow them a more relaxed financial situation than that of bank financing.
In this third phase, the court concludes that there is also a medial bankruptcy relationship between the crime of falsifying the annual accounts and that of falsifying the economic and financial information. In this way, the court concludes that the four crimes are in a single media contest relationship.
The ruling also considers it to be proven that the president of Pescanova and his wife, Rosario Andrade, took 4 and a half million euros from the accounts in Spain and deposited the money in two banks in the Portuguese town of Valença, after it was known that the accounts did not reflect the real situation Pescanova and the first complaints had been filed and that they tried to transfer the money to an account previously opened in Hong-Kong.
The sentence explains that he as the author and his wife as a necessary cooperator, tried to prevent part of the repayment of the loan of the 6 million lent by the President of Pescanova on behalf of Sodesco from being available to Pescanova investors and for this they took the money from Spain to two accounts opened in Portugal. The intention of marriage, indicates the sentence, was to transfer part of the return of the 6 million from the accounts of Kiwi SA, from Spain to Portugal and from Portugal to China, for which, Rosario Andrade opened an account in the chartered Bank of Hong Kong city china. For these events, the former president of Pescanova is sentenced to two years in prison and his wife one year for the crime of confiscation of assets.