Solyndra asks court to OK huge fees for law firm
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.
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.