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China’s Legend Sues Chilean Investor in US Over Salmon Deal

The China-based parent of Chilean salmon farmer Australis Seafoods said in a US lawsuit that former owner Isidoro Quiroga defrauded it when he sold the aquaculture company for $900 million and then tried to hide assets bought with the proceeds.

Australis, a unit of Legend Holding Corp., sued in Delaware state court alleging Quiroga didn’t disclose that his company was exceeding Chile’s salmon-production limits to artificially inflate the firm’s 2019 sale value.

The complaint is the latest twist in Legend’s efforts to hold Quiroga accountable for what the Chinese company has called “one of the greatest frauds in Chilean history.” Legend and Quiroga have been exchanging lawsuits.

“As the walls closed in, Quiroga transferred assets to the far corners of the globe in an international effort to escape the consequences of the fraud he perpetrated” on Australis and Legend, according to the 15-page suit filed Dec. 22 and made public on Tuesday.

Legend’s lawyers already have sued Quiroga in the UK and Florida, alleging he organized a scheme to pump up the value of Australis by over-fishing salmon in violation of Chilean law. The Chinese company paid “close to $1 billion for shares that would have been valued less than $350 million” if Australis was operating legally, according to the Delaware suit.

In a statement Wednesday, Quiroga’s family office dismissed the claims in the suit, saying there’s no evidence that he concealed information.

“The Chinese administration of Australis was not only informed of the supposedly hidden production situation, but expressly ordered the local administration to maintain and even increase production levels after the environmental authority had already changed its sanctioning criteria,” Quiroga’s family office said.

Delaware Link

Legend officials filed suit in Delaware because one of the holding companies Quiroga used to transfer assets is based in the state, which is the corporate home to more than 60% of Fortune 500 companies. Australis wants to use a Delaware asset-transfer law to recover money from the deal.

Joyvio Food Co., another Legend unit, filed a criminal fraud allegation against Quiroga in June over the deal. In court filings, Quiroga has repeatedly denied wrongdoing, and in a libel suit alleged Joyvio and its board had been aware of the overproduction, which was an industrywide practice before 2021.

Legend wants the Delaware judge to invalidate the transfers of assets bought with sale proceeds, including $8 million in Chilean real estate purchases, and bar Quiroga from doing other deals with monies reaped from the acquisition.

Australis, based in Santiago, produces more than 60,000 tons of salmon annually from its farms in Patagonia. The company accounts for about 10% of Chile’s annual salmon harvest.

The case is Food Investments v. Quiroga, No. N23C-12-199 MAA CCLD, Delaware Superior Court for New Castle County (Wilmington).

Source: Bloomberg