Lawyers netted millions in solar loan deal
In the fallout of the collapse of solar-panel maker Solyndra LLC — a company awarded more than a half-billion dollars in federal loans before it went bankruptlate last month — members of Congress are demanding to know how all that money was spent.
The answer, in part, can be found in a review of public federal contracting records, which detail payments to dozens of vendors and contractors that received funds reported through the $535 million in loan guarantees awarded to Solyndra to build a solar plant in Fremont, Calif.
Before Solyndra went bankrupt and its headquarters were raided by the FBI, law firms that highlighted their work on the loan-guarantee package received millions of dollars in legal fees, according to payments disclosed through the American Recovery and Reinvestment Act.
Morrison Foerster, which represented the Department of Energy as the loan guarantor, received more than $1.9 million for legal services. Wilson Sonsini Goodrich & Rosati, which represented Solyndra, received more than $2.4 million.
A spokesman for the Department of Energy said it’s customary in commercial loan transactions for the borrower to pay or reimburse the fees of the lender and guarantor counsel.
“In the case of the Solyndra loan application, Morrison and Foerster was hired to represent the department, and Wilson Sonsini was hired to represent Solyndra,” said Energy Department spokesman Damien LaVera. “Their fees associated with this program were paid by Solyndra. As is required of companies receiving funds as a result of the Recovery Act, those funds were reported on the Recovery Act website.”
Ryan Alexander, president of the nonpartisan Taxpayers for Common Sense, agreed that it’s not unusual in a loan-guarantee situation for the borrower to pay the costs. Still, she said, Congress didn’t sell the American public on the idea of the stimulus program by saying more lawyers were going to be employed.
“What we’ve learned about Solyndra is the complexity of these deals undermines our confidence that we’re getting a good deal,” she said. “I think the complexity indicates there needs to be greater transparency throughout the whole process.”
Morrison Foerster did not respond to questions about the firm’s work on the Solyndra deal, but the law firm provided an upbeat assessment of the project not long after the loan guarantee was approved in 2009.
In a paper titled “Say Hasta La Vista to Global Warming” on the firm’s website, one Morrison Foerster associate was quoted as saying that working on the deal was “a truly unique opportunity and a wonderful learning experience.”
Another associate added, “Since we had very little time to close and since the team was leanly staffed, we were all given a tremendous amount of responsibility and a lot of material to process.”
The title of the paper, “Hasta La Vista to Global Warming,” was a reference to a comment made by California Gov. Arnold Schwarzenegger at a ceremony announcing the Solyndra loan in 2009, an event that also included Energy Secretary Steven Chu and, by satellite, Vice President Joseph R. Biden.
Mr. LaVera said it’s not unusual for the Department of Energy to rely on outside specialists. He said the department’s loan program has supported more than 40 projects, including the world’s largest wind farm, several of the world’s largest solar-generation plants and the first nuclear power plant in the U.S. in three decades.
“As would be expected in project financing arrangements this complicated, the department relies on some of the best outside support in the world. This includes legal counsel, outside auditors, independent technical reviews and market analysis,” he said.
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