Suntech Power investigates potential fraud at GSF

By Song Shengxia Source:Global Times Published: 2012-8-1 0:10:03

Suntech Power Holdings, the world's largest solar panel maker by capacity based in Wuxi, East China's Jiangsu Province, said Tuesday it was investigating whether it is a victim of a fraud involving a financing guarantee of 554.2 million euros ($680 million or 4.3 billion yuan) in German government bonds that it extended in 2010. 

Analysts said Tuesday the fraud, if proven to be true, may deal the company another blow after Solarworld AG, a German solar panel maker, filed a complaint with the EU last Wednesday, accusing Chinese solar panel makers including Suntech for dumping their products in Europe, and the US has already imposed preliminary antidumping duties of up to 250 percent on solar panels imports from China in May. 

Zhang Jianmin, a Suntech spokesman, told the Global Times Tuesday that the investigation is underway and the company may postpone publishing the second-quarter financial results to allow it to assess the potential financial impact of the incident

Zhang declined to make further comment on the investigation.

In a statement published on the company's website early Monday, the New York-listed company said its lawyer discovered a potential problem at Global Solar Fund (GSF), an investment fund in which Suntech owns a majority stake, as a part of efforts to sell assets held by GSF.

In May 2010, Suntech guaranteed 554.2 million euros in payment obligations for GSF. As security for Suntech's obligations under the guarantee, it received a pledge of 560 million euros worth of German government bonds from asset management firm GSF Capital Pte, a third-party investor of GSF. But the bonds may never have existed, the statement said.

"We are very disappointed that this has occurred, and it is receiving the highest level of attention from the company and the board, including the Audit Committee. There is no indication that management had any involvement," Shi Zhengrong, Suntech's chairman, said in the statement.

"While we continue to investigate and take actions to resolve this matter, Suntech's daily operations will not be impacted," Shi said.

Yao Hui, a Beijing-based lawyer specializing in guarantee law, told the Global Times Tuesday that if the fraud is proved to have occurred, it would affect the creditor's right entitled to Suntech under the guarantee it extended.

"It may trigger chain reactions and affect the trading of securities Suntech holds as well as the interest of Suntech's stockholders if Suntech does not handle the event properly," she said.

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