'Sun King' detained in China Solar magnate may face prosecution over insolvency
Chinese-language media report that immigration officials have been instructed to prevent Dr Shi from leaving China so that he can assist with the investigation.
"He's really in trouble this time," according to an official from Wuxi, where Suntech is based, the Zhengzhou Evening News reported on Saturday.
The Department of Foreign Affairs was yet to respond to questions about whether embassy or consular staff in China were in contact with Dr Shi. In recent years, Australia has been drawn into several criminal cases involving prominent business executives holding Australian passports, such as that of ex-Rio Tinto employee Stern Hu, now serving 10 years in jail for stealing commercial secrets.
Wuxi's court last week accepted Suntech's petition opening the way for the restructuring of its main unit, which employs 10,000 workers. The firm's US-listed arm defaulted on $US541 million ($518 million) earlier this month.
Dr Shi, who completed his doctorate in solar energy at the University of NSW before returning to China, was hailed as the "Sun King" and inspired local book titles such as The hero who chased the sun.
Suntech expanded rapidly to become the world's largest producer of solar photovoltaic panels in 2011. Last year, Dr Shi told media that Suntech supplied about 10 per cent of global PV, and was the "leading sheep" in a revolution that would transform the energy sector.
Suntech became the first solar energy company to list on the New York Stock Exchange, soaring to be worth $16 billion by late 2007, and valuing Dr Shi's stake at more than $3 billion.
Dr Shi was stripped of his title of chief executive last August and ousted as president earlier this month, complaining he was being locked out of meetings despite remaining the largest shareholder with a stake of at least 30 per cent.
His firm's early success prompted "every city to build a solar industrial park", China Securities News reported last week.
Apart from sending panel prices plummeting - wholesale costs have dropped 80 per cent in Australia in the past four years - the rush also set off a scramble for raw materials, pushing costs sharply higher.
The China Securities report said black market silicon prices jumped fourfold to $US400 per kilogram in 2007. Suntech reacted by locking in a 10-year supply worth $US7 billion with a foreign company, only to see the price crash to $20 per kilogram, undermining its competitiveness.
More damaging for Dr Shi's reputation, and potentially for his freedom from prosecution, are claims he signed a $1.5 billion long-term contract with a related company, Asia Silicon.
Frequently Asked Questions about this Article…
Shi Zhengrong is the founder of Suntech Power, a former solar billionaire and an Australian citizen often nicknamed the “Sun King.” Chinese authorities are investigating his financial dealings that may have contributed to Suntech’s insolvency, and reports say immigration officials have been told to prevent him leaving China so he can assist with the probe.
Chinese-language media report that immigration officials have been instructed to stop Dr Shi from leaving China so he can assist with the investigation. The Department of Foreign Affairs (Australia) had not yet responded to whether embassy or consular staff were in contact with him, according to the article.
Wuxi’s court recently accepted Suntech’s petition to open restructuring for its main unit, which employs about 10,000 workers. Separately, Suntech’s US-listed arm defaulted on US$541 million earlier this month, actions that signal major financial distress for the company.
According to the article, Dr Shi remained Suntech’s largest shareholder with at least a 30% stake even after being stripped of his CEO title and ousted as president. Claims that he signed significant related‑party deals (for example a reported US$1.5 billion contract with Asia Silicon) and other financial decisions under investigation could materially affect the company’s finances and shareholder value.
Asia Silicon is described in the article as a related company. More damaging to Dr Shi’s reputation — and potentially relevant to prosecution — are claims he signed a US$1.5 billion long‑term contract with Asia Silicon, which investigators say may have contributed to Suntech’s financial problems.
Suntech grew rapidly and by 2011 had become the world’s largest producer of solar photovoltaic panels. The company once supplied about 10% of global PV, was the first solar energy company to list on the New York Stock Exchange, and at its peak in late 2007 was valued around US$16 billion.
The article notes the Department of Foreign Affairs had not responded to questions about whether embassy or consular staff in China were in contact with Dr Shi. It also points out Australia has previously been drawn into criminal cases involving Australian passport holders abroad, but the article does not report any confirmed consular intervention in this case.
Suntech’s rapid expansion helped push wholesale solar panel prices down — the article says Australian wholesale costs have dropped about 80% in the past four years. At the same time, a scramble for raw materials earlier led to sharp silica price swings (black‑market silicon reportedly jumped to US$400/kg in 2007), and Suntech’s decision to lock in a 10‑year silicon supply worth US$7 billion became a problem when silicon prices later fell to about US$20/kg, undermining competitiveness.
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