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ECONOMY | 05-07-2020 08:10

Creditors allege Vicentin soy giant siphoned off US$400 million

Banks are asking a New York judge to subpoena more documents from bankrupt soy-export giant Vicentin, saying there may have been “major international financial impropriety” that saw US$400 million drained from the firm.

Banks are asking a New York judge to subpoena more documents from bankrupt soy-export giant Vicentin SAIC, saying they may have been the victims of “major international financial impropriety.”

Lenders including Rabobank, Credit Agricole, ING and the International Finance Corp., the private-lending arm of the World Bank, want copies of wire transfers by Vicentin and several related companies that include a meatpacker and a vineyard. The banks, together owed US$500 million, also want to see transactions by company executives and members of its founding families, court filings dated June 29 show.

The banks are persisting with a discovery process – started in February as Vicentin went bankrupt – because they suspect about US$400 million was drained into sister companies. Vicentin said it isn’t aware of the request for new documents but that it has collaborated fully so far with the discovery procedure. The firm denies any wrongdoing and said its Paraguay, Uruguay and Europe units were not created as vehicles for capital flight.

“If proven,” lawyers for the banks said in their request to the New York court, “these ‘tunnelling’ activities very well may amount to a criminal offence under Argentine law.”

At stake is the future of one of the world’s biggest suppliers of soy meal for livestock feed and soy oil for cooking and biofuel. Vicentin’s credit-fuelled expansion in recent years helped it fend off multinationals like Bunge Ltd and Cargill Inc to be Argentina’s top exporter of the products.

Information the banks gleaned after an initial request in February led them to seek more. They say they simply can’t fathom how Vicentin went from reporting healthy finances in mid-2019 to collapsing months later, in December, when it defaulted on 99.3 billion pesos (US$1.4 billion) of debt to farm suppliers and creditors.

“Thanks to this Court’s initial order, the pieces of the puzzle that was Vicentin’s collapse are starting to fall into place,” according to the request. Now, it goes on to say, the banks want to follow the flow of funds they’ve already traced out of Vicentin into the other companies owned by its controlling families.

If it’s proved that Vicentin siphoned off funds illegally, it would be jet fuel for the Argentine government’s plan to expropriate the company.

An outright nationalisation, announced last month, is on hold after seeing resistance. After President Alberto Fernández met with Sergio Nardelli, one of Vicentin’s top executives, and Omar Perotti, the governor of Santa Fe Province, where the company is headquartered, he agreed to explore other options.

To be sure, Vicentin has already provided some of its own answers. The company says it was caught out in mid-2019, when the August PASO primary vote that made Fernández the firm favourite to win last year’s election upended markets.

Vicentin has also defended the sale of a stake in soy-processing and biodiesel-export venture Renova to partner Glencore Plc for a little more than US$122 million just days before its December default. The banks say their lending agreements don’t allow for the sale and that they don’t know what happened to proceeds. Vicentin has said US$26 million was used to pay back Rabobank and the rest went to farmers and grain brokers.

Meanwhile, Santa Fe Province, which is now handling the federal government’s efforts to control the future of Vicentin, is also on the hunt for more transparency.

It has asked the bankruptcy judge to make Vicentin and its sister companies publish annual earnings statements going back to 2014. The statements, according to a court filing by the province, would help to ascertain any hidden links between the different companies at the time Vicentin filed for bankruptcy and how company directors managed personal assets.

The New York request for documents covers the period from the start of 2017 to now. It includes Vicentin and the units in Paraguay, Uruguay and Europe, as well as Renova.

The lenders, with Natixis and Dutch development bank FMO among them, have also requested information from Vicentin’s top managers such as Nardelli and descendants of founding families, including three members of the Vicentin clan.

by Isis Almeida & Jonathan Gilbert, Bloomberg

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