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Letter from ASIC Chairman to James Kwok


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Below is Page No. 2 of a two page letter, dated 5 November 2009, from the then ASIC Chairman Tony D' Aloisio to James Kwok. The content of the letter relates to material published by ASIC in February 2007 regarding the business of EnviroStar Energy (EEL), subsequent to James Kwok's letter requesting accuracy and correctness to ASIC's publication (i.e. its absence to prove the factual basis of its prima facie case). A corrected publication is currently outstanding.


This summary of the Judgement has, to many eminent Australians and communities, represented a major testimony to the clear vindication of James Kwok's firm stance against ASIC's case and innocence in the matter.

 

Please click the icon below to read Page No. 2 from the letter. The file is in PDF format and requires Adobe Reader to view.

 

ASIC Letter - An extract from two pages

 

The latest version of Adobe Reader may be downloaded from www.adobe.com.

 

 

Further Reading:

Background of the matters preceding the letter above.

 

James Kwok is a Chartered Professional Engineer and Fellow of the Institution of Engineers Australia, who holds various granted Patents on cleantech innovative technologies. With great success James pioneered Australia’s first household biomass fuelled power generation plant (200ktpa in 2001 at Stapylton, Queensland) utilising the Fluidised-Bed Combustion Reactor (FBCR) technology that was contributed to by his research and development.

 

This utility-scale biomass plant at Stapylton was granted with Australia’s first renewable energy certification, with the technical performance verified by independent experts. The FBCR technology is now well commercialised as the world’s best-practise for energy generation from low calorific value fuels, including brown-coal, with environmental coal gasification plants being constructed in PRChina at Lou Yang Heavy Machineries in Lou Yang City, and Yima City Henan Province. A large capacity lignite gasification project approval was also granted for Dalian Heavy Machinery in Dalian City, Liaoning Province.

 

The entity of Envirostar Energy Limited (EEL) resulted from Mr Kwok’s turn-around of a previously dormant company of seven years, directing it to the main-stream of the cleantech industry in they year 2000, where various project approvals were attained, commitments of 15 year power sales agreements were signed with Energy Australia, and licenses for power generation, network access and HV-transmission were granted to Mr Kwok. These were major tasks achieved impressively, resulting in the company 's capitalisation and shareholder values growing respectably.

 

Fully approved and licensed by the respective Governments, power generation projects at Stapylton, Queensland and Morwell, Victoria took some three (3) years in the development-phase; the total costs of which were fully-paid for privately by James Kwok, his close friends and many fellow engineers. Each of the projects' generating capacities of 2x20MWe were fully designed and documented with a project development cost of over AU$3 million for each project (total over AU$6 million). These projects were transferred to EEL by James Kwok for a consideration of AU$1.00 (one dollar), with not a single share consideration attached; thus being stated as an equitable transaction in accordance with the Court's Judgement.

 

This transaction meant that EEL owned the project assets entirely for a mere consideration of AU$1.00 with the only requirement being to pay site rental at the fair market price of AU$12,000 per month including rates, taxes and outgoings. This arrangement resulted in EEL taking no risk in project development and conserved its cash during the early stages of the company's formation. Furthermore, agreements for the sale of power from the projects (PPAs), which were fully signed, would result in revenue in the order of AU$500 million over 15 years with Energy Australia, as well as power interconnection-access to the network being agreed to and signed with Energex (QLD project). Under these transactions, there were no other payments whatsoever to James Kwok required into the future, with EEL holding the right of final-say should it decide to terminate any of the agreements with no-recourse whatsoever.

 

Following the removal of a majority of the EEL board members by James Kwok, subsequent to the loss of a significant amount of the company's capital in a wrongful decision of the board to invest in Australian Funds Management (which went into liquidation in 2002), EEL was placed into administration. The company later successfully re-listed its securities following a capital re-structure that effected full payments to all creditors/suppliers, including those remaining under personal guarantees which were cleared by James Kwok personally. James Kwok sacrificed a controlling stake in the company and the FBCR technology ownership, as well as foregoing pre-payments towards infrastructure works constructed on site. During this time James Kwok defended allegations that were levelled by a former EEL director (who had been removed) to ASIC, regarding the market rentals for the sites in Stapylton, Queensland and Morwell, Victoria.

 

This specific issue then was the only basis of the prima-facie case brought by ASIC in its persecution of the matter, in which James Kwok maintains his total innocence and deeply regrets that the relevant authorities saw fit to pursue it in this manner. Indeed, following the Company's appointment of a new board and management, an independent valuation was subsequently conduction by Hall Chadwick Chartered Accountants in Sydney. Following this expert report the existing lease agreements for the property rentals, which were the subject of ASIC's case, were found to be not only justifiable, but the subsequent lease contracts between the Company and the new landlord of these properties were subjected to hefty increases.

 

All of the documents relating to these matters were held as 'privileged' during the Court's proceedings, therefore being rendered as inadmissible. Having now re-emerged, they prevail as a record of the pure-events that were unable to be exhibited at that time and could potentially raise questions about the understanding of the subject or motivation of those prosecuting the matter.

 

The essence of James Kwok's clear conscience and principles therefore prevailed, as there was no detriment or loss to shareholders, investors and the ASX publicly listed company he owned by majority and led. This is firmly evidenced as detailed and stated in the Court's judgement appended herewith. Further, James Kwok’s clear objectives and aims to prove the technology in actual commercial operation were achieved (actually well attained and well recognized), being technically verified and deemed comprehensively ready as a feasible technology for deployment world-wide.

 

To James Kwok's total credit he lead the company to a successful conclusion, with the completed and independently expert-verified project in Queensland being Australia's first large-scale green-waste from garden-pruning to clean-energy power generation facility; built utilising James Kwok's earlier self-funded research and development of the Fluidised-Bed Combustion Reactor (FBCR) technology. The FBCR integrated water-tubes boiler technology is now the world's well commercialised cutting-edge technology, viewed as best-practise for Biomass, MWSDB, and Lignite fuelled power generations.

 

The recently granted World Patent for the original Hydrodynamic Power Technology is the result of Mr Kwok’s relentless research and development endeavours, which have been in commercialisation.