SynGest Inc., the California-based company with plans to build a plant near Menlo, Iowa, that will produce fertilizer and energy from corn cobs, claims that a recent decision by the Iowa Economic Development Authority (IEDA) to cancel a $2.5 million grant for the project is simply a misunderstanding.
“The actions being taken in Iowa right now are the direct result of a misguided Associated Press story that has led to a misunderstanding at IEDA,” said SynGest CEO Jack Oswald. “We are confident that with a little bit of time and calmer heads, that we will ultimately get this project back on track.”
Earlier this month IEDA declared SynGest had defaulted on its state contract by failing to note in its application for the grant that SynGest Chairman Serge Randhava had been accused in a federal lawsuit in Illinois of racketeering and fraud related to his role in a previous research project involving fertilizer.
In a letter to SynGest dated May 1 and released to the Associated Press, Director Debbi Durham notified the company that its Iowa power fund grant was being terminated immediately due to failure to report that Randhava was named as a defendant in a federal court suit in Illinois in 2005. The notification stated that part of the basis for this litigation, Gas Technology Institute v. Rehmat, was the allegation that Randhava, in his role as president of Gas Tech LLC, misappropriated approximately $530,000 of funding provided by Gas Research Institute to Gas Tech LLC.
In its financial assistance application, the authority’s letter noted, SynGest answered “no” to questions whether “there any judgments or court actions completed or pending against the applicant entity, or any current or prospective employee, officer, principal, director, or owner and has any current or prospective employee, officer, principal, director or owner been accused or convicted of any crime or wrongdoing?"
Oswald told Green Markets that this situation had nothing to do with his company and was civil litigation that took place in 2005 and had been settled by late summer 2009. “It amounts to a technicality how the application had been checked,” he said. “I didn’t know about it beforehand.”
In support of SynGest, Prof. Robert Brown at the Iowa State University Institute for Physical Research and Technology wrote to IEDA that SynGest and its management team had his continuing support with respect to its grant for the proposed project to develop a bioammonia facility in Iowa.
“I have been part of the SynGest technical advisory council for over two years and continue to be confident in their executive team and the viability of their business plan,” Brown wrote.
Support also came from Nigel McMullan, vice president with Matheson, which expects to be partnering with SynGest. “In addition to investigating the character of those involved,” McMullan wrote, “we have also reviewed your process, technology and business plan and applaud you for choosing technology that appears to be the most viable in the renewable energy industry.” McMullan added that Matheson likely will invest millions to support SynGest projects.
Mike Bontrager, industrial segment president with The Weitz Co., wrote that “we have been quite impressed with the entire company’s strength and ethic of perseverance and are confident that SynGest will weather this unwarranted storm and ultimately thrive.”
Heartland Co-op, headquartered in West Des Moines with some 48 locations throughout central Iowa, announced in 2009 that it had signed a “letter of interest” with Syngest to explore a partnership whereby Heartland would store and market the ammonia produced by the plant, and also collect and transport corn cobs to fuel the facility (GM Sep