Suntech's GSF to increase Italy presence, extraneous to fraud

MILAN, Oct 2 (Reuters) - An investment fund controlled by China's Suntech Power Holdings said on Tuesday it would strengthen its position in Italy, denying it was involved in a fraud allegedly committed by one of the fund's shareholders.

Investment fund GSF Sicar, a Luxembourg-based company that develops solar power plants, is 80 percent owned by Suntech, 10 percent by the investment vehicle GSF Capital PTE and 10 percent by Zhengrong Shi who founded Suntech in 2001.

The fund said it would boost its "presence" in Italy this year, and that its Italian operations would not be affected by the controversy between its shareholders.

"The dispute under way regards exclusively a financial agreement between the main shareholders of GSF Sicar," GSF said in a statement sent to Reuters. "More specifically it involves Suntech and GSF Capital PTE, not GSF Sicar."

Suntech shares fell after it revealed in July that a GSF shareholder and executive, Javier Romero, had used $700 million in fake German bonds to help guarantee some of the fund's financing.

In August it was decided that Shi would be replaced by David King as CEO and his chairman title changed to executive chairman.

"Proof that GSF Sicar is extraneous to the legal dispute between the shareholders can be seen in the normal continuance of power production, for which no interruptions are foreseen," GSF said in the statement.

(Reporting by Stephen Jewkes and Steve Scherer)

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