An Idaho company chosen for an $850 million Biden administration loan is defending its decision to enlist its co-owner, a Chinese battery company, to help build a taxpayer-funded battery production facility in Arizona.
KORE Power issued a lengthy press release blasting the Washington Free Beacon for reporting that KORE’s co-owner—a Chinese battery company run by a Chinese Communist Party official—is helping to build the plant. KORE said the story was "riddled with inaccuracies," though the statement did not contradict any of the underlying facts of the article.
The Free Beacon reported on Wednesday that KORE was co-owned by a Chinese battery company DFD New Materials, which is run by a Chinese Communist Party official.
After publication, KORE said it is actually co-owned by a wholly-owned subsidiary of DFD New Materials called DFD New Energy, which is also run by a Chinese Communist Party official.
KORE said its partnership with the company was "deeply vetted" by the Biden administration for "over two years" before the conditional loan was approved last summer.
"KORE is an American company with a story of advancing energy storage that goes back more than 50 years," said a spokesman for the company. Corporate records show KORE was founded in 2018, which was six years ago.
KORE’s China ties are drawing scrutiny because the $850 million Department of Energy loan is intended to combat China’s dominance of the battery industry. KORE was approved for the conditional loan last summer to build the battery facility. The Biden administration touted the project as a way to "strengthen the domestic battery supply chain" and counter China’s grip on the global market.
The Department of Energy told the Free Beacon that the company will help KORE build the Arizona facility by providing intellectual property, research and development, and engineering capabilities.
The Free Beacon's report indicated that the China-based DFD New Materials—which is led by Chinese Communist Party official Li Shijiang—held a 14 percent stake in KORE, according to DFD New Materials’s 2022 financial disclosure report.
After the article was published, KORE told the Free Beacon that the shares are actually held by DFD New Energy, a wholly-owned subsidiary of DFD New Materials that is run by Li’s son Li Yunfeng, who is also a Chinese Communist Party official.
KORE added that DFD New Energy’s stake has been diluted to 7 percent in the last year, due to other capital investments in KORE. A company spokesman said "reducing the equity stake of Chinese shareholders has been a priority of KORE."
"Do-Fluoride New Materials (DFD) holds no ownership interest in the Company, much less a controlling interest in KORE," said a KORE spokesman. "Do-Fluoride New Energy, a Chinese battery manufacturer, is a small minority shareholder in KORE."
DFD New Energy’s leader Li Yunfeng has served as an elected representative of the Henan Provincial People's Congress, according to DFD’s website. His father Li Shijiang, the head of DFD New Materials, has served as a representative to China’s National People’s Congress.
One of KORE’s company directors is Li Lingyun, who is Li Shijiang’s daughter. She also serves as vice president of China’s Patent Protection Association, a nonprofit industry group that is overseen by China’s State Intellectual Property Office.
KORE’s relationship with DFD New Materials and its subsidiary DFD New Energy is at the center of a legal dispute in Idaho. A decade ago, Chenco Engineering, a German company, won a $10 million judgment against DFD New Materials for technology theft in the United Kingdom, which the Chinese company has allegedly failed to pay. In September, Chenco Engineering asked an Idaho court to garnish any payments between KORE and DFD New Materials in order to collect the money.
In court filings, Chenco Engineering noted that DFD New Energy is wholly-owned by DFD New Materials and argued that the companies "share such a unity of interest that their individuality has ceased, and the observance of the fiction of separate existence of DFD and DFD New Energy would, under the circumstances, sanction a fraud or promote injustice."
Chenco Engineering claimed DFD New Energy was "inserted into the payment stream between KORE Power and DFD for the primary purpose of frustrating Chenco’s efforts to collect on its adjudicated debts owed by DFD."
KORE’s plans to work with DFD New Energy to build the proposed taxpayer-funded battery plant were first reported by the Free Beacon. KORE acknowledged that DFD New Energy would help build out the facility in its press release on Wednesday, but said the partnership "requires context."
The company said DFD New Energy would provide a "springboard that advances US-owned intellectual property. This is a one-way agreement with no technology going back to China. Any IP created by KORE will be solely US-owned."
In a November legal filing in the Idaho lawsuit, KORE’s CEO Lindsay Gorrill said the Arizona facility was "under construction at present and DFD New Energy will assist in the buildout."
The news raised concerns with watchdog groups and China experts.
"It’s outrageous that a company partly owned by a Chinese company with ties to the CCP would be rewarded with taxpayer money," said Caitlin Sutherland, executive director of the watchdog group Americans for Public Trust, in a statement to the Free Beacon on Wednesday.
In its 3,100-word press release, KORE also accused the Free Beacon of "under-count[ing] KORE’s staff by more than 45 percent." The Free Beacon reported that the company had around 150 employees, based on numbers that KORE’s chief executive provided in an Idaho court filing three months ago. The company said it has been expanding its staff.