Chinese foodservice giant Joyvio plans to file a USD 1.22 billion (EUR 1.13 billion) suit against the former owner of Puerto Varas, Chile-based Australis Seafoods, which it purchased in 2018 for USD 921 million (EUR 850 million).
Joyvio, a subsidiary of Legend Holdings which also owns the computer giant Lenovo, has accused businessman Isidoro Quiroga of allegedly withholding information regarding overproduction at the company’s farming centers during the acquisition’s due diligence phase.
In a statement issued 28 March, Australis filed a self-report with Chile’s Superintendency of the Environment (SMA) on 27 October, 2022, “after detecting facts that could constitute of infractions.”
“Having discovered the existence of this systematic salmon overproduction policy devised by the previous administration, we can affirm that these are acts in force at least since 2016 and that they generated an overproduction of more than 80,000 tons of salmonids. Given this, we take different measures to eradicate from the company such bad practices that affect both the controller and the authorities and that significantly damage public faith,” it said. “The first measure was to file a self-report with the SMA and, at the same time, immediately end the regulatory breaches detected. Collaboration with the SMA seeks to facilitate its inspection work, for which reason a precise description of the circumstances detected (magnitude, duration, etc.) was made available to them; a detail of what happened in the 33 fattening centers involved; reports from external and independent environmental experts; and the description of a program to compensate during the next five years (from 2023 to 2027) the denounced overproduction.”
Australis said it is pursing civil and criminal actions "against those responsible for the systematic policy of overproduction and its concealment” and is restructuring the company's corporate governance – “a process that is already being implemented.”
Australis said the value of the company upon its acquisition was artificially inflated, and accused the previous owners of the company of fraud “and other serious crimes that will be exposed in the different lawsuits.”
In response, Isidoro Quiroga – who now lives in Great Britain and may face extradition as a result of the accusations – called them “falsehoods and slander.”
“I regret that Joyvio and its advisors in Chile have chosen the path of slander and defamation to try to solve their financial and business management problems,” he told El Mercurio.
“Joyvio went scandalously into debt to buy Australis, based on profit expectations that were impossible for any company to meet,” he said, questioning why the accusations surfaced four years after the purchase. “They failed when it came to adapting to new regulatory conditions. The debt pressure was so great that Shaopeng Chen, Joyvio's chairman, decided not to listen to the warnings of Chilean executives and ordered the company to continue producing as if everything remained the same. This is taking its toll on them.”
Quiroga insisted all the details of Australis' present and past production, as well as environmental and sectoral permits, were made available to Joyvio and its specialized advisors throughout the due diligence period …
Photo courtesy of Australis Seafoods
