Issue link: https://maltatoday.uberflip.com/i/1081437
NEWS maltatoday | WEDNESDAY • 13 FEBRUARY 2019 2 MATTHEW VELLA IN 2017, the operation of Spanish tuna giant Ricardo Fuentes underwent a radical change in fortune as auditors prepared their annual re- view of the Mare Blu Tuna Farm accounts: in what was a booming year for the Maltese tuna trade, the Mare Blu operation had gone from a massive profit in 2016 to a loss in 2017. As the auditors themselves found out, in 2017 the company incurred a net loss of €7.5 million, and concurrently, saw its total liabilities exceed assets by €7.77 million. Much of these liabilities were loans, or cred- it, from Fuentes-owned companies – that is, while the Maltese operation was selling more and more tuna, it was still registering losses and its debts with Fuentes companies growing. The company's losses so big, industry observ- ers thought it had affected the annual "value added" of Malta's tuna and aquaculture indus- try in 2017 because of an inexplicable rise in operating expenses in what was a year of in- creasing sales. The data from the National Statistics Office was clear: a picture of the tuna industry in rude health, with tuna and other fish-farming ac- tivities growing by 15% in 2017 to an output of €203 million. Simultaneously, however, the costs of the in- dustry rose exponentially by 42%, or €61 mil- lion – practically double. Because of that increase in industry costs, the trend of growing value added was reversed: in 2014, the tuna industry had a gross value add- ed of €18 million, growing the year after to €21 million, then €34 million, and in 2017 suddenly crashing to just €147,000. Why? Industry watchers said the anomaly made no sense. "How can an industry that is posting an- nual increases in sales and profits, suddenly go down from a value added of €34 million to just €147,000?" one government aide told Malta- Today. Another industry player pointed his fingers at the Fuentes subsidiary in Malta – surmising that its sudden reversal from profit to loss in 2017 could have influenced the entire indus- try's rise in operating expenses, although there is no smoking gun to suggest such a direct cor- relation. As the accounts of the Mare Blu Tuna Farm Limited company show, the Fuentes fish farm- ing operation in Malta went from a pre-tax profit of €7.9 million in 2016, to a massive loss of €11 million in 2017 – a downturn of 152% in what was supposed to be a year of booming tuna sales. In fact, Mare Blu actually recorded increased sales, up from €53 million to €56 million in 2017. But the company also registered a doubling of "related party" creditors in 2017, up to €37 million: unsecured loans, with no fixed date of repayment, and at interest rates of 3% or zero rates to Fuentes companies and subsidiaries. Indeed, in 2017 Mare Blu's liabilities explod- ed with the increase in its creditors: basically companies from the Fuentes group such as ship registration companies Princesa Guasi- mara, Golden Sea Trading, Waterline Trading, Frigorificos De Tunidos SA, Commercializa- dora de Armuelis SA, Tuna Graso, and Viver Atun Cartagena. The company's own auditors flagged the sud- den increase in these liabilities. "The company incurred a net loss of €7.5 million [in 2017] and the company's total li- abilities exceeded total assets by €7.77 mil- lion… these events or conditions, along with other matters… indicate that a material un- certainty exists that may cast significant doubt on the company's ability to continue as a going concern." The auditors also stated in their report that they had not received all the information and explanations required for their audit. "Adequate accounting records have not been kept, or those returns adequate for our audit have not been received from branches not vis- ited by us. The financial statements are not in agreement with the accounting records and returns." Fuentes's operations in Malta The Fuentes Group has previously insisted its sales of fresh tuna are legal and traceable and that "there are no imports from Malta, only some specific purchase operations if that were the case" From massive profits to massive losses: KNOWN in fishing circles as "the boss", Andreina Fenech Farrugia used her role as di- rector of fisheries in Malta to try and regularise illegal tuna catches, according to Spanish investigators. Her name cropped up in Op- eration Tarantella, an inves- tigation by the Spanish envi- ronmental police which led to several arrests last year. Back then Malta had featured in the findings but no public reference was made on the in- volvement of Maltese high of- ficials. However, transcripts of phone taps carried out by Spanish investigators now reveal the extent of Fenech Farrugia's al- leged involvement in trying to appease the requests for a high- er fish quota by Spanish tuna impresario Jose Fuentes. In one of the more damning conversations seen by Malta- Today, Fenech Farrugia is re- corded asking Fuentes for pay- ment. Fuentes has subsidiary com- panies in Malta, trading under the name Mare Blu, that oper- ate offshore tuna farms. Fenech Farrugia ostensi- bly used her role as director of fisheries to regularise tuna catches that surpassed strict international quotas. At one point, she was asked by Fuentes to increase his company's fish- ing quota from 3,000 tonnes to 4,000 tonnes. Secure mobile phone But it was only when Span- ish investigators came across a second mobile phone used by Fuentes that the Malta link to Fenech Farrugia surfaced. This second mobile phone was described by investigators as Fuentes's "secure phone". Transcripts of phone taps show how Fuentes used his secure line to make "confiden- tial" calls to Fenech Farrugia. How Malta's fisheries director used a Spanish mobile phone number to communicate exclusively with Spain's tuna king Jose Fuentes Garcia. KURT SANSONE reports Fisheries director point to collusion