Singapore-listed fish seller Pacific Andes Resources (Pard), which defaulted on $200 million worth of Singdollar bonds in January, is "highly likely" to have overstated its assets, revenues and profits, according to a letter to creditors seen by The Straits Times (ST).
The letter from FTI Consulting, which is the liquidator of Pard unit Pacific Andes Enterprises (PAE), has alleged that PAE's largest asset - prepayments exceeding US$700 million as at March 28 - "cannot be genuine".
PAE, which trades frozen seafood products, was supposed to have used the prepayments to pay Solar Fish Trading, an agent that purportedly dealt with Russian fishing companies to supply fish to PAE.
But according to trade finance documentation from five banks for periods from January 2013, all invoices of Solar Fish financed by these lenders were paid to the same bank accounts that had been previously alleged to be involved in "substantial circular fund flows", FTI said.
Since the funds were channelled this way, Solar Fish could not have used the money from PAE to deal with Russian fishing companies, FTI added in the letter, an update to creditors on the status of the liquidation dated Dec 6.
The allegations formed the basis of an application by HSBC for the appointment of provisional liquidators before the Hong Kong High Court at the end of 2015, and the court was totally unconvinced by the allegations and dismissed the application.
MR GEOFF WALSH, Pacific Andes spokesman, on FTI Consulting's claim of fictitious accounts.
It also noted that it is "highly likely that all or the majority of the prepayment and sales recorded in the financial accounts of the company are fictitious".
"As such, it is apparent that material levels of revenue, purchases, profit and assets reported by the company (PAE), and consolidated in relevant holding companies, cannot be genuine."
In response to queries from ST, a Pacific Andes spokesman called the letter a "vendetta" by FTI.
Mr Geoff Walsh said: "These are largely old allegations that originated from an FTI report which was written two years ago... The allegations formed the basis of an application by HSBC for the appointment of provisional liquidators before the Hong Kong High Court at the end of 2015, and the court was totally unconvinced by the allegations and dismissed the application."
The earlier FTI report had been commissioned by HSBC, after the bank's risk team spotted certain "red flags" at parent company Pacific Andes International Holdings. FTI said that most of the payments it traced from Solar Fish went to Hangzhou Investments, and from there to Parkmond Group, a unit of Pard, rather than to Russian fishing firms.
Separately, a draft report from PwC seen by ST also detailed how, at the end of June last year, Pard had made about US$611 million (S$873.3 million) worth of prepayments to three Russian agents without any formal documentation.
PwC had been engaged by Pard at the banks' behest in December last year.
Mr Walsh added that Pard's independent directors have engaged RSM Corporate Advisory to undertake a forensic review of the allegations, but did not say when those findings are expected to be published. Pard had earlier said that a draft report would be out in September.