Watchdog investigates Magnis Energy chair, company in sights

ASIC could expand probe into Magnis Energy, sources say.

Frank Poullas, chairman of Magnis Energy, is under investigation by the corporate regulator.

Frank Poullas, chairman of next-generation batteries player Magnis Energy, is under investigation by the corporate regulator.

Sources close to the Australian Securities & Investments Commission inquiry said investigators had not ruled out expanding the probe to include the company.

The Australian Federal Police has assisted the regulator with its inquiries, but declined requests for further information because it “would or could reasonably be expected to prejudice the conduct of a current investigation”.

The Australian has previously reported that customers of Magnis subsidiary Imperium3, which will shortly begin manufacturing batteries in New York, had negligible assets and no revenues.

One customer, Sukh Energy, one of six to have signed orders worth a total $885m, has said it was in the business “of solar-based lighting solutions”.

Despite an ASX query, Magnis shares have risen from 32c in October to 67c on Tuesday.

When it is operating, the New York factory run by Imperium3 will produce next-generation batteries based on patents owned by another company associated with Magnis, Charge CCCV.

That technology, Magnis says, can recharge electric cars in just a few minutes without damaging the battery – which could be made without the need to use expensive materials such as cobalt and nickel components

Magnis has also applied to list on the OTCQX Best Market in the US and previously counted ex-NSW deputy premier Troy Grant and former Macquarie executive Warwick Smith among its directors. Both men have now left the board.

Sources close to the ASIC investigation said the regulator had recently discussed the company with the ASX. ASIC declined to comment on Tuesday.

The ASX declined to publish a Magnis Energy announcement on its platform last week.

The release, which Magnis instead placed on its website, noted Charge CCCV had been “selected to participate in the United States government-funded USCAR program”. Magnis has a 9.65 per cent stake in Charge CCCV.

A statement from the American Battery Technology Company, which received the $US2m ($2.7m) contract, said it would test the recycled batteries it manufactured “against otherwise identical cells made from virgin sourced metals by (Charge CCCV)”.

An ASX spokesman said that while he could not comment on whether Magnis had lodged the announcement with the stock exchange, “we do provide guidance to companies that announcements should be material and not for promotional purposes predominantly”.

Magnis did not respond to requests for comment, but an unidentified woman at Mr Poullas’s home described The Australian as the “scum of the Earth” before threatening to call police.

ASIC has previously moved to deter those in the market from pumping up the Magnis share price, in October entering a Telegram group of 400 traders and warning they could be breaking the law with a co-ordinated “pump-and-dump” campaign.

“We can see all trades and have access to trader identities. We can identify underlying clients and networks of connected parties, and can also analyse trading patterns,” the corporate regulator posted into the channel.

At the time, Magnis shares traded at between 36c and 38c.

ASIC has now created more than 174 documents related to its inquiries into the Telegram group and related “pump-and-dump” activity around Magnis shares.

The Australian does not suggest Mr Poullas is involved in that activity, only that it is another focus of ASIC’s inquiries.

The rapidly rising Magnis share price has proven a boon for Mr Poullas, landing him 500,000 ordinary shares on Monday.

The new shares issued to Mr Poullas, worth almost $320,000, were triggered after the company surpassed a $500m market capitalisation milestone. Two other Magnis directors – Stanley Whittingham and Peter Tsegas – were also given 500,000 shares in the company each on the back of the milestone.

Despite the regulator’s interest, Magnis has forecast significant growth in the battery sector.

In response to an ASX query in October, the company said it projected Imperium3 would have revenues of $80m in 2022, climbing to $360m in 2023 and $1.8bn by 2027. Sukh Energy would contribute up to 9 per cent of that revenue annually, Magnis said.

Despite initially declining to name any of its customers, Magnis eventually disclosed Sukh had a major contract with Imperium3 after The Australian raised questions over its ability to fulfil the orders it had made.

According to its Indian filings for the year ending March 2020, Sukh Energy had $58,000 in intangible assets, $7400 in tangible assets, $435 in cash and an investment in development near Chandigarh worth $3751.

“Sukh Energy, when considered together with other members of the group of entities owned by the Sukh Energy owners, is an entity of sufficient substance and standing,” Magnis general counsel Julian Rockett wrote to the ASX in October.