Singapore's solar firm Sun Electric feels more heat from fraud allegations

Singapore

RATTLED by multiple claims to the tune of some S$15 million from partners-turned-creditors, contempt proceedings and a lengthy patent fight which all came to a head with a winding-up order, Singapore solar firm Sun Electric Group's woes are set to get even more complicated.

The case involving the city-state's first solar energy retailer and developer of solar rooftops for industrial landlord JTC Corp has become somewhat entangled with scandal-hit coal miner Agritrade Resources.

There are also fraud allegations that The Business Times (BT) understands were filed over a week ago with the Singapore authorities against Sun Electric's founder Matthew Peloso by RCMA Asia, the creditor that pushed for the liquidation of one entity in the group and won (the case is now pending an appeal).

"This seems to be a rare case. The sums owed are not extraordinary and yet it involves a Mareva injunction, alleged fraud, contempt of court, patent fight, alleged conspiracy with third parties... it's really bizarre," said one person close to the matter.

When contacted by BT on the complaint against Mr Peloso - a Canadian who has been residing in Singapore and the solar company's founder - the Singapore Police Force replied: "The Police confirm that a complaint was filed and are looking into the matter." RCMA declined comment.

Mr Peloso and his once-deemed up and coming solar energy firm are facing mounting woes as former business partners, EPC (engineering, procurement and construction) firms, consultants and at least one legal firm knock on their door to pay up.

The group has also been caught up in a patent fight over the past four years with Singapore's clean energy solutions provider Sunseap Group.

BT understands that four to five creditors have been in talks on how to recoup their monies. "Nothing has been agreed on. There is no plan in motion. The creditors are just talking to figure out if there is some way they can get something back," said one source.

Last year, as bills piled up and payrolls and expenses became a challenge, it is believed that most employees had left the firm. Mr Peloso had described the group's state of affairs as a "cliff edge" in court documents.

One engineer at Sun Electric Energy Assets, a subsidiary that is licensed to generate and export electricity to the national grid has, however, stuck with the firm. "(I) just find that the company still has some prospects", he told BT when asked why he hadn't left. He declined to be named.

The turn of events is surprising, notwithstanding the capital-intensive nature of solar projects.

Mr Peloso claimed in court documents that the group earned some S$16.8 million in revenue from its share of the Forward Sales Contract (FSC) incentive payments. The FSC is part of the electricity futures market scheme that was launched by Singapore's Energy Market Authority (EMA) five years ago, where power generators could participate as market makers to create liquidity in the electricity futures market on the Singapore Exchange. Debt-hit Hyflux was also one of the scheme participants of the pioneering product.

Market watchers said FSC was in fact Mr Peloso's first big break. That has now come undone after RCMA pushed to wind up Sun Electric Power (SEP) - an electricity retailer for mid-size and large businesses and FSC scheme participant - for failing to pay S$7.5 million, which mostly entailed its 70 per cent share of FSC incentive payments for assuming SEP's market making obligations.

RCMA, a unit of global commodity house RCMA Group, is parent company of iSwitch - one of Singapore's 12 electricity retailers.

Another twist came in September after Hong Kong-listed Agritrade Resources - debt-roiled and a subsidiary of Singapore's collapsed commodity trader Agritrade International - disclosed it has commenced a claim against Vikash Kumar and an associate in Singapore in relation to alleged fraudulent misrepresentations. Agritrade is claiming US$5 million in damages for losses from them.

Agritrade has also filed a claim against its former executive director and chief financial officer Ashok Kumar Sahoo in Hong Kong for alleged breaches of contract and fiduciary duties and is claiming US$12.7 million in damages.

Both claims are related to a petition filed by Singapore-headquartered Agritrade at India's National Company Law Tribunal in Mumbai after the company discovered "abnormal and suspicious transactions" in relation to an Indian power plant SKS Power that it acquired last year. Agritrade said it was surprised to discover that SKS Power had run out of funds as it has invested over US$123 million in the power company since March 2019.

Mr Vikash Kumar runs Singapore-based private equity firm Hector Capital which together with Agritrade International picked up a 51 per cent stake in Sun Electric Pte Ltd (SEPL), a holding company, in December 2019. The acquisition was done through an entity called UHP Holdings - majority owned by Hector Capital - which in the ensuing months raised its stake in SEPL to 80 per cent, leaving Mr Peloso, the firm's sole director and chief executive, with the rest.

People closed to that deal said UHP had entered the picture to rescue the Sun Electric group which was in bad shape but the investment had quickly turned sour.

The UHP-SEPL deal is another case to add to the solar firm's court-dominated saga. Menrva Solutions, a former consultancy firm to Sun Electric which is claiming nearly S$1.8 million in largely outstanding fees, has launched committal proceedings against Mr Peloso on the basis that the sale to UHP had breached a worldwide Mareva injunction against the group. Menrva had sought and won the bid for an injunction in court in September last year.

Last Wednesday, in a session held in chambers, Menrva's legal firm NLC Law Asia LLC sought leave to include Mr Vikash Kumar in the committal proceedings. According to sources, the hearing was adjourned for the matter to be heard inter partes.

Sun Electric has other worries. The current dilemma could jeopardise its JTC contract, a business linchpin, given that its electricity retail business is facing the threat of liquidation. SEPL has licences to install 5.5MWp (Mega-Watt peak) of solar panels on JTC rooftops. It is believed that the panels are fully installed although they are yet to be fully powered up.

When contacted by BT to comment on the status of the contract given the woes facing Sun Electric, JTC replied: "We are exploring our options."

That may provide an opening for worried creditors eager to recover unpaid dues. According to one source, creditors are already "circling" Sun Electric's solar photovoltaic panels on JTC buildings. The source added: "I wouldn't be surprised if there is some jostling. That (solar rooftops) is the only place with valuable assets. The other entities in the group don't have anything much."