October 11, 2011 7:50 PM
Wilson Sonsini Defends Itself Against Solyndra Accusations
Posted by Brian Baxter
UPDATE: 10/12/11, 6:35 p.m., EDT. The names of attorneys from Jones Day and Milbank have been added to the 20th and 22nd paragraphs of this story. CORRECTION: 10/12/11, 12:22 p.m., EDT. The original version of this story misstated details about the California Valley Solar Ranch project in the 19th paragraph, which has been revised to include the correct information. We regret the error.
As House Republicans press for information about additional government-backed loans to the solar energy sector, Silicon Valley–based Wilson Sonsini Goodrich & Rosati is moving aggressively to refute allegations that its role advising bankrupt solar panel maker Solyndra created a conflict of interest.
Solyndra's failure has generated a firestorm of controversy, with House Republicans claiming that political connections were behind the Obama administration's decision to pump taxpayer money into a questionable project it hailed as a success story even as the company's finances were crumbling.
In making their case against the administration's efforts on behalf of Solyndra—Solyndra filed for bankruptcy in September after shuttering its operations and laying off its 1,100 employees—House Republicans have pressed for various documents related to a $535 million loan the company received from the U.S. Department of Energy.
Meanwhile, Solyndra remains the subject of an Federal Bureau of Investigation into possible accounting fraud. At issue: whether the company provided misleading financial forecasts in order to get federal funds. The existence of the FBI probe, as well as other ongoing inquiries, prompted Solyndra to seek bankruptcy court approval earlier this month to hire K&L Gates for representation in connection with the various probes.
Wilson Sonsini was drawn deeper into the Solyndra fray over the weekend when The New York Times reported that Steven Spinner—a senior official with the Energy Department's loan guarantee oversight office and a major fund-raiser for Barack Obama's 2008 presidential campaign—had pushed hard for the Obama administration to provide Solyndra with the loan that helped sink it.
In its report, the Times cited e-mails sent by Spinner pushing for approval of the government loan to Solyndra in his official capacity at the Energy Department, despite the reported concerns of Office of Management and Budget officials about a possible default.
Spinner is also married to Palo Alto–based Wilson Sonsini corporate partner Allison Spinner. As previously reported by The Am Law Daily, the firm advised Solyndra on its failed $300 million initial public offering last year. Government documents show that Wilson Sonsini has also received more than $2.4 million in recent years in connection with its work for Fremont, Calif.–based company, some of which involved the controversial loan.
Though Spinner left the Energy Department in September 2010 and is now a clean energy and technology consultant and investor in Silicon Valley, Wilson Sonsini now finds itself publicly defending its work on behalf of Solyndra and claiming it committed no ethical breaches as a result of that work.
"Allison [Spinner] did not work on the Solyndra transaction, nor has she ever worked with the company in any capacity," the firm said in a statement provided by spokeswoman Courtney Dorman. "Also, the firm established an ethical wall around Allison with respect to [Wilson Sonsini's] representation of clients in matters involving [Energy Department] loan programs."
Wilson Sonsini claims its "ethical wall" prevented Allison Spinner from handling any work on Energy Department–related client matters while her husband was employed by the federal government from April 2009 until his departure last fall. No one from Wilson Sonsini was permitted to "discuss or otherwise communicate" about those matters with Spinner, the firm said in its statement.
The firm's statement also said Allison Spinner did "not receive any correspondence, documents, or files relating" to Energy Department–related matters during the entirety of her husband's employment in government service.
Another lawyer recusing herself from any Solyndra-related matters is former Orrick, Herrington & Sutcliffe litigation partner Melinda Haag, who left the firm in August 2010 to become the U.S. attorney for the Northern District of California.
Reuters reports that Haag has agreed not to participate in any criminal investigation into Solyndra as a result of her firm's role representing company CEO Brian Harrison, who invoked his Fifth Amendment right to refuse to answer questions at congressional hearings last month.
Other law firms with ties to Solyndra continue to surface. U.S. Senate lobbying records show that Solyndra paid $50,000 to Holland & Knight in quarterly installments for lobbying work in 2008. The records show that Richard Gold, head of Holland & Knight's public policy and regulation practice group, took the lead from the firm, assisted by energy and clean technology cochair and senior policy adviser Beth Viola, corporate partner David Mann, and political affairs manager Beth Salvosa.
Solyndra isn't the only solar company in the United States to attract the attention of House Republicans, who called Monday for information on loan deals with several other solar energy companies. And it certainly isn't the only solar company to turn to lawyers from Am Law 200 firms for counsel on those transactions.
Akin Gump Strauss Hauer & Feld, Jones Day, and Skadden, Arps, Slate, Meagher & Flom have been particularly busy, with Skadden energy and infrastructure projects cohead Martin Klepper leading teams from the firm working on four separate deals announced earlier this month in the solar energy sector.
Skadden advised Tempe, Arizona–based First Solar in connection with a $1.46 billion partially guaranteed Energy Department loan to support the Desert Sunlight solar farm project in Riverside, Calif., the largest photovoltaic power plant of its kind in the world. Skadden also helped First Solar finalize another $646 million loan from the Energy Department to support the construction of the Antelope Valley Solar Ranch in nearby Los Angeles County.
First Solar's general counsel is Mary Beth Gustafsson. She took over in November 2009 from John Gaffney, a former Cravath, Swaine & Moore partner who left the company to become the top in-house lawyer at Solyndra. Akin Gump senior public policy adviser Jose Villarreal, a longtime partner at the firm, serves on First Solar's board of directors.
Adam Umanoff, the cochair of Akin Gump's project finance and renewable energy practice, is leading a team from the firm advising High Plains Ranch II LLC, SunPower, and NRG Energy on their acquisition and financing of the California Valley Solar Ranch earlier this month. High Plains Ranch was sold by SunPower and NRG Energy in a transaction that closed immediately before the financing.
Jones Day energy M&A partner Gerald Farano and of counsel Danielle Varnell led a deal team from the firm advising NRG on that transaction. Milbank, Tweed, Hadley & McCloy renewable energy and infrastructure of counsel Michael Dayen, promoted by the firm in August, represented SunPower on the deal. Located in San Luis Obispo, Calif., about halfway between Los Angeles and San Francisco, the planned 250-megawatt facility is expected to provide power for 260,000 homes in California after its completion within two years.
In a separate transaction, Bank of America/Merrill Lynch recently turned to Skadden to advise it on a $1.4 billion partially guaranteed loan by the Energy Department for Project Amp, which supports the installation of photovoltaic solar panels on rooftops in 28 states in what is considered the world's largest rooftop solar generation project. The project—being jointly developed by NRG, SunPower, and real estate developer Prologis (on whose buildings the panels are to be placed)—is expected to almost double the U.S.'s total solar power capacity.
A government press release states that Project Amp's application under the Energy Department's 1705 loan program—the same program that Solyndra tapped into—was submitted by lender-applicant BoA under the Financial Institution Partnership Program. Jones Day also acted for NRG on the Project Amp transaction.
Not to be outdone, Skadden also recently advised Santa Monica–based SolarReserve in connection with a $737 million guaranteed loan from the Energy Department to fund the construction of the Crescent Dunes Solar Energy Project in Tonopah, Nevada. The facility is the first of its kind in the U.S., according to an Energy Department press release, and will be tallest molten salt tower in the world.
The recent flurry of solar sector deals occurred in part because the 1705 program had a September 30 deadline for finalizing its loans. Energy Department Secretary Steven Chu supports the loan program, which began in 2005 but didn't issue its first loan guarantee until 2009, according to green energy trade publication Ethanol Producer Magazine. (Chu is the older brother of Morgan Chu, chair of the litigation practice at Irell & Manella and a former co–managing partner of the firm.)
The fallout from the ill-fated Solyndra loan claimed a high-ranking victim last week when the head of the Energy Department's loan guarantee office, Jonathan Silver, resigned as questions about the circumstances surrounding the company's government funding continued to swirl.Make a comment