Climate Spectator editors' note: Overnight the CEO and founder of Suntech Power, Zhengrong Shi, stepped aside from his role at the head of the company, but he will remain involved as executive chairman and chief strategy officer. The move was made independent to the current crisis that has beset the company.
"The solar industry is at a critical juncture and is facing both significant challenges and exciting opportunities. At this time, I believe it's important to devote more of my time to guiding the strategic direction of the company, building relationships with key partners, and driving the ongoing development of Suntech's leading solar technology," Dr Shi said.
As one of the world’s largest PV companies, the news that Suntech had potentially been swindled to the tune of $A650 million dollars was somewhat alarming; especially when you consider that it had reported losses last year of a similar amount.
To be clear, Suntech isn’t alone in being in a tough financial place. Being at big end of town in the world of PV is not easy for anyone, with many posting poor results in recent times as silicon prices decrease and market conditions remain soft.
Falling prices are great news for PV consumers – but will come with a hefty price tag if the long-term survival of manufacturers is not assured.
The current issues stems from a phony collateral pledge of German bonds that occurred through an affiliate in a solar development fund. "We now suspect that the German government bonds may not have existed and Suntech may have been a victim of fraud,” said (former) Suntech CEO Zhengrong Shi.
Maxim Group analyst Aaron Chew who I have met with and talked solar many times said: "While the fraud concerns the collateral backing the project debt and not the project itself, where there is smoke, there is usually fire.”
Suntech announced yesterday however that it has obtained court orders to freeze the worldwide assets of GSF Capital and Javier Romero and to have an independent, court-appointed manager oversee their assets. In addition, the manager has exercised the powers granted by the court to replace Romero as the manager of the general partner of the Global Solar Fund.
"Our initial due diligence indicates that the solar plants owned and operated by the Fund’s operating companies are in good order,” Dr. Zhengrong Shi, Suntech’s chairman and CEO said. "Over the coming weeks we intend to work closely with the manager to review all of the assets and confirm that the operations are in line with our initial expectations.”
Undoubtedly, things are going to be tough for a while with local sources suggesting Suntech is tightening up on credit terms and cost forecasts for Suntech’s competitors’ not keeping pace with emerging giants such as Canadian Solar and Trina.
One of the downsides of being in the fastest growing industry in the world is that everyone wants a piece of the action, and we have seen our fair share of scams in Australia. Let’s hope that despite what some analysts are saying, that this all turns out to be a storm in a tea cup.
For the sake of the industry, investors and the changes to the world of PV that Suntech made through its enormous growth, I hope the company survives and prospers, but we all have to learn a lesson from this one.
This article was originally published by Solar Business Services. Republished with permission.