NovaNam denies tax evasion
The company says it has paid various taxes due to the government since 1990 and has always been given a clean bill of health in this regard.
NovaNam has denied repeated claims that it has failed to pay the proper taxes, in terms of fishing levies due to government, and is therefore denying the state valuable income.
The resurfaced allegations emanate from extracts of financial information contained in a confidential report prepared by Rand Merchant Bank (RMB) for NovaNam, which aims to dispose of its 49% shareholding in the fishing company.
The document sets out NovaNam's proposed “localisation and empowerment transaction”, which intends to “transfer control and economic ownership to Namibians”, according to NovaNam Group CEO, Miguel Tordesillas.
This would mean that previous joint venture arrangements fall away and various rights holder partners would now participate as shareholders in management structures, in a vertically integrated NovaNam value chain.
Local sources preferring anonymity say the RMB report raises some serious questions about NovaNam's financial feasibility, as well the extent to which its “localisation” and “empowerment” ushers in a greater degree of 'Namibianisation' in the local fishing sector.
An analysis done on NovaNam's balance sheet showed the business has total debt of N$1 billion and close to N$870 million in assets, which means it has a liquidity problem.
Tordesillas, however, said despite the challenges, NovaNam's parent company, Neuva Pescanova in Spain, has been recapitalising the business to ensure its growth and retention of its 2 100 jobs, in order to keep Lüderitz on an even keel.
Tordesillas was adamant that NovaNam, Lalandii and their subsidiaries have paid the various taxes due to the Namibian state “every single year since 1990”. He says the company has been given a clean bill of health in this regard.
To illustrate his point, Tordesillas said NovaNam paid over N$72.5 million in taxes in 2016, and by November last year it had paid over N$70 million.
In 2016, NovaNam reported profit of N$200 million. Sources claim this was because it was “forced” to sell its fish in South Africa, as Pescanova Spain - at the time - had filed for bankruptcy due to liquidity problems.
The allegation is that NovaNam over the years has been selling Namibian hake at prices completely unknown to local joint venture partners and even the fisheries ministry.
“I challenge anyone - from local players to the Ministry of Fisheries and Marine Resources to ordinary fishermen - to say what the price of hake is internationally and what Namibian hake has been sold for internationally,” one source said. “No one, except the big foreign companies, know.”
They claimed that NovaNam's profit recorded in 2016 was because prices of hake sold in South Africa could not be “disguised”, as is allegedly the case for prices fetched in Spain or elsewhere.
“This is a clear indication of transfer pricing,” the source said.
Transfer pricing, put simply, is the practice of setting up prices for trading valuables between two entities across different tax jurisdictions.
In a document entitled 'Namibia fishing industry: BEE and Transformation', it was alleged that “most” fishing companies “prefer to operate at a loss” to ensure they pay less tax to the Namibian government.
It further states: “[Most] businesses will [therefore] not be able to declare dividends, which is a critical part in repaying the cost of financing the BEE transaction.”
Allegations denied
Tordesillas said the price of hake, on average, is N$54 per kilogram.
Tordesillas denied the allegations, saying the company's improved performance was due to firmer prices, a weaker local exchange rate, investment in newer technologies for its fleet and factory and an aggressive entrance into new markets.
He said South Africa, with its growing middle-class, has become an attractive market to sell to, while also noting that the European market still attracts a higher margin on premium fish per kilogram.
The alleged levy trickery
Allegations persists that NovaNam has duped the Namibian government out of millions in fishing levies, by claiming the company is 51% Namibian-owned.
The levy for hake per tonne on Namibian vessels is N$300. For foreign-owned vessels it is N$1 200. For frozen fish it is N$550 for local boats and N$1 450 for foreign vessels.
Former employee, Dawid Pokolo, who was sacked as NovaNam's general manager of human resources, claims to own 49% of NovaNam's shares through CuviMarket S.L. and Pacific Fish Distributors, of which he is the sole owner.
While Pokolo claims to own the 49% in NovaNam, the NovaNam Staff Trust has held 2% of the company's ordinary shares since 1997. This would mean that 51% is indeed owned by Namibians.
Pokolo, however, claims he was set-up to window-dress the ownership structure, for which he says he has never been paid a cent.
According to a 2013 KPMG audit report, CuviMarket, amongst others, was used by former Pescanova S.A. executives to “park” Pescanova's shares in NovaNam and so hide the mother company's massive debt.
NovaNam, as a subsidiary of Pescanova in Namibia, was never investigated by local authorities for possible collusion in the fraud.
The KPMG report led to the winding up of Pescanova S.A. in Spain and the subsequent formation of Neuva Pescanova.
Pokolo claims he was never aware that the company he had signed for in Spain as a sole shareholder was used to hide debt, claiming he was “properly played”.
CuviMarket has been dissolved - allegedly illegally - and Pokolo has in the meantime been on a fruitless hunt for the financial statements and share registers of Pacific Fish Distributors and CuviMarket.
Tordesillas maintained that Pokolo never, at any stage, owned any shares in NovaNam.
He did not respond to questions asking for an explanation on the link between NovaNam, CuviMarket and Pacific Fish Distributors.
In June 2014, NovaNam placed an advertorial in various newspapers, in which it stated its voting shareholding since 1997 was 51% held by NedCapital Namibia, as a nominee for Namibian institutional investors and the NovaNam Staff Trust, while Pescanova held 49%.
However, Namibian Sun has seen a shareholders' resolution passed on 17 February 2011, in which CuviMarket was issued 889 351 500 non-cumulative preference shares.
Another document seen is a letter to NovaNam, dated 31 October 2012, in which the CuviMarket shares were transferred to Novapesca Trading.
Pokolo has also been receiving invoices for accounting services rendered by PricewaterhouseCoopers for Pacific Fish Distributors, which NovaNam paid on his behalf.
Pokolo also claimed that NovaNam employees have never seen NovaNam Staff Trust share certificates.
More denials
Tordesillas flatly denied these allegations, as well.
He said the idea behind the NovaNam Staff Trust was to eventually list the company on the Namibian Stock Exchange, prior to or on 31 March 2018, and upon the trust paying for the value of the shares by or before the intended listing, the staff would be issued with the shares directly.
“That listing is no longer contemplated - at least in the short- to medium-term future - and what is instead being proposed is that the staff trust would obtain an additional 13% of NovaNam's voting shares with the enactment of the empowerment transaction and for the staff to directly benefit from the shareholding,” Tordesillas said.
“At no time has anybody requested a copy of the share certificate of the staff trust shares in NovaNam. All this information is available in the NovaNam share register and secretarial records.”
CATHERINE SASMAN
The resurfaced allegations emanate from extracts of financial information contained in a confidential report prepared by Rand Merchant Bank (RMB) for NovaNam, which aims to dispose of its 49% shareholding in the fishing company.
The document sets out NovaNam's proposed “localisation and empowerment transaction”, which intends to “transfer control and economic ownership to Namibians”, according to NovaNam Group CEO, Miguel Tordesillas.
This would mean that previous joint venture arrangements fall away and various rights holder partners would now participate as shareholders in management structures, in a vertically integrated NovaNam value chain.
Local sources preferring anonymity say the RMB report raises some serious questions about NovaNam's financial feasibility, as well the extent to which its “localisation” and “empowerment” ushers in a greater degree of 'Namibianisation' in the local fishing sector.
An analysis done on NovaNam's balance sheet showed the business has total debt of N$1 billion and close to N$870 million in assets, which means it has a liquidity problem.
Tordesillas, however, said despite the challenges, NovaNam's parent company, Neuva Pescanova in Spain, has been recapitalising the business to ensure its growth and retention of its 2 100 jobs, in order to keep Lüderitz on an even keel.
Tordesillas was adamant that NovaNam, Lalandii and their subsidiaries have paid the various taxes due to the Namibian state “every single year since 1990”. He says the company has been given a clean bill of health in this regard.
To illustrate his point, Tordesillas said NovaNam paid over N$72.5 million in taxes in 2016, and by November last year it had paid over N$70 million.
In 2016, NovaNam reported profit of N$200 million. Sources claim this was because it was “forced” to sell its fish in South Africa, as Pescanova Spain - at the time - had filed for bankruptcy due to liquidity problems.
The allegation is that NovaNam over the years has been selling Namibian hake at prices completely unknown to local joint venture partners and even the fisheries ministry.
“I challenge anyone - from local players to the Ministry of Fisheries and Marine Resources to ordinary fishermen - to say what the price of hake is internationally and what Namibian hake has been sold for internationally,” one source said. “No one, except the big foreign companies, know.”
They claimed that NovaNam's profit recorded in 2016 was because prices of hake sold in South Africa could not be “disguised”, as is allegedly the case for prices fetched in Spain or elsewhere.
“This is a clear indication of transfer pricing,” the source said.
Transfer pricing, put simply, is the practice of setting up prices for trading valuables between two entities across different tax jurisdictions.
In a document entitled 'Namibia fishing industry: BEE and Transformation', it was alleged that “most” fishing companies “prefer to operate at a loss” to ensure they pay less tax to the Namibian government.
It further states: “[Most] businesses will [therefore] not be able to declare dividends, which is a critical part in repaying the cost of financing the BEE transaction.”
Allegations denied
Tordesillas said the price of hake, on average, is N$54 per kilogram.
Tordesillas denied the allegations, saying the company's improved performance was due to firmer prices, a weaker local exchange rate, investment in newer technologies for its fleet and factory and an aggressive entrance into new markets.
He said South Africa, with its growing middle-class, has become an attractive market to sell to, while also noting that the European market still attracts a higher margin on premium fish per kilogram.
The alleged levy trickery
Allegations persists that NovaNam has duped the Namibian government out of millions in fishing levies, by claiming the company is 51% Namibian-owned.
The levy for hake per tonne on Namibian vessels is N$300. For foreign-owned vessels it is N$1 200. For frozen fish it is N$550 for local boats and N$1 450 for foreign vessels.
Former employee, Dawid Pokolo, who was sacked as NovaNam's general manager of human resources, claims to own 49% of NovaNam's shares through CuviMarket S.L. and Pacific Fish Distributors, of which he is the sole owner.
While Pokolo claims to own the 49% in NovaNam, the NovaNam Staff Trust has held 2% of the company's ordinary shares since 1997. This would mean that 51% is indeed owned by Namibians.
Pokolo, however, claims he was set-up to window-dress the ownership structure, for which he says he has never been paid a cent.
According to a 2013 KPMG audit report, CuviMarket, amongst others, was used by former Pescanova S.A. executives to “park” Pescanova's shares in NovaNam and so hide the mother company's massive debt.
NovaNam, as a subsidiary of Pescanova in Namibia, was never investigated by local authorities for possible collusion in the fraud.
The KPMG report led to the winding up of Pescanova S.A. in Spain and the subsequent formation of Neuva Pescanova.
Pokolo claims he was never aware that the company he had signed for in Spain as a sole shareholder was used to hide debt, claiming he was “properly played”.
CuviMarket has been dissolved - allegedly illegally - and Pokolo has in the meantime been on a fruitless hunt for the financial statements and share registers of Pacific Fish Distributors and CuviMarket.
Tordesillas maintained that Pokolo never, at any stage, owned any shares in NovaNam.
He did not respond to questions asking for an explanation on the link between NovaNam, CuviMarket and Pacific Fish Distributors.
In June 2014, NovaNam placed an advertorial in various newspapers, in which it stated its voting shareholding since 1997 was 51% held by NedCapital Namibia, as a nominee for Namibian institutional investors and the NovaNam Staff Trust, while Pescanova held 49%.
However, Namibian Sun has seen a shareholders' resolution passed on 17 February 2011, in which CuviMarket was issued 889 351 500 non-cumulative preference shares.
Another document seen is a letter to NovaNam, dated 31 October 2012, in which the CuviMarket shares were transferred to Novapesca Trading.
Pokolo has also been receiving invoices for accounting services rendered by PricewaterhouseCoopers for Pacific Fish Distributors, which NovaNam paid on his behalf.
Pokolo also claimed that NovaNam employees have never seen NovaNam Staff Trust share certificates.
More denials
Tordesillas flatly denied these allegations, as well.
He said the idea behind the NovaNam Staff Trust was to eventually list the company on the Namibian Stock Exchange, prior to or on 31 March 2018, and upon the trust paying for the value of the shares by or before the intended listing, the staff would be issued with the shares directly.
“That listing is no longer contemplated - at least in the short- to medium-term future - and what is instead being proposed is that the staff trust would obtain an additional 13% of NovaNam's voting shares with the enactment of the empowerment transaction and for the staff to directly benefit from the shareholding,” Tordesillas said.
“At no time has anybody requested a copy of the share certificate of the staff trust shares in NovaNam. All this information is available in the NovaNam share register and secretarial records.”
CATHERINE SASMAN
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