Australian-born former billionaire Shi Zhengrong has been shown the door at his solar panel company, following a tumultuous few years in which the business has been left at risk of defaulting on a loan worth half a billion dollars.
The development comes as the solar industry continues to suffer in Australia, with local businesses struggling to stay competitive against the influx of cheap panels coming from China.
Shi’s departure came after the revelation last year the business used German bonds to invest in a solar project in Europe, but questions soon arose over whether the bonds ever actually existed.
Now, Suntech Power has confirmed Shi has been ousted as the company’s chairman after being stood down. In a statement, he said the decision was “misconceived and unlawful”.
“The Board had no legal basis for doing so, and the decision was invalid and of no effect. The actions taken at this time by the rest of the Board show that they are not focused on the issues most important at hand and are not acting in accordance with the best interest of the Company.”
Shi founded the company back in 2001 after studying at the University of New South Wales. The business started selling on the New York Stock Exchange, and was turning over more than $US3 billion in 2011.
The business was often cited as a key factor in the strength of renewable energy in China and has been a source of pride for the Chinese industry. At Suntech’s height, Shi was one of the 10 richest people in China.
But the company’s huge output didn’t match demand and value started falling. Even though Chinese manufacturers represent a majority of the world’s solar panel output, demand hasn’t matched the supply. The development has been a setback for the company.
Last year, Suntech’s problems were exacerbated after it said the company was a victim of fraud involving German bonds. Analysts expect the business will need to find new funding in order to survive and doubt the Chinese government will let the well-known business go under.
The solar industry has been one of the biggest problem areas in the Australian small business sector. With so many businesses relying on government rebates to stay alive, several have fallen over since rebates were wound back.
But John Grimes, chief executive of the Australian Solar Council, says the market may be turning a corner.
“We’re seeing the market pick up in the fundamentals,” he says. “Rising electricity prices are a factor there.”
“I think we’re on much firmer footing and I don’t know if any recovery will be explosive but there is gradual growth.”
Grimes says while cuts to rebates and tariffs have left some businesses in the lurch, others will be able to stand on their own.
“We want consistency in the industry,” he says.