Amid Fraud Allegations, Aegean Marine Files for Bankruptcy

Mr. Dimitris Melissanidis. (Photo by Eurokinissi/Antonis Nikolopoulos)

NEW YORK – One of the largest independent fuel suppliers in the world, Aegean Marine Petroleum Network Inc. filed for bankruptcy protection under Chapter 11 on November 6 in New York, the Wall Street Journal (WSJ) reported, following the discovery by auditors that $300 million was missing from its books.

Over a dozen employees were accused last week by the company of committing fraud through an affiliated company, WSJ reported, noting that “Aegean Marine said an internal investigation determined nearly $300 million in funds was filtered to… OilTank Engineering & Consulting linked to a 2010 deal to build a ship bunkering terminal in Fujairah in the United Arab Emirates,” and “about $200 million was listed on Aegean’s books in transactions with shell companies designed to obscure misappropriations to OilTank, which was controlled by the unnamed affiliate.”

“Although the company intends to pursue [potential redress] vigorously, there can be no assurance that it will be able to recover a material portion of the losses it has incurred,” Aegean said in a statement, WSJ reported, adding that “a person involved in the investigation said scores of documents are missing.”

Aegean Marine’s founder Dimitris Melissanidis was bought out in 2016, but controversy continues over his relationship with the company as he continued on as a consultant into this year, “when a $360 million agreement for Aegean to buy the Melissanidis-owned H.E.C. Europe Ltd. collapsed in March” and then “a criminal probe into financial wrongdoing was launched in June by the Justice Department,” the WSJ reported.

At press time, Melissanidis did not respond to The National Herald’s request for comment on the matter. Meanwhile, Aegean Marine shares fell 29% on November 5 and remain at 66 cents on the New York Stock Exchange, WSJ reported.

Listed in the United States, the company has its headquarters in Athens and said, according to the WSJ report, “Mercuria Energy Group Ltd., a Switzerland-based commodity trading company, has agreed to provide more than $532 million in post-petition financing to ensure adequate working capital for Aegean during bankruptcy proceedings” and the “privately held Mercuria would also serve as a so-called stalking horse, or lead bidder, in a sale of Aegean’s assets.”

With a total of $855 million in funded debt and $5.67 billion in revenue last year,

Aegean, “said it continues to explore alternatives intended to maximize its value,” the WSJ reported.

According to court documents, Aegean Marine began in 1995 with one bunkering station in the Port of Piraeus, Greece and today employs 850 people, operates 57 vessels, and delivers fuel around the world in 20-plus countries.

“The company and certain subsidiaries will continue to operate their businesses as ‘debtors-in-possession’ under the jurisdiction of the U.S. Bankruptcy Court in New York,” Aegean said, the WSJ reported, adding that “the company is seeking approval for Mercuria’s financing and authorization to continue conducting business as usual during the restructuring process.”

According to the WSJ, in May, an activist-investor group “forced its way onto the board” of Aegean Marine, “calling it mismanaged and undervalued,” and “its new board alleging that the company had been systematically plundered and the assets that drew the activists’ attention were largely fake.”

The board’s audit committee ran an internal investigation and allegedly found that Melissanidis had stolen over $300 million, the WSJ reported citing “people familiar with the matter.”

Melissanidis and his lawyers have not responded at press time to requests for comment.

“The investigation found that a set of shell companies, fake receipts and documents covered up the alleged theft by making it look like Aegean Marine had legitimate contracts with customers that would explain the missing cash, the company announced last week,” the WSJ reported, adding that “investigators alleged some of the money went to Mr. Melissanidis, a billionaire, and to his family businesses, which include a professional soccer team and yacht rentals, the people said.”

The company is “cooperating with the U.S. Department of Justice subpoenas,” and the bankruptcy filing in New York “likely wiped out the value of its shares,” the WSJ reported. The U.S. attorney’s office in Manhattan which has not responded to requests for comment is leading the investigation though no charges have been filed.

The course of events so far for Aegean Marine highlights the risks activist-investor groups face when they attempt to take over a business that seems to be in trouble and try to transform it. According to the WSJ, “Even as they go to great lengths to research their targets, activists live in fear of the lack of ‘perfect information.’”

Melissanidis’ business empire also includes gas stations, a sports-betting company and a top soccer team, AEK Athens FC, the WSJ reported adding that “his racehorse, Youtalkingtome, won the 2017 Greek Derby.”

OilTank allegedly stole about $285 million through false receipts and bank transfers that continued through this year, investigators said, according to the WSJ report with “another $31 million… allegedly sent by Aegean Marine to yet another company controlled by Mr. Melissanidis’ family,” adding that “to hide the tracks, shell companies claiming legitimate business were listed on the books… tied to Mr. Melissanidis and never received any products.”

Normal paperwork was missing from contracts that “listed post office boxes controlled by Aegean Marine employees,” investigators said, the WSJ reported, noting that “the amount of oil products specified in the allegedly fake contracts exceeded the capacity of the oil terminal in the U.A.E.”

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