A $32 million dispute between Argentina’s Fecovita and Spain’s Iberte is shaking the global wine industry. Accusations of breached contracts, unpaid debts, and falsified balance sheets have turned a failed export venture into a high-stakes legal drama with major industry implications.

The Argentine wine industry finds itself embroiled in a significant legal crisis. A notable commercial conflict has emerged between two prominent entities in the industry: Fecovita (Federation of Argentine Wine Cooperatives) and the Spanish firm Iberte.

What started as a simple contractual disagreement has now morphed into a multifaceted legal struggle, with ramifications that extend well beyond the mere financial ledgers of those involved.

To grasp the significance of the case, one must delve into the past and examine the connection between Fecovita and Iberte. Years prior, the companies came together to establish Evisa, a venture aimed at the joint export of wine and must. The arrangement was straightforward: Fecovita would handle the production, while Iberte would take charge of global sales. To put it another way, the collaboration signified a strategic union that enabled Fecovita, a major cooperative uniting over 5,000 producers and holding a considerable share of Argentina’s vineyards, to tap into global markets, while its partner reinforced its status as a significant contender in the must trade.

The pivotal moment arrived in 2023, as Fecovita opted to unilaterally end the contract, pointing to violations by the Spanish firm. The cooperative contended that Iberte had not fulfilled the agreed-upon volumes and prices stipulated in the contract, resulting in considerable economic detriment to its members. Iberte asserts that Fecovita was handed USD 32 million yet failed to provide the requisite merchandise for sale.

Carlos Aguinaga, the legal representative for Iberte, stated that the dispute revolves around financial matters.

“An initial capital of USD 32 million was established.” Fecovita accepted the funds yet failed to provide the wine, which ought to be marketed via Evisa. Ultimately, the expectation was to provide 17.4 million litres of wine and 5,600 tonnes of must; however, it failed to meet those obligations,” he remarked.

Iberte is now insisting on the reimbursement of the funds contributed, alongside compensation for the economic damages incurred, amounting to over USD 32 million in total.

Alongside the primary case, Iberte has lodged a complaint against her partner, accusing them of falsifying balance sheets for the years 2021, 2022, 2023, and 2024. “We have submitted the complaint regarding the 2024 balance sheet, which will be addressed by the same prosecutor’s office currently examining the earlier cases,” Aguinaga remarked.

The alternative rendition is markedly distinct. Osvaldo Coll, the defence attorney representing the Argentine Federation of Wine Cooperatives, has firmly stated that Fecovita should not be regarded as a debtor; instead, it is a creditor. “The goods arrived promptly.” Moreover, Coll remarked that Iberte has yet to settle $15 million for the merchandise that was sold.

He further included additional debts that, as he claims, elevate the total owed to Fecovita: a contractual stipulation that would require Iberte to compensate for any increase in the value of the must beyond the original agreement, potentially adding another $7 million to the sum. Furthermore, they encompass the failure to pay VAT along with a contractual penalty for non-compliance amounting to $8 million.

We have submitted a document to the Commission of Rights and Guarantees, followed by a submission to the Prosecutor’s Office, where the investigation into the fraud is currently under review. “The investigation has led to the conclusion that Fecovita is owed USD 2.7 million,” stated the lawyer.

The reality is that the situation seems quite unresolved. Both parties are insisting on the settlement of outstanding debts and seeking financial recompense. The situation is fraught with cross-complaints, leaving little to no chance for the parties to reach an agreement.

In the interim, the Argentine wine sector stands poised for the outcome of the case, mindful of the implications it may hold for Fecovita. The company wields considerable influence over the domestic market and provides support to thousands of producers with whom it collaborates directly.

Source: Infobae