Rica Foods has said that the investigation into alleged transactions by its former CEO Calixto Chaves have been expanded.
In December 2005, the company appointed a special investigation subcommittee charged with investigating allegations from a shareholder of certain undisclosed transactions between the company and Chaves, his affiliates and/or Industrias Avicolas Integradas, a Nicaraguan poultry and animal feed company (Indavinsa) during Chaves’ tenure as CEO of Rica from August 1996 until January 2005.
Since the investigation began, the committee’s investigation has been expanded, a statement said. Further investigations are now taking place to determine if, among other things, between January 2002 and February 2003, the company’s operating subsidiary, Pipasa, acquired various parcels of real property from Chaves and/or his affiliates for an aggregate of approximately US$5.9m, a portion of which purchase price may have been advanced to Chaves and/or his affiliates prior to the closings of the purchases.
The committee was also looking at whether from January 2001 through March 2004, Pipasa pledged certain of its short-term certificates of deposit to secure approximately US$2.5m of indebtedness of Chaves and/or his affiliates; and between January 2001 through March 2004, Pipasa provided an additional $870,000 of financial guarantees for the benefit of Indavinsa.
A statement from Rica said the committee is continuing to investigate the transactions. However it added that in the last few weeks, the committee has, with the assistance of the company’s management, collected information that suggests the outstanding principal amount of one of the debt obligations referenced in its December statement was approximately US$3.6m greater than previously estimated.
Back in December, the company said it believed that the alleged transactions will have an effect on certain of the company’s previously filed financial statements.
The company anticipates that revised financial statements and auditor’s reports will not be issued at least until the investigation is complete.