Chinese PV firm Suntech Power Holdings faces more trouble in Italy after an Italian court reportedly filed a lawsuit against the company’s Global Solar Fund (GSF). The lawsuit alleges that the investment fund illegally built solar farms in the country in order to exploit Italy’s subsidies, Reuters has revealed.
Under the lawsuit, five of the fund’s subsidiaries have been formally charged and accused them of abusing the approval processes in order to gain subsidies. Specifically, the subsidiaries are said to have failed to obtain the correct permits and in some cases, they would confirm the completion of construction prematurely in order to meet a deadline to qualify for the subsidies. The subsidies allow the firms to sell their electricity at above-market prices for 20 years.
The trial involving these five solar plants is due to begin on December 6, Reuters stated.
The lawsuit also claims that Suntech failed to properly monitor the fund’s business practices and questions the extent to which it supervised the fund’s activities. Moreover, it alleged that Suntech failed to disclose all potential problems concerning GSF’s financial matters keeping its shareholders in the dark about its troubles in the country. Suntech owns an 80% stake in the investment fund.
If convicted, the charges may lead to the removal of €80 million worth of subsidy-backed solar farms, an Italian prosecutor said as cited by Reuters.
These latest charges are just being added to Suntech’s long list of woes. In July it was discovered 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. According to Reuters, since this discovery on July 30, Suntech has lost more than 40% of its market value. Earlier this month, an Italian court froze all assets of GSF Capital and its senior manager, Javier Romero, over claims that Suntech and its chairman and CEO, Dr. Zhengrong Shi were victims of fraud. GSF is now being sued by several US law firms over the fraud claims.
In addition, the prosecutor revealed that another 11 GSF subsidiaries are being investigated with charges being sought against them. No further details have been disclosed over these cases.