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Contractor sues Hoku's Chinese parent company

By Associated Press

LAST UPDATED: 09:02 a.m. HST, Aug 21, 2013

POCATELLO, Idaho » A Washington state-based contractor is suing the Chinese parent company of a defunct polysilicon maker over a failed $700 million plant in eastern Idaho that had been expected to supply the solar energy industry but never produced anything.

Officials with JH Kelly Inc., the Longview, Wash., construction company, said it's still owed about $25 million for work it did on the plant in Pocatello for Honolulu-based Hoku Corp., which has been controlled by Tianwei New Energy Holdings since 2009.

The Idaho State Journal reports JH Kelly filed the lawsuit in Pocatello's U.S. District Court on Tuesday, alleging Hoku and Tianwei committed fraud and racketeering by promising to make payments that it never intended to transfer to the contractor. JH Kelly is seeking unspecified damages including money owed for work completed and attorney's fees.

"We can no longer sit idly by and wait for Hoku/Tianwei to honor commitments made to us," said JH Kelly President Mason Evans, in a press release accompanying the lawsuit.

Tianwei has not yet filed a response.

Hoku, which has filed for bankruptcy protection in eastern Idaho, began building what was supposed to be a $370 million plant in 2007, saying it had secured hundreds of millions worth of contracts from customers for polysilicon material destined to be used in solar panels.

Eager Pocatello officials agreed to numerous tax concessions, in hopes the plant would generate 200 full-time jobs for a region hard hit when a big chemical company, FMC, shuttered a nearby plant in 2001.

By 2009, however, polysilicon prices were plummeting while the cost of the Pocatello plant more than doubled, developments that helped force Hoku to hand over control to Tianwei as part of a financing deal with the Chinese company that was supposed to save the project.

Hoku's plant never opened, however, amid a cascade of bad news: At one point, the local utility threatened to turn the power off, employees were laid off, Hoku's nearly worthless shares were delisted from the Nasdaq Stock Market — and finally, the company sought bankruptcy protection in July, reporting debt of nearly $1 billion.

Now, the lawsuits have begun.

JH Kelly says Tianwei, Hoku and its employees made repeated promises just to keep the contractor moving forward on the project, even threatening to hire a new contractor if the builder didn't keep working on the project absent funding — even though they never intended to pay up, according to the complaint.

The lawsuit says no payments were made after October 2011.

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awahana wrote:
For quite some time, before the end came, the founders knew that it wasn't going to work out as planned, so they did their best to milk what they could from the agreements they had already gained.
You will see some SEC investigations announced soon enough, after they complete their preliminary investigations and prepare their case.
Another case of aspirations larger than their skillset from locals in Hawaii Nei.
on August 21,2013 | 09:39AM
inverse wrote:
Like Sandwich Isle communications, Hoku were artificially inflated with Act 215/221 and the late Inouye.
on August 21,2013 | 10:48AM
Anonymous wrote:
"We can no longer sit idly by and wait for Hoku/Tianwei to honor commitments made to us,"...Good luck! I've done business for 6 years in China and had never collected a penny on accounts receivable.
on August 21,2013 | 10:07AM
Mythman wrote:
Imagine that, and involving a local hi tech start up that got going with a little help from the state. What is the world coming to. And BTW, where is the United States attorney possibly returning some indictments? Inouye is gone, Mr. or Ms US Attorney, you are on your own and can investigate and indict without asking Inouye first, now. "fraud and racketeering"
on August 21,2013 | 05:44PM
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