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Sany not involved in US lawsuit

(Global Times)

08:27, October 08, 2012

Sany Group, China's leading machinery manufacturer, denied involvement in a lawsuit against US President Barack Obama and the Committee on Foreign Investment in the US (CFIUS), according to a company announcement made during the national holidays.

The plaintiff, Ralls Corp, which mainly focuses on wind farm investment and construction in the US, only has a relationship with Sany and does not belong to the group, Sany said in an announcement on October 5.

The company also said that the lawsuit by Ralls Corp against the US president and the CFIUS is proceeding in accordance with the US laws, and "Sany Group is not involved in the lawsuit in any way."

On September 28, Obama issued an executive order that nullified Ralls Corp's purchase of four Oregon-based wind farm projects, claiming that the deal threatened national security of the US.

Ralls Corp is a US-incorporated company controlled by executives from Sany Group. According to media reports, the four projects that Ralls Corp is eying are near a naval test facility in Oregon.

Last month, Ralls Corp had already challenged the CFIUS' decision that ordered Ralls to halt construction of the four projects.

After the president made the ruling, Ralls Corp amended its complaint on October 1, claiming that the US president had exceeded his statutory authority by ordering Ralls to divest its investment in Oregon.

The presidential order gives Ralls 90 days to divest its interests in the projects.

"It is very difficult to avert such political risks during international investment, even with enough due diligence," Wan Ge, an analyst at ChinaVenture Investment Consulting Group, told the Global Times.

Shanghai-listed Sany Group also said in the announcement that no part of the company's wind farm business is included in the company's listed assets.

This is not the first instance of Chinese companies being accused of "threatening the US national security." In a recent case, Chinese telecom companies Huawei and ZTE were investigated by the US government on national security grounds in November 2011.

"There is an element of subjectivity in claiming that the deal is a threat to national security," Wang Zhile, the director of Beijing New-century Academy on Transnational Corporations under the Ministry of Commerce, told the Global Times Sunday.

Wang noted that Chinese investors should communicate with the US government together with their local partners before any investment is made, in a bid to avert such political risks.

"Though it is unlikely the lawsuit will lead to any change in the executive order, Chinese companies should still make their voices heard," said Wang.

Ralls Corp's case marks the first time in over 20 years when the US president blocked a foreign investment deal. The last such case happened in 1990 when President George W. Bush stopped a Chinese aviation company from acquiring a US manufacturing firm.

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