The near-$80 million handed over to a contractor in 2019, of which around $2.3 million was retained by the recipient, is now being investigated by an independent accountant. Meanwhile, GCL’s shares remain suspended because the payment issue is holding up its 2020 accounts.
May 10, 2021
GCL-Poly says the accountant it has appointed to investigate a pre-payment made in 2019 for a silicon project which never took shape will examine whether the money passed between related parties.
The Chinese polysilicon manufacturer has been unable to publish its 2020 accounts over the matter and trading in its shares has been suspended since the end of March as a result.
Auditor Deloitte Touche Tohmatsu questioned the commercial rationale behind the payment of RMB510 million ($79.5 million) to a contractor in September 2019 for a silicon manufacturing project which was never subsequently constructed. Although GCL said it had received a refund of RMB495 million ($77.2 million) – minus the contractor’s expenses – last month, Deloitte refused to sign off the accounts and recommended the appointment of an independent accountant to investigate the matter.
After starting an internal investigation, GCL on Friday announced a Shanghai-based accounting and advisory firm which is a member of international accountancy body Mazars would conduct a forensic audit of the matter. In addition to questioning the commercial reasoning behind the pre-payment, GCL said the firm would also probe “whether the parties to the EPC contract were related parties.”
The solar manufacturer, which has been in cross-default since the end of 2020 after non-payment of a $500 million senior note at the end of January, announced its latest solar project sell-off on Friday.
GCL, which last year shed its crown of being China’s largest solar plant owner to Chint Group, announced the sale of an 86 MW solar farm to the SPIC Chongqing Electric Power Co Ltd unit of utility State Power Investment Corp for a net RMB252 million.
The sale will book a gain of RMB51 million despite RMB4.6 million ($717,000) worth of “engineering and compliance defects” and will remove another RMB431 million of liabilities from the heavily-indebted accounts of GCL’s New Energy solar project development operation.
The solar project in question is yet to be added to the national Renewable Energy Tariff Subsidy List and, if it fails to be listed this year, its state-owned purchaser will have the right to insist GCL repurchase the facility.
According to Chint’s annual report, the power transmission and distribution equipment provider held 5.7 GW of solar farms in China at the end of 2020. GCL’s estate had fallen to around 4.83 GW by that point, according to its stock market announcements, and the sell-off has continued into this year as the company awaits approval of a senior note swap plan to reorganize its problematic $500 million debt.
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