Following a discovery of budget overruns, The Italian Sea Group (TISG) has filed a criminal complaint against former executives. It’s seeking charges related to collusion and providing inaccurate financial and managerial information.
According to a press release from TISG on March 9, Giovanni Costantino, its CEO, filed the complaint for himself personally and on the company’s behalf. He additionally filed it on behalf of GC Holding, TISG’s parent company, which he controls. The complaint indicates the individuals were senior executives who worked together to deceive Costantino about the actual state of business. It describes their actions as “fraudulent and covert circumvention of the company’s internal order management system.”
TISG isn’t revealing the executives’ names. However, it does say the complaint accuses them of providing Costantino (below) with false accounting and management information related to specific orders. “To carry this out, the individuals allegedly manipulated TISG’s internal order management systems without authorization,” it adds. The altered documentation relates to cash flow, for example, as well as order budgets and bank statements. Additionally, the company says Costantino had no way of knowing as CEO that information he received was false.
The criminal complaint is with the Court of Massa’s public prosecutor’s office, which will investigate further.
In related news, GC Holding provided TISG with a €25-million (about $29-million) loan to shore up finances. Furthermore, TISG has appointed the auditing firm KPMG to perform a forensic accounting analysis. Budget overruns impacting most superyacht orders under construction were discovered in February. The forensic analysis is set to uncover who is responsible for the financial irregularities and exactly how much the budget overruns are. KPMG’s preliminary report is due within six weeks. For now, TISG lays blame for the overruns with “a group of individuals who implemented a system designed to circumvent the controls preventing expenditure in excess of the budget approved for each project.”
Furthermore, several resignations of executives tied to the company have taken place. Specifically, the chairman of the board of directors and the vice chairman both resigned on February 26. The vice chairman also was responsible for drafting TISG’s financial reports. Yet another member of the board resigned that day, over a difference of opinion on how to handle the company’s challenges.
The Italian Sea Group theitalianseagroup.com
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