Suntech claims to be victim of massive fraud over GSF investment

Financials

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Suntech Power Holdings said it had started multiple legal proceedings against a number of unidentified parties regarding investment guarantees it provided for a joint venture PV power plant project developer, Global Solar Fund, S.C.A., Sicar (GSF). However, Suntech has claimed that a pledge of €560 million of German government bonds by a third-party investor of GSF, GSF Capital Pte Ltd., may never have existed. Suntech said that it may have to delay second quarter financial reporting as a result.

According to Suntech, recent efforts to "monetize" its investment in GSF led to the discovery that the "collateral related to the security interest may not have existed and the company may have been a victim of fraud."

Dr. Zhengrong Shi, Suntech's chairman and CEO said, "We are very disappointed that this has occurred and it has the highest level of attention from the company and the board, including the audit committee. There is no indication that management had any involvement and we are vigorously pursuing all avenues to resolve this matter and ensure that we protect the interests of our shareholders."

Dr. Shi added in a statement that, "While we continue to investigate and take actions to resolve this matter, Suntech's daily operations will not be impacted. It's business as usual and we remain focused on supplying the market with excellent solar products.”

Suntech also said that it may delay its earnings announcement for the second quarter of 2012 until an investigation and financial impact assessment could be made, yet it hoped to publish key financial figures in the week beginning August 20, 2012.

The company is holding an investors conference call today to discuss the situation.
 

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