New Report Claims McAuliffe Hyped Another Failed Chinese Venture
On Friday, Watchdog reported that Virginia Democratic gubernatorial candidateTerry McAuliffe was involved in a previously unknown Chinese investment that turned sour. This represents a second failed China venture promoted by McAuliffe since 2010, in addition to the stalled GreenTech Automotive automobile manufacturing joint venture with Chinese company Shengyang ZhongRui Breitbart News reported on in August.
According to Watchdog, "On Aug. 2, 2010, McAuliffe, then chairman of both the auto company [GreenTech Automotive] and a sister entity called WM GreenTech Energy Holdings, signed a joint agreement with A-Power Energy Generation Systems, a China-based firm, to develop renewable power projects."
When A-Power Energy Generation Systems went public on the NASDAQ on January 31, 2008, the stock opened that day at $14.50 per share and closed at $14.46 per share. By July 2008, it hit a high of $31.80 per share, but the slide down thereafter was precipitous.
On August 2, 2010, when McAuliffe's WM Green Tech Energy Holdings and A-Power Energy Generation Systems announced their joint development deal, the share price of A-Power stock had declined to $8.25 from its high of $31.80.
According to an October 2010 Bloomberg report, "[i]n the past year, McAuliffe founded GreenTech Automotive, which he aims to build into a $1 billion powerhouse. In February he bid to convert a shuttered paper factory in Virginia’s southeast corner into a biomass power plant; he’s awaiting word. He plans to invest up to $1 billion in wind power with a Chinese company, A-Power Energy Generation Systems. He says he’s 'jacked up' on fuel cells and is scoping out new technologies worldwide."
The venture was a bust however. It is unknown whether any of McAuliffe's promised $1 billion investment in the company occurred.
The announcement of the development deal between A-Power and McAuliffe's WM GreenTech Energy Holdings did nothing to halt the slide in A-Power's stock price. A-Power's financial position quickly deteriorated. By July 1, 2011, its price per share had slid to $1.67, and on October 3, 2011 it hit a mere $0.33 per share. In November 2011, a scathing analyst report identified a series of glaring red flags. Today, the stock lists at $0.06 per share, but no trades have been recorded since April 2013.
Watchdog reported that "[l]ess than two years after McAuliffe and A-Power Chairman Jinxiang Lu signed their 'cooperative development agreement,' A-Power investors sued the company, alleging securities fraud and demanding their money back."
Subsequently, Watchdog reported that "A-Power paid a $3.6 million settlement to investors, and the company’s stock was valued at 6-cents a share on April 23 . The Securities and Exchange Commission has since banned A-Power from the U.S. securities market."
Watchdog notes that "[n]either Shengyang nor McAuliffe were cited in the A-Power investors’ lawsuit, which charged that the company 'grossly misstated its revenue, income, total assets and total liabilities.' "
Although McAuliffe's doesn't appear to face legal liability for his involvement with A-Power Energy Generation Systems, the timing of the report about his role in yet another failed business venture just days before Tuesday's election does not bode well for McAuliffe. The new revelations will only re-enforce the perception among voters, encouraged by his Republican opponent, Ken Cuccinelli, that when it comes to business McAuliffe is not a man whose promises can be trusted, and not a man who deserves the confidence of the voters.
Image: GreenTech Automotive