Suntech’s GSF charged with illegal construction of solar plants in Italy30. August 2012 | Applications & Installations, Industry & Suppliers, Markets & Trends | By: Becky Beetz
According to media reports, criminal charges have been filed in Italy against the Global Solar Fund, S.C.A., Sicar (GSF). It is claimed the company "illegally" built solar farms in the country in order to take advantage of available subsidies. The trial is scheduled to begin on December 6.
Reuters reports that an Italian court has filed the charges against the 80% Suntech-owned investment fund, GSF, "accusing it of illegally building solar farms to milk state subsidies". Quoting an Italian prosecutor, the news agency says if the charges prove factual, 5 solar farms worth up to €80 million could be dismantled.
"A prosecutor in the southern Italian city of Brindisi has formally charged five of the fund's subsidiaries with illegal construction of solar power plants, accusing them of sidestepping the approval process in order to exploit Italy's generous renewable-energy subsidies," it writes.
Specifically, GSF has been accused of failing to secure the proper permits and of falsifying the completion date of the solar farms in order to meet feed-in tariff deadlines.
A further 11 of GSF’s subsidiaries are also said to be under investigation. Suntech has, as of yet, declined to comment on the news. "Suntech's only filing on the issue was in May last year, when it noted in its 2010 annual report that solar parks belonging to five of the fund's investee companies and totaling 2.83 MW were under investigation by the court of Brindisi," says Reuters.
The news follows the launch of an investigation by Suntech into the possibility that it may have backed €560 million worth of fraudulent bonds, issued in connection with GSF, in 2010.
Since the announcement, the company’s market value is said to have fallen by over 40% and 3 U.S. class action lawsuits have been launched on the back of claims that the Chinese photovoltaic manufacturer’s financial statements "were materially false and misleading." Responding to the news at the time, communications manager Europe, Björn Emde told pv magazine, "The class action [lawsuits] filed against us are nothing special and certainly nothing we worry about."
However, as Reuters reports, "The Italian charges add to questions over the Luxembourg-based fund's affairs, the extent to which Suntech supervised it, and how much shareholders were told about the scale of its troubles in Italy."
"Suntech management had the opportunity to disclose all potential problems associated with GSF when they announced the suspected fraud with the German bonds," Mark Bachman, a solar technologies analyst for Avian Securities in Boston told Reuters, adding, "If there are now additional potential liabilities related to GSF activities in Italy that were undisclosed, then what little investor interest remained in the stock will be eroded."
In connection with its fraud investigation, Suntech announced on August 14 that it had obtained a court order to freeze GSF Capital's global assets. It also announced that the assets of Javier Romero, the man who reportedly issued the fictitious bonds, a former Suntech sales representative through his firm, GSF Capital Pte Ltd, and 10% owner of GSF, had been frozen. He was also removed from his managerial role in the Global Solar Fund, S.C.A., Sicar.
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