SI Group sued over chemical plant sale

A German company is accusing the SI Group of concealing tax liabilities and intentionally mislabelin

A German company is accusing the SI Group of concealing tax liabilities and intentionally mislabeling toxic materials at a chemical plant it sold two years ago.

Minatec Finance S.a.r.l. last month sued the Niskayuna-based SI and its Luxembourg subsidiary in a Frankfort court. On Monday, Minatec asked a federal judge in Albany to force SI to turn over certain documents and make executives available for dispositions for the German suit.

The German suit stems from SI’s sale of Chemtec Leuna Gesellschaft Fur Chemic & Technologic GmbH plant to the Minatec for 11.3 million euros ($17.3 million US). After closing on the plant in Leuna, Minatec discovered SI allegedly concealed information about the likelihood of a large post-closing tax liability, according to court documents.

The Luxembourg-based Minatec also learned that SI allegedly mislabeled a highly toxic product called “Dibloc” as the less hazardous designation “Xn.” Minatec claims those materials should have been labelled “vert toxic T+,” according to court documents.

The alleged mislabelling resulted in improper handling and storage of the Dibloc. Minatec claims SI mislabelled the Dibloc throughout Europe, but not in the United States.

“This mislabeling resulted in the evasion of numerous mandatory, critical safety requirements and may have caused serious harm to Chemtec employees, customers and others who came in contact with the mislabelled toxic material,” states the suit filed in U.S. District Court.

In 2000, SI agreed to purchase Chemtec, which supplied chemicals for pharmaceutical and industrial uses. It also supplied specialty natural waxes for agricultural and cosmetic applications.

SI has asked the Frankfort court to deem the company not liable to Minatec. Messages seeking comment left on SI Vice President William Scheffer’s office and cell phones were not immediately returned Monday. Company spokeswoman Renee Michalisin also did not immediately return a call Monday.

After the Chemtec deal closed, German tax authorities launched an investigation into the transaction. Minatec believes the audit will show a “substantial liability of Chemtec.”

However, SI claims it is not liable for losses Minatec incurs from the Chemtec deal. SI has also refused to make available certain documents and witnesses, according to court documents.

Minatec is requesting a federal judge to order SI to provide those documents and witnesses because it believes they might show how certain information was concealed during the 2006 transaction. It could also use that information to deflect claims raised by the German audit, according to court documents.

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