Oceana Group CEO replaced as company delays financial results yet again

Cape Town, South Africa-based seafood firm Oceana Group has appointed Neville Donovan Brink, a fishing industry veteran of 30 years, as its CEO to replace Imraan Soomra, who resigned on 14 February, 2022.

And on Monday, 7 February, Oceana suspended its CFO, Hajra Karrim, on a “precautionary basis pending a further process."

The sudden leadership changes at Oceana Group comes after repeated warnings from the Johannesburg Stock Exchange, where its stock is listed, about the delayed publication of its year-end results for the year ended 30 September, 2021.

Although Oceana had earlier indicated it would publish the results by 10 February, 2022, its board of directors has petitioned for more time to file after auditors raised concerns about a letter they received regarding the dating of signatures on an internal document pertaining to an insurance claim in the amount of USD 4 million (EUR 3.5 million) in September 2021, and the recognition of the claim in the financial year ended 30 September, 2021.

Although Oceana said in early February there “is no doubt regarding the validity of the claim, which was paid out during October 2021,” the company auditors recommended a delay in publication of the financial results until an investigation by South Africa-based ENSafrica Forensics on the matter is concluded and a determination made on whether or not any additional audit and review procedures are required. The audit was triggered by a whistleblower's complaint alleging financial impropriety at the company.

In a 1 February online meeting with shareholders, Oceana Chairman Mustaq Brey denied the company had engaged in any fraud or financial misdealings, according to the Daily Maverick.

In a statement to SeafoodSource, Oceana said Soomra had resigned for "personal reasons" on 14 February and that his last day at the company will be 28 February.

"The board is cognizant that the timing for Mr Soomra’s resignation is unfortunate given the challenges that the company is currently facing, the most pressing of which is the delayed publication of the financial results," it said. "To that end, the board is working with the auditors, the JSE, and Oceana’s advisors to expedite the resolution of outstanding matters in order to pave the way for publishing of the annual financial results."

The company’s board of directors said in a notice to Johannesburg Stock Exchange (JSE) on 15 February 2022, Brink has "deep operational knowledge of all areas of the Oceana divisions and is supported by a capable executive team which will play a crucial role to ensure stability through this period of change.”

Brink, a marketing specialist, has served on Oceana's executive committee as its director for blue content products, a role he transitioned into in 2011 after serving as managing director of Oceana's lobster and calamari fishing division since 2005.

“Neville has a wealth of experience in leading businesses successfully in this industry,” the board’s statement said.

Soomra, a charted accountant, had served as Oceana's CEO for nearly four years and as Oceana's CFO since 2013. He took over as CEO from Francois Kuttel, who also quit abruptly in February 2018. Kettel now serves as the majority owner and CEO of New Orleans, Louisiana, U.S.A.-based Westbank Fishing, which owns the vessels used by Oceana subsidiary Daybrook Fisheries, a company that fishes and processes 40 to 45 percent of the annual U.S. menhaden catch in the Gulf of Mexico.

According to the Daily Maverick, Oceana's financial issues are tied to the complicated ownership structure of Westbank Fishing and Daybrook Fisheries. Oceana purchased Daybrook in 2015 for ZAR 4.6 billion (USD 305 million, EUR 269 million), an agreement that also included a 25 percent stake in Westbank, with an option to purchase the remaining 75 percent of the company should its owners choose to sell. That occurred in 2016, and Oceana chose to exercise its option, but due to U.S. laws prohibiting foreign ownership of U.S. fishing vessels, the company could not complete the transaction. At that point, Kuttel, a U.S. citizen, resigned from Oceana and acquired the 75 percent stake in Westbank.

Now, Oceana is seeking to change the financial listing of its stake in Westbank from a USD 3.5 million (EUR 3 million) asset to a USD 4.4 million (EUR 3.8 million) goodwill impairment.

Zwelakhe Mnguni, the chief investment officer of Benguela Global Fund Managers, which sold its shares in Oceana after the Westbrook transaction was approved in a shareholder vote, took umbrage with the deal.

“The fact of the matter is that this was clearly a related party transaction entailing a massive conflict of interest and potentially even laced with corruption,” he told the Daily Maverick. “There was not enough disclosure around all of this.”

Oceana has been hit by a spate of resignations in recent years, as non-executive director Geoffrey Fortuin and executive directors Lawrence McDougall and Noel Doyle resigned in 2019. Elton Bosch, who was hired as chief financial officer in June 2019, left the company in February 2020.

In its statement to SeafoodSource, Oceana said it had "beefed up" its finance division with additional capacity to manage financial operations, but that its operations "have not been affected in any manner by these ongoing challenges."

"It is important to note that the forensic investigation did not find any evidence of fraud or malfeasance, and we stand by its rigor. The suspension of the chief financial officer still stands, and the internal process is ongoing. Once again, in the interests of transparency and openness, we commit ourselves to apprising the market of any developments in that regard," it said. "The board has the highest regard for its governance, regulatory and reporting responsibilities. The board remains resolute in its quest to exercise its fiduciary responsibilities and conduct its affairs in a principled and ethical manner."

Photo courtesy of Oceana