From massive profits to massive losses: Fuentes’s operations in Malta

In 2017, the operation of Spanish tuna giant Ricardo Fuentes underwent a radical change in fortune as auditors prepared their annual review 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 credit, 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.

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The company’s losses so big, industry observers thought it had affected the annual “value added” of Malta’s tuna and aquaculture industry in 2017 because of an inexplicable rise in operating expenses in what was a year of increasing 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 activities growing by 15% in 2017 to an output of €203 million. 

Simultaneously, however, the costs of the industry rose exponentially by 42%, or €61 million – 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 added 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 annual increases in sales and profits, suddenly go down from a value added of €34 million to just €147,000?” one government aide told MaltaToday. 

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 industry’s rise in operating expenses, although there is no smoking gun to suggest such a direct correlation. 

As the accounts of the Mare Blu Tuna Farm Limited company show, the Fuentes fish farming 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 exploded with the increase in its creditors: basically companies from the Fuentes group such as ship registration companies Princesa Guasimara, Golden Sea Trading, Waterline Trading, Frigorificos De Tunidos SA, Commercializadora de Armuelis SA, Tuna Graso, and Viver Atun Cartagena. 

The company’s own auditors flagged the sudden increase in these liabilities. 

“The company incurred a net loss of €7.5 million [in 2017] and the company’s total liabilities exceeded total assets by €7.77 million… these events or conditions, along with other matters… indicate that a material uncertainty 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 visited by us. The financial statements are not in agreement with the accounting records and returns.”