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Air Conditioning Supplier Fined $122M Executives Charged

Chinese home appliance maker Gree Electric whose air conditioners are widely sold in Australia via specialist dealers and on the Kogan web site has been fined A$122 Million for selling defective and dangerous products, executives of the Company have been charged.

The faulty air conditioners have been attributed to being the cause of 450 fires that resulted in over $25M worth of damage to homes.

Gree air conditioners which are widely sold to apartment owners in Australia who rent properties and want a cheap air conditioning system agreed to pay the huge fine to resolve criminal charges over faulty dehumidifiers sold in the U.S., according to federal prosecutors.

At this stage it’s not known whether any of the same air conditioners who sold into the Australian market.

The Company who were aware of the problems failed to inform regulators that the more than 2 million dehumidifiers sold between 2007 and 2013 could overheat and catch fire, prosecutors in California said Friday in a press release.

Gree employees, including high-level executives, knew about the defects in September 2012 but the company continued to sell the devices for at least another six months, according to the statement. Gree eventually recalled the defective dehumidifiers almost a year after learning about the defects.

Gree Electric Appliances and Gree Hong Kong entered into a deferred prosecution agreement, authorities said.

What this means is that the companies will avoid criminal prosecution, Gree has agreed to plead guilty to wilfully failing to report consumer product safety information to regulators.

The firms have also agreed to provide restitution to victims of fires caused by the defective dehumidifiers.

The faulty dehumidifiers, which were manufactured by Gree Electric Appliances, caused extensive property damage, according to a notice published by the U.S. Consumer Product Safety Commission.

The $91 million penalty included a $15.45 million civil penalty.

“The issues involved in the above agreements all occurred eight years ago and there have been no recurrence of such problems after 2013. The amounts involved have been paid in full and would not affect the company’s operations and performance this year,” Gree said.

Two Gree executives are facing criminal prosecution for their alleged roles in the failure to report the defective dehumidifiers, U.S. authorities said.

They have pleaded not guilty and face trial in March 2022 in Los Angeles.

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