The deal was supposed to bring hundreds of millions of dollars in Chinese financing to the U.S. wind power industry, all pulled together by a Dallas entrepreneur with long ties to China.
But five years later, E. Patrick Jenevein III and his partners are demanding that the state-owned Aviation Corp. of China pay them $2.3 billion after failing to come through on the promised financing and going behind their backs to buy a Minnesota airplane manufacturer Jenevein brought to their attention.
It’s a long way from 2009, when Jenevein, a member of the advisory council of the Dallas Committee on Foreign Relations, was doing interviews about the need to foster better U.S.-Chinese ties and proclaiming his startup firm Tang Energy – a reference to the Chinese dynasty – part of a new wave of cross-Pacific business deals.
“In China the state owns the enterprises, and it owns the court. So if you’re a state-owned company, you never have to worry about having a fair fight. And here they have a fair fight on their hands,” Jenevein, CEO of Tang, said Wednesday.
Now the two sides are locked in a legal battle over the breakdown of a partnership that at one point appeared poised to bring a Chinese wind power manufacturer to the United States with the support of Texas’ political elite.
In a demand for arbitration filed in June, Tang claimed that “a story that started with honor and optimism ended when one party refused to do what it promised and bragged about doing exactly that which it promised not to do.”
“Neither gushing national pride nor unfettered greed excuse a party from its contractual obligations,” Tang said.
The case came into public view last week when the U.S. subsidiary of the Chinese aviation company filed a federal suit claiming Jenevein and his partners were attempting to manipulate an agreed-upon arbitration hearing to their advantage.
Malcolm McNeil, an attorney representing the subsidiary, said the parent company never had a deal with Tang, only the subsidiary.
“AVIC is a non-signatory,” he said. “We don’t know what they’re up to, but generally you’re going to go after the company you think has the deepest pocket.”
According to court documents, Jenevein’s plan to use Chinese money to finance wind power development in the United States began in 1995 when he was introduced to Yih-Min Jan, a Chinese physicist. Jan helped Jenevein win a contract with the state-owned China National Petroleum Co., and soon the pair partnered to form Tang.
They helped bring U.S. power equipment to China and Chinese wind turbines to the United States. And in 2001, Tang made a deal with the Chinese aviation company to start up a wind turbine blade manufacturer in China, HT Blade. Soon the two companies had a new idea, financing U.S. wind energy with Chinese dollars through a Dallas-based startup optimistically named Soaring Wind.
In 2009, Tang announced $300 million in financing from the Chinese to help build close to 250 megawatts of wind power capacity at sites across the United States. A few months later came another announcement, that HT Blade was going to open a U.S. plant, creating around 1,000 jobs.
A U.S.-Chinese conglomerate, which included Dallas investor and Democratic fundraiser Cappy McGarr, had plans to build what would have been one of the largest wind farms in the country at 600 megawatts. The $1.5 billion project was to be located in West Texas and named Spinning Star. And Jenevein had a deal to supply the turbine blades.
The prospect of the plant opening in Texas was so great that Dallas Mayor Tom Leppert visited the turbine manufacturer’s operation in China. But the plant and the jobs never came to be.
Spinning Star’s bid to obtain $450 million in federal stimulus money and its Chinese business partners drew the scrutiny of U.S. Sen. Charles Schumer, D-N.Y., and others. And financing for wind projects dropped off after the global financial crisis.
A website for Spinning Star said the project was “still in development,” but an email to the company drew no response. The Electric Reliability Council of Texas, which manages the state’s grid, has no record of Spinning Star receiving permission to supply the grid.
After Spinning Star, relations between Tang and the Chinese deteriorated.
Jenevein claims the Chinese aviation company never provided the $300 million it promised. What’s more, in 2011 the state-owned company announced it was buying Cirrus Industries, the Minnesota aircraft manufacturer that Jenevein says he brought to their attention as a potential investment vehicle for Soaring Wind.
Now Tang is struggling to stay afloat, reduced to half a dozen staff.
“It would be sad for it to be over. But we committed to undertaking projects with AVIC, and to do it without AVIC, I’m not sure we could,” Jenevein said. “I don’t know what’s next yet. I wish I knew.”
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