China Development Bank: Unaffected by Suntech Fraud
August 08th, 2012 | CaijingChina Development Bank told Caijing that it was not affected by a fraud involving 560 million euros in bond to secure the bank’s financing to Suntech.
China Development Bank, a major lender to China’s leading solar panel maker Suntech, told Caijing Tuesday it was not affected by Suntech’s involvement with a counter-guarantee fraud.
“The legal force of Suntech’s guarantee over CDB’s loans will not be affected by the case,” the bank’s news press office said. The power station project invested by Suntech’s Global Solar Fund has been running smoothly, with stable income from electricity, it said.
Overall, the new loans are safe and risks are controllable, the bank added.
The policy bank has lent a total of 325 million euros since late 2010 in batches, after it signed an agreement in April 2010 with Global Solar Fund, an investment vehicle spearheading the Italy expansion.
CDB told Caijing the decision was made based on “a comprehensive judgment” on Suntech’s operations and conditions of the industry, as well as a risk assessment on its ability to guarantee the debts.
Suntech committed to provide guarantee for the loan, while it had 560 million euros of German government bonds from GSF as a hedge against the commitment.
The company revealed, however, on July 30 that 560 million euros in bond involved in securing the bank financing may never have existed, and Suntech may fall victim to the potential fraud.