The province's stocks regulator is alleging two companies tied to the Liberals' trade mission to China broke securities law prior to the trip. Staff at the Ontario Securities Commission alleges they did so by obtaining investments linked to a provincial immigration program without being properly registered.

The two clean energy businesses, which had a director say the company benefited from Premier Kathleen Wynne’s trade mission to China and which were visited by two government ministers for an announcement, are facing allegations they raised $6.6 million selling shares in a solar company before the trip and visit. Those investments were purportedly to go towards expanding the company’s participation in Ontario’s green energy regime.

But a statement of allegations by Ontario Securities Commission staff, dated March 26, accuses Future Solar Developments Inc., Cenith Energy Corporation, Cenith Air Inc., Angel Immigration Inc. and Xundong Qin (also known as Sam Qin, the document notes) of trading securities without being registered, illegally distributing securities and acting in a manner against the public interest from May 2012 to August 2014. All of the companies, OSC staff says in the statement, have registered addresses in Toronto.

None of the allegations have been proven.

Deals signed by Cenith Air and Future Solar Developments – whose websites say they are “an international home automation company” and a “solar power project developer”, respectively – were highlighted by the Liberals following Premier Wynne’s trade mission to China last fall. Two ministers even visited Cenith and FSD earlier this year, to announce additional agreements signed “as a result” of the premier’s trip to China. The government has said the trade mission yielded about $1.3 billion in investments and 1,880 potential jobs.

OSC staff alleges FSD, Cenith, Angel and Qin (who is named as a director of FSD, Cenith and Angel) garnered about $6.6 million by selling shares of Future Solar Developments to 11 Chinese financiers – but without being registered to do so. Furthermore, the document charges that “The investments at issue are linked or are stated by FSD to be linked to the Opportunities Ontario Provincial Nominee Program (the “OPNP”) in which FSD investors could qualify for permanent resident status in Canada through the investor stream of the OPNP.” The OPNP is the province’s immigration selection program, allowing employers and investors to recruit workers.

The statement of allegations says that documents provided to investors and the Ministry of Citizenship, Immigration and International Trade showed the OPNP investments were to be used by Future Solar Developments to “‘support the company’s planned expansion in the clean energy sector’ with activities centred on (1) FSD’s participation in the Ontario Power Authority’s Feed-in-Tariff Program and (2) the design, manufacture, sale, installation and maintenance of custom LED lighting products and services.”

The Ontario Power Authority has since merged with the Independent Electricity System Operator, taking the latter’s name. The feed-in-tariff, or FIT program, gives out contracts for renewable energy projects.

Approximately $6.6 million was allegedly raised and deposited into Ontario-based accounts in the names of Future Solar Developments and the others listed in the allegations, OSC staff say.

Citizenship, Immigration and International Trade Minister Michael Chan and Research and Innovation Minister Reza Moridi visited Future Solar Developments and Cenith Air Inc. in January. The two ministers attended the company’s Markham headquarters to tout business agreements inked “as a result” of the premier’s trade mission to China in the fall.

A backgrounder highlighted two deals signed by Cenith Air Inc./Future Solar Developments Inc. One was an agreement with Shanghai Yangze River Group “to collaborate on smog control projects and selling smart electric appliances and Cenith Air purifiers products in China.” The other was a joint venture agreement with Guangzhou City Construction Investment Group “to develop "net-zero" energy technologies and smart device technologies for a project in Guangzhou City.”

A press release contained a quote from Sam Qin stating “Our company’s increased international presence in a key global market like China and the successful promotion of our state-of-the-art products was a direct result of the Premier-led trade mission and the support provided by Ontario’s Going Global Trade Strategy.” Qin was part of the Chinese trade mission delegation.

The same release quoted Minister Moridi as saying “York Region’s Cenith Air Inc. demonstrates that strengthening our ties with China in key areas such as clean tech is generating jobs for Ontarians and growing Ontario’s clean tech sector.”

Premier Wynne and the Liberals have been trying to boost trade with Asia. Ontario’s exports to China were $2.15 billion in 2013, up almost 10 per cent from 2012.

The investigation into the alleged conduct of FSD, Cenith, Angel and Qin was announced by the Ontario Securities Commission in February. A temporary order was issued on February 17 to cease trading shares of Future Solar Devevelopments, and for the respondents to cease trading securities altogether. A hearing was held on March 2, where the temporary order was extended until June 12.

Cecil Fong, a spokesperson for Minister Chan, said in an email that "we are unable to comment on specific allegations that are currently before the OSC." However, Fong did tell QP Briefing that there were no successful applications from Future Solar Developments under the Provincial Nominee Program.

"Based on the OSC website, the OSC's allegations were first posted in February, well after last fall's trade mission," said Fong. "Nothing in the OSC filings would indicate that the allegations are related to the mission or to January's announcement."

Another OSC hearing has been scheduled for April 15, the purpose of which is to weigh whether the FSD, Cenith and the others should be barred from trading securities, fined, reprimanded and/or otherwise.

OSC Spokesperson Kristen Rose confirmed a hearing is scheduled for April 15, but that the regulator can’t speak to the matter due to the ongoing proceedings.

Messages left with FSD, Cenith and Qin were not returned Monday.

gzochodne@qpbriefing.com

Clean energy companies with ties to Liberals’ Chinese trade mission facing allegations from securities watchdog staff

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