The report of an independent Auditors Committee which audited Aegean Marine Petroleum Network Inc, has found $300mn that went missing, financial data that were registered wrongly to cover up that fact, responsibilities of an individual, who is not named but is alluded to, and who is charged with controlling the company’s personnel not only through economic pressure, but also with threats of physical violence, and even the hacking of a company server in order to erase incriminating evidence.

The damning report was released by the company itself, with new shareholders saying that they will take legal action and seek damages.

The US Securities and Exchange Commission and the Justice Department are already investigating the case.

Among the highly unusual things recorded in the findings, what makes the greatest impression is that the Hellenic Data Protection Authority issued in June a temporary order –upon the petition of the aforementioned individual – by which it forbade the Audit Commission access or use of emails collected from the Piraeus server. If that is corroborated, it raises huge questions about the role of the Hellenic Data Protection Authority, as it is liable to be accused of being a “backer” that ensures that the probe will not go forward.

The new report of the Audit Committee, dated 2 November, 2018, was released last Friday by Aegean, which is listed on the New York Stock exchange (NYSE).

Entitled “Aegean Marine Petroleum Network Inc. Announces Results of Audit Committee Investigation and Findings of Substantial Misappropriation of Company Assets”, the report uncovers new parameters of the case.

For example, it alludes to a key person who is behind Aegean and an affiliated company, which is described as “Former Affiliate”. The term is usually used to refer to an individual who in the past had a stake in the company and had a directorial position.

What the Committee discovered

The findings that were drafted by the Audit Committee with the help of forensic accountants state the following:

“The Audit Committee believes up to US$300 million of Company cash and other assets were misappropriated through fraudulent activities. The Audit Committee believes that the principal beneficiary of the misappropriation is OilTank Engineering & Consulting Ltd. (“OilTank”), a company based in Fujairah and incorporated on March 15, 2010 in the Marshall Islands. On March 31, 2010 OilTank entered into a contract with Aegean’s subsidiary to oversee the construction of the Fujairah Oil Terminal Facility (the “Fujairah Facility”). The Audit Committee believes that this contract was used to misappropriate Company funds through inflated contracts and fraudulent pricing. The Audit Committee has reason to believe that OilTank is controlled by a former affiliate of the Company (the “Former Affiliate”).”

“As of December 31, 2017, the Company and/or its subsidiaries had an aggregate of approximately US$200 million in accounts receivable that arose from purported commercial transactions that occurred in 2015, 2016, and 2017. These transactions lacked economic substance as the relevant counter-parties were shell companies with no material assets or operations and were owned or controlled by former employees or affiliates of the Company. The Audit Committee believes that the receivables were improperly recorded as part of a scheme to facilitate and conceal an extensive misappropriation of Company assets channeled to OilTank, but accounted for as transactions with these shell companies. The Audit Committee has further confirmed that the approximately US$200 million of receivables are uncollectible and will be written off.”

“The Investigation also uncovered additional actions to defraud the Company and/or its subsidiaries, including prepayment for future oil deliveries that were never made. These fraudulent activities appear to have commenced as early as 2010.”

“The misappropriation of Company assets, and the fraudulent accounting entries and fictitious documentation designed to conceal it, involved over a dozen Company employees, including members of senior management. The employees who directed the scheme, which involved the creation of falsified and forged documents, including bank statements, audit confirmations, contracts, invoices and third party certifications, among others, have been terminated.”

“The Audit Committee believes that this misconduct occurred in part because the Former Affiliate has exerted significant control over Company personnel and assets through various inappropriate means, including threats of economic retaliation and physical violence. In addition, the Former Affiliate continues to have access to and control over the Company’s electronic and physical files.”

Electronic interventions

The findings note the company’s efforts to access emails and other electronic data were obstructed.

“In connection with the Investigation, the Company’s efforts to obtain access to relevant emails and other electronic data stored on the Company’s server were and continue to be obstructed as a result of, among other things, the threats of retaliation against Company personnel, and at least one attempt to delete and permanently erase documents from the Company’s server through the remote installation of data deletion software by a person with administrator access. On June 22, 2018, following a complaint by the Former Affiliate and related parties, the Hellenic Data Privacy Authority (“HDPA”) issued a provisional order which prohibited the review or use of emails and other files that were collected from the Company’s Piraeus, Greece server in connection with the Audit Committee’s investigation.”

Involvement of US law enforcement

The findings also outline the involvement of US law enforcement agencies.

“As previously disclosed, the Company voluntarily reported its preliminary findings to the U.S. Securities and Exchange Commission (“SEC”) and the U.S. Department of Justice (“DOJ”) and has now reported the results of the Audit Committee investigation. On October 3, 2018 the Company received a grand jury subpoena from the U.S. Attorney’s Office for the Southern District of New York in connection with suspected felonies. Insofar as it is permitted to do so within the strictures of the HDPA’s order, the Company is providing documentation to the DOJ.”

Swift developments regarding the case are expected, according to sources in New York.

The role of the US Embassy in Athens and Ambassador Geoffrey Pyatt , as well as that of competent auditing authorities that have come to Greece for this purpose, is expected to be decisive.