The liquidity crisis hitting Pacific Andes Resources Development (PARD) has ensnared shareholders and bondholders alike since the firm failed to honour coupon payments on $200 million worth of Singdollar bonds in January.
But investigations made by separate accounting firms on behalf of the fishing firm's bank lenders suggest that some of PARD's wounds may have been self-inflicted.
The investigations began after HSBC's risk team spotted certain "red flags" at parent company Pacific Andes International Holdings last year. Investigators appear to have uncovered suspicious transactions by the firm and associate companies over a period of years.
This information came to light after PARD filed for protection against forced liquidation under the Singapore Companies Act in July. The Pacific Andes group has struggled to repay debts since its relationships with banks soured last year.
Court documents seen by The Straits Times included a draft report from PwC detailing how PARD sources most of its fish from Russian firms by making payments to agents in advance to secure supplies. The agents refund PARD from time to time after the vessel owners reimburse them.
More than 70 retirees, semi-retirees and professionals who each shelled out $250,000 or more on the bonds have come together to see if they can recover at least a fraction of their savings.
Earlier this month, about 30 bondholders met PARD's executive chairman Jessie Ng Puay Yee to hear about her restructuring plan for the company, but some said the meeting did little to clarify their concerns.
At the end of June last year, PARD had made about US$611 million (S$830 million) worth of prepayments to three Russian agents without any formal documentation, according to PwC, which had been engaged by PARD at the banks' behest in December last year.
That figure represents about 37 per cent of PARD's total assets.
Another report, from FTI Consulting and commissioned by HSBC, traced the funds paid to one of the Russian agents, Solar Fish, along a "circular route".
Most of the payments made by Solar Fish that were seen by FTI went to Hangzhou Investments and from there to Parkmond Group, a unit of PARD, rather than to Russian fishing firms, FTI said.
However, FTI also noted that Mr Ng Joo Siang, PARD's executive chairman at the time, commented that FTI's conclusions could not be relied upon as it did not understand the Russian fishing industry and its unique circumstances.
He also claimed that the HSBC bank account transactions did not provide a complete picture.
In response to Straits Times queries, a PARD spokesman pointed to a July filing stating that PARD's three independent directors have engaged RSM Corporate Advisory to undertake a forensic review of the allegations. A draft report is expected later this month.
Many of those who had put their savings into bonds issued by PARD only came to know of these allegations of financial shenanigans for the first time last month.
This was a year after PARD first made known that it was being investigated by the Monetary Authority of Singapore and the Commercial Affairs Department over possible breaches of the securities law.
A High Court hearing tomorrow will decide if PARD should get an extension of its debt moratorium.
Ahead of that, more than 70 retirees, semi-retirees and professionals who each shelled out $250,000 or more on the bonds have come together over the last two months to see if they can recover at least a fraction of their savings.
The number of DBS private banking clients involved prompted the bank to appoint Clifford Chance Asia as their lawyers. DBS was the sole lead manager and bookrunner for the 8.5 per cent unsecured bonds that sold like hot cakes in 2014.
Earlier this month, about 30 bondholders met PARD's executive chairman Jessie Ng Puay Yee to hear about her restructuring plan for the company, but some that The Straits Times spoke to said the meeting did little to clarify their concerns.
"It was totally a waste of time," said one bondholder, noting that PARD provided no updates on its business or revenue figures, while questions on the ongoing investigations were brushed aside.
But in a sudden turn of events last Friday afternoon, PARD gave an update on the operations of some of its subsidiaries.
Based on the unaudited management accounts, PARD's Peruvian fishmeal and fish oil business was a bright spot, posting a turnover of US$285 million in the nine months to June 28, and profit before tax of US$5.8 million.
The update came after Ms Ng approached bondholders again mid-week, this time with an offer to restore interest payments by the end of the first quarter next year if they support PARD at the hearing tomorrow.
In court filings here, PARD has put forth an "indicative outline restructuring plan" to restructure its debt by issuing new debt that will be repaid in five years.
The Pacific Andes group has said that the court process here is a protective measure to allow PARD to "finalise an optimal scheme of arrangement without the threat of a forced liquidation by any one of the bank creditors, acting unilaterally and in self-interest". The impact of the action taken by HSBC last year was "highly destructive", it added.
But lenders such as Rabobank and Standard Chartered have argued that PARD's application for more time to restructure its debt without a court-appointed liquidator is "self-interested" and not in the interests of stakeholders.
They allege that PARD is stalling to shield its units from attempts by creditors to carry out investigations into the suspicious transactions.