Solyn­dra asks court to OK huge fees for law firm

The Washington Times Weekly - - Politics - BY JIM MCELHATTON

U.S. tax­pay­ers risk los­ing more than a half-bil­lion dol­lars from the col­lapse of so­lar-panel maker Solyn­dra Inc., but former Mas­sachusetts Gov. Wil­liam F. Weld and his as­so­ci­ates stand to earn a wind­fall in fees rep­re­sent­ing the bank­rupt com­pany in com­ing months.

Two weeks af­ter the com­pany was raided by the FBI, Solyn­dra filed pa­pers ask­ing a bank­ruptcy judge to al­low it to pay $825 per hour to Mr. Weld, a former twoterm Repub­li­can gov­er­nor of Mas­sachusetts who en­dorsed Barack Obama for pres­i­dent, and lesser amounts to four oth­ers at the Mc­Der­mott Will & Emery law firm, in­clud­ing a former White House reporter turned ad­viser spe­cial­iz­ing in cri­sis man­age­ment.

The com­pany wants to em­ploy the law firm as spe­cial coun­sel dur­ing Solyn­dra’s bank­ruptcy to help it deal with a host of govern­ment in­ves­ti­ga­tions, records show. In ad­di­tion to Mr. Weld, the com­pany wants to pay Stephen M. Ryan, a reg­is­tered lob­by­ist, former Se­nate com­mit­tee gen­eral coun­sel and head of the firm’s govern­ment-af­fairs prac­tice, $775 per hour.

David Ran­som, a reg­u­la­tory and govern­ment af­fairs lawyer who was com­mu­ni­ca­tions di­rec­tor to Rep. Steny H. Hoyer, Mary­land Demo­crat, from 2003 to 2006, is slated to earn $525 per hour. Mr. Ran­som also is a reg­is­tered lob­by­ist, though nei­ther he nor Mr. Ryan has reg­is­tered to lobby for Solyn­dra.

The com­pany also wants to pay $425 per hour to Jon Decker, iden­ti­fied on the firm’s web­site as a “se­nior pro­fes­sional ad­viser,” whose ex­pe­ri­ence in­cludes work­ing as White House reporter for Reuters Tele­vi­sion. The firm says with his jour­nal­is­tic ex­pe­ri­ence as a mem­ber of the White House press corps, Mr. Decker “fo­cuses on pro­vid­ing clients with strate­gic ad­vice, par­tic­u­larly in cri­sis man­age­ment.”

The law firm earned about $23,000 in fees from Solyn­dra be­fore the bank­ruptcy, but any fu­ture ex­pen­di­tures now must be cleared by a bank­ruptcy judge.

Christo­pher Rieck, a spokesman for Mc­Der­mott Will & Emery, said the firm had been en­gaged as le­gal coun­sel for Solyn­dra, but not to lobby on be­half of the com­pany. The firm de­clined to com­ment fur­ther on its work for Solyn­dra.

Les­lie Paige, a spokes­woman for Cit­i­zens Against Govern­ment Waste, said no­body should go with­out le­gal rep­re­sen­ta­tion, but she ques­tioned the fees at a time when tax­pay­ers stand to lose so much money from the col­lapse of the so­lar com­pany.

“Ev­ery­body needs to have ad­e­quate rep­re­sen­ta­tion,” she said. “But I think it’s an out­rage to pay $825 per hour. That’s all go­ing to come out of the tax­pay­ers’ hide one way or an­other.”

Pete Sepp, vice pres­i­dent of the National Tax­pay­ers Union, said that while fed­eral loans won’t fund the hir­ing of Mr. Weld and other lawyers at the firm, the hir­ing would mean there’s some­what less money left over from the bank­ruptcy to pay off cred­i­tors.

“Tax­pay­ers are al­ready shelling out di­rectly for the govern­ment’s side of the in­ves­ti­ga­tion, and by the time it’s all over, who knows what will be left for the Trea­sury to re­cover,” he said. “This is why avoid­ing the mess be­fore it hap­pens is eas­ier than clean­ing up af­ter it hap­pens.”

The com­pany’s bank­ruptcy ear­lier this month came about two years af­ter En­ergy Sec­re­tary Steven Chu and Vice Pres­i­dent Joseph R. Bi­den an­nounced ap­proval of $535 mil­lion in loan guar­an­tees to the Cal­i­for­nia-based com­pany.

“This an­nounce­ment to­day is part of the un­prece­dented in­vest­ment this ad­min­is­tra­tion is mak­ing in re­new­able en­ergy and ex­actly what the Re­cov­ery Act is all about,” Mr. Bi­den said at the time.

Pres­i­dent Obama, dur­ing a sub­se­quent tour of the com­pany’s head­quar­ters, said the firm would hire 1,000 work­ers and make enough panels over the life of a plant it was build­ing that it would be like re­plac­ing eight coal-fired power plants.

In­stead, the com­pany went down in flames, lay­ing off more than 1,000 work­ers in re­cent weeks and fil­ing for bank­ruptcy pro­tec­tion in Delaware. Next came an FBI raid and con­gres­sional hear­ings.

The com­pany’s chief fi­nan­cial of­fi­cer, W.G. Stover Jr., said in bank­ruptcy fil­ings that Solyn­dra’s col­lapse was fu­eled by, among other things, an over­sup­ply of so­lar panels. He blamed the over­sup­ply on ex­pand­ing ca­pac­ity by for­eign so­lar-panel man­u­fac­tur­ers that “uti­lized low-cost cap­i­tal pro­vided by their gov­ern­ments to ex­pand op­er­a­tions,” ac­cord­ing to court records.

“In re­sponse, Solyn­dra was forced to re­duce its av­er­age sell­ing prices to re­main com­pet­i­tive,” Mr. Stover ex­plained in a 56-page court fil­ing.

Within days of the com­pany’s bank­ruptcy an­nounce­ment, a spokesman for the En­ergy Depart­ment re­leased a state­ment say­ing the loan-guar­an­tee pro­gram was pur­sued by the Bush

Pete Sepp, vice pres­i­dent of the National Tax­pay­ers Union, said that while fed­eral loans won’t fund the hir­ing of Mr. Weld and other lawyers at the firm, the hir­ing would mean there’s some­what less money left over from the bank­ruptcy to pay off cred­i­tors. “Tax­pay­ers are al­ready shelling out di­rectly for the govern­ment’s side of the in­ves­ti­ga­tion, and by the time it’s all over, who knows what will be left for the Trea­sury to re­cover,” he said.

and Obama ad­min­is­tra­tions.

But the House En­ergy and Com­merce Com­mit­tee, which had been in­ves­ti­gat­ing the Solyn­dra loan deal months be­fore the com­pany’s bank­ruptcy, is press­ing to find out if the Obama ad­min­is­tra­tion, which awarded the loan pack­age, ig­nored signs of the com­pany’s fi­nan­cial trou­bles and played pol­i­tics in award­ing the loan guar­an­tees to Solyn­dra.

“There is much to learn as the in­ves­ti­ga­tion moves for­ward, and it is im­per­a­tive that Amer­i­can tax­pay­ers are not pay­ing the price for the sins of Solyn­dra,” Rep. Fred Up­ton, Michi­gan Repub­li­can, said in a joint state­ment this month with Rep. Cliff Stearns, Florida Repub­li­can, af­ter the FBI raid.

Mr. Up­ton is chair­man of the House En­ergy and Com­merce Com­mit­tee, and Mr. Stearns is chair­man of its over­sight and in­ves­ti­ga­tions sub­com­mit­tee

The big­gest in­vestor in Solyn­dra is Arg­onaut Ven­tures, which is tied to Ok­la­homa bil­lion­aire Ge­orge Kaiser, a fundraiser for Mr. Obama’s 2008 pres­i­den­tial cam­paign.

Adding to the scrutiny, re­ports sur­faced Mon­day that Rep. La­mar Smith, Texas Repub­li­can and chair­man of the House Ju­di­ciary Com­mit­tee, cited the in­volve­ment of Arg­onaut in a let­ter to At­tor­ney Gen­eral Eric H. Holder Jr. ask­ing him to ap­point an independent ex­am­iner to in­ves­ti­gate the com­pany’s loan deal.

Mean­while, Rep. Henry A. Wax­man of Cal­i­for­nia and the com­mit­tee’s rank­ing Demo­crat, called on Repub­li­cans to seek the tes­ti­mony of rep­re­sen­ta­tives of Arg­onaut and an­other big in­vestor in Solyn­dra, Madrone Cap­i­tal Part­ners, at an up­com­ing hear­ing. At a House com­mit­tee hear­ing on Solyn­dra ear­lier this month, Mr. Wax­man cited ties Madrone has to Wal-Mart’s Wal­ton fam­ily, which he noted backs Repub­li­cans.

Af­ter ques­tion­ing Obama ad­min­is­tra­tion of­fi­cials two weeks ago, the House En­ergy and Com­merce Com­mit­tee sched­uled an­other hear­ing for Sept. 23 ti­tled “From DOE Loan Guar­an­tee to Bank­ruptcy to FBI Raid: What Solyn­dra’s Ex­ec­u­tives Knew,” in which com­pany of­fi­cials were to tes­tify un­til they changed their minds and backed off.

Solyn­dra ex­ec­u­tives were likely well-pre­pared by Mc­Der­mott Will & Emery.

Be­fore Solyn­dra went bank­rupt, the com­pany had hired the law firm “with re­spect to re­spond­ing to con­gres­sional in­ves­ti­ga­tions,” Mr. Ran­som said in an af­fi­davit, which was filed re­cently in the com­pany’s bank­ruptcy case in Delaware.

Mr. Ran­som called the rates for Mr. Weld and oth­ers “stan­dard hourly rates for work of this na­ture.”

“These rates are set at a level de­signed to fairly com­pen­sate the firm for the work of its at­tor­neys and par­ale­gals and to cover fixed and rou­tine over­head ex­penses,” he wrote.

AS­SO­CI­ATED PRESS PHO­TOGRAPHS

Po­si­tioned to clean up: Former Mas­sachusetts Gov. Wil­liam F. Weld stands to earn $825 an hour as spe­cial coun­sel to the bank­rupt so­lar-panel maker, if a bank­ruptcy court judge agrees.

An FBI agent car­ries out ev­i­dence from Solyn­dra head­quar­ters in Fre­mont, Calif., on Sept. 8 in a probe of its col­lapse af­ter re­ceiv­ing $535 mil­lion in fed­eral loans.

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