Istanbul Battery Manufacturer Sues US Real Estate Firm Over Alleged ‘Illegal’ Fees

Istanbul-based Battery Firm Files lawsuit Against US Real Estate Company Over ‘Illegal’ Fees

In a surprising turn of events, Kontrolmatik Technologies, an Istanbul-based battery manufacturing firm, and its subsidiary, Pomega Energy Storage Technologies, filed a lawsuit against a leading commercial real estate company in the United States. The energy powerhouse accuses Jones Lang LaSalle Americas (JLL), a renowned Chicago-based real estate and site selection group, of charging ‘illegal’ fees related to government incentives.

According to Kontrolmatik Technologies, JLL is demanding an inflated share of approximately $127.6 million in taxpayer-funded incentives. These were initially promised for a new factory at the Colleton Industrial Campus off I-95 near Walterboro. The financial inducements consisted of income tax credits, property tax breaks, a grant to assist with the construction of public utilities, and sales tax exemptions.

Huge Incentives and Property Tax Breaks

Apart from the generous state-accorded incentives, the Pomega plant is also set to receive roughly $900 million in U.S. tax credits until 2032 under the Federal Inflation Reduction Act. However, the state law of South Carolina prohibits industries from paying third-party consultation fees to help arrange such incentives.

Despite several pleas, JLL refrains from commenting on the ongoing lawsuit. The Chicago-based real estate giant has requested the adjudicating judge to transfer the case to Illinois, stating that their witnesses and documents are located there. The impacted Turkish firm has until June 12 to respond to the request.

Prolonged Discrepancies and Court Proceedings

The Turkish company had employed JLL in May 2022 to find a suitable location for its inaugural U.S.-based lithium-ion battery manufacturing site. The real estate company successfully led the energy giants to Colleton, where the anticipated battery plant was announced publicly in December under the alias name Project Quartz.

The $358 million project, promising to generate 600 jobs over five years, was celebrated as a significant victory by local officials. Unfortunately, the joyful sentiment was short-lived. By February 2023, JLL pursued payment for the financial inducements awarded to the Pomega plant. Kontrolmatik Technologies resisted the payment, arguing that JLL did not mediate the incentives it was now charging for.

JLL sent a $5 million invoice, the maximum amount under the agreement between the two sides. Kontrolmatik conceded to paying a $750,000 fee for incentives that they believed were directly related to JLL’s efforts. But the real estate company demanded that Kontrolmatik pay additional funds, even threatening legal action.

Looking Ahead

The battery firm has now appealed to the court to declare the agreement unenforceable and that such a transaction contravenes South Carolina law. Furthermore, Kontrolmatik is seeking an unspecified sum in financial damages, which, under the state’s Unfair Trade Practices Act, should be tripled.

Once operational, Kontrolmatik’s Lithium-ion battery plant will power electric grids. These could be paired with renewable energy installations or function as standalone facilities, with the capacity to power around 900,000 homes.