The head of the Chile Salmon Council trade association is reminding the country's salmon farmers of the the importance of complying with salmon farming regulations in the wake of a scandal involving the alleged systematic overproduction of salmon by Australis Seafoods.

"Business values and trust are vital for the sustainable development of our country, and it is essential that all companies comply with the current regulatory framework to project salmon farming in the long term," Chile Salmon Council Executive Director Loreto Seguel said in an emailed statement.

Her comments come amid a bitter legal battle between Australis Seafoods' new owners, Jovyio Food, and its previous leadership team, led by London-based billionaire Isidoro Quiroga, over who is responsible at the company for salmon overproduction that could result in fines and other punishment.

Seguel, whose organization represents 52 percent of production in the South American nation, called for the fastest possible resolution to the controversy.

In April, it emerged that Australis is facing potential punishment on 52 counts of overproduction, after environmental authority SMA officially filed charges against the company.

Australis self-reported overproduction at 33 salmon growout sites, two of which were already under official investigation, SMA said.

In total, 21 sanctioning processes related to the incidents have been initiated, which include 52 serious infractions for overproduction in different production cycles, between 2014 to 2022, in addition to five minor charges for other environmental breaches.

Joyvio, a subsidiary of Chinese group Legend Holdings, a vast conglomerate whose assets include computer giant Lenovo, acquired Australis in 2018 in a deal worth $921 million (€854 million).

Following the acquisition and while former members of Australis's management team were still employed on the board at the company, Joyvio alleges systematic overproduction of salmon occurred without their knowledge.

They also allege that while Quiroga remained on the Australis board, he knew of 40 of an alleged 56 cases of overproduction, something that put the company at risk of multi-million dollar fines. That knowledge was not disclosed during the sales due diligence, Joyvio officials allege.

Quiroga's lawyers, meanwhile, argue Jovyio's top executives ignored warnings from the former management and instructed Australis to continue overproducing even as environmental rules tightened because of a heavy debt burden weighing on the Chinese company, which threatened its listing on the Shenzhen stock exchange.

Overproduction must not be repeated

In 2021, 1,140 inspections were carried out at Chilean salmon farms and in 2022 another 1,771, meaning inspections have increased more than 80 times from the 2013 to period, the Chile Salmon Council said citing official numbers.

Of the those inspected in 2022, 99 percent had no reported issues, Seguel said, adding that the current owners of Australis and CEO Andres Lyon are "doing the right thing" by making themselves available to work together with authorities.

"However, the high and systemic levels of the company between 2017 and 2021 must not be repeated in the salmon farming industry in Chile and as the Salmon Council we are deeply committed to it," she said.

Although "terrible for the salmon industry in Chile," the legal feud is not representative of the sector in the South American nation, Cermaq Global CEO Steven Rafferty told IntraFish

Rafferty's comments echo those of another senior Chilean salmon industry executive who said the legal battle is harming the South American nation’s salmon industry reputation.

Chile is Cermaq's second largest Atlantic salmon producing area behind Norway, and accounts for nearly half of the company's annual Atlantic salmon production.

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