The First Solar Three Billion Dollar Swindle

As we dig deeper in the green-energy crony corruption-story, it begins to sound more and more like the making of a big-budget Hollywood thriller. Today’s installment on First Solar includes billionaire investors, corporate welfare, favoritism, threats, exaggerations, lawsuits over inferior quality, layoffs and outsourcing, and even a romantic dalliance. The screenplay would be riveting. Too bad it is not fiction. The film would have to be a documentary.

The trailer would open: “What do Goldman Sachs, several Goldman executives, and quite a few billionaire investors have in common? Add in millions of campaign donations followed by billions doled out of the 2009-stimulus package along with a ‘who’s who’ list of high-powered energy connections. Throw in a lead lobbyist with frequent White House visits and an active, yet connected board member.” Dark clouds would roll in as the music comes to a crescendo. The narrator continues: “Along the way, drama and trouble emerge. The CEO sells his own stock, jobs are going overseas. Accusations of money laundering materialize, and inside investigations point to a shady scheme within a solar energy company. The firm in question is implicated—as well as the Department of Energy.” Bold text pops up on the screen: “The First Solar Swindle” Smaller text: “Opening in theaters nationwide…”

Yes, all of this drama can be found in one company with interconnected ties to the Obama White House!

Last week, we wrapped up Senator Harry Reid’s connection to four firms—representing billions in taxpayer money—also part of the green-energy, crony-corruption story. Three of the four are in Reid’s home state: Nevada Geothermal, Ormat Nevada, and SolarReserve; while both SolarReserve and BrightSource Energy have multiple and significant ties to the President.

Now, we move on to the next three of our Special Seven series––those that received the Department of Energy loans (even though the companies were rated as “non-investment” grade) and grants, as a part of the stimulus spending spree. Additionally, these seven companies received “special” Department of Interior (DOI) treatment through a March 11, 2009 Secretarial Order, which the Washington Free Beacon described as a means “To fast track the siting of renewable energy projects on public lands managed by the agency.”

This chapter exposes First Solar.

From the introduction of this serialized book, the thumbnail says:

First Solar manufacturers “thin film” solar modules and is now moving into project development. While First Solar is not in the “junk bond” list, they do hold the unique distinction of being the single worst performer in the SPX in 2011. Additionally, they are linked to three junk-bond projects: Aqua Caliente (AZ), BB+; Antelope Valley Solar Ranch (CA), BBB-; and Desert Sunlight (CA), BBB-. First Solar was an early green investment of Goldman Sachs—which gave more than $1 million to the 2008 Obama campaign. Goldman Sachs executives sat on Obama’s 2008 Finance Committee and others were bundlers. In Throw Them All Out, Peter Schweizer reports on First Solar investor Paul Tudor Jones, who was a 2008 Obama bundler, and First Solar CEO Michael Ahearn, who “gives generously (and exclusively) to Democrats.”

First Solar Swindle cast of characters:

Goldman Sachs Investor and Top 2008 Obama Donor
First Solar was an early investment of Goldman Sachs, the number two Top Obama Donor that gave more than $1 million dollars to his 2008 campaign––plus, the Obama administration “is infested” with Goldman Sachs executives.

Bruce Heyman and David Heller sat on Obama’s 2008 Finance Committee 

Bruce Heyman and Jennifer Scully were 2008 Obama bundlers
Two Goldman executives sat on Obama's 2008 Finance Committee, Bruce Heyman and David Heller, while Heyman, along with Jennifer Scully, was also a 2008 Obama bundler. According to the Wall Street Journal, “Ms. Scully raised $100,000, but didn’t make any large donations personally; Mr. Heyman bundled $50,000 in donations, including a $10,000 contribution he made and Goldman executive, David Heller, donated $25,000.”

Michael Ahearn CEO First Solar 

Pages 91-92 of Peter Switzer’s book Throw Them All Out says: “Ahearn gives generously (and exclusively) to Democrats.”

Ted Turner Billionaire Investor
From Throw Them All Out: “The biggest investors [in First Solar] include billionaire Ted Turner, a big financial backer of Obama’s 2008 campaign.”

Paul Tudor Jones Billionaire Investor
“Another Obama bundler, also owns a stake in First Solar.”

Whitney Tilson Ultra-wealthy Obama Supporter
Obama ally and a member of “Patriotic Millionaires” (a group of wealthy Obama supporters backing the president’s effort to raise taxes on high-earners), is “Ultra-wealthy Obama supporter Whitney Tilson,” reports the Washington Free Beacon. It turns out that “One of the few ‘winners’ in Tilson’s portfolio was his short position in First Solar, a company on the brink of collapse, despite receiving more than $3 billion in federal loan guarantees from the Obama administration.”

Former Vice President Al Gore Generation Investment Management co-founder
Other Wealthy First Solar Shareholders who are heavily involved in clean-energy include: Generation Investment Management (GIM) co-founded in 2004 by former chief executive of Goldman Sachs Asset Management and Former Vice President Al Gore.

David Shaw Obama bundler
Founder of D. E. Shaw, an Obama bundler and one of the top 3 donors to the Democratic Party, who happens to the largest shareholder of First Wind that “received $232 million in stimulus funds.”

Jose Villarreal First Solar board member
Also a board member for the Center for American Progress, a left-wing think tank, closely tied to the administration, which lobbied for green energy loans.

Kathleen Weiss Vice President of Government Relations
The lead lobbyist for First Solar, Kathleen Weiss, Heritage’s Scribe reports, “has had numerous meetings at the White House, according to visitor logs. She has met with senior White House official Valerie Jarrett, Deputy Assistant to the President for Energy and Climate Change Heather Zichal, among others.”

First Solar Swindle scene outline:

The First Solar Swindle takes place in several locations as they have three distinct projects.

Exelon Corp.

Antelope Valley Solar Ranch, California—Rating BBB- by Fitch, September 2011, DOE loan for $646 million––was purchased by Exelon Corp, yet First Solar, which developed the project, “will build, operate, and maintain the project.” Exelon Corp. was another 2008 Obama donor, and the Antelope Valley Solar Ranch project has a 25-year purchase power agreement from PG&E as well.
During Obama’s run for the presidency, Exelon’s employees continued to give, contributing at least $200,000 during Obama’s 2008 campaign. Exelon board member John Rogers Jr. was a top Obama bundler, hauling in at least $500,000. Bloomberg reported that former Obama chief of staff Rahm Emanuel worked on the $8.2 billion merger that created Exelon in 2000, and former senior adviser David Axelrod had ownership in a consulting business that had Exelon as a client.

NextEra Energy

Desert Sunlight, California––Rating BBB, by Fitch; September 2011, DOE loan for $1.2 billion—was sold to NextEra Energy Resources, LLC, the competitive energy subsidiary of NextEra Energy, Inc. and GE Energy Financial Services. Yet, the September announcement also states that “First Solar will continue to build and subsequently operate and maintain the project under separate agreements.” Both CEO's are on President Obama's Job Council, Lewis Hay of NextEra Energy and Jeffrey Immelt of GE (another top Obama donor, donating $529,855 to his 2008 campaign). GE has raked in over $3 billion of stimulus money, and counting.

Sherry Barrat, a director at NextEra, is also Vice Chairman of Northern Trust, the company that once owned the Obamas’ house.

NRG Energy

Agua Caliente, Arizona––Rating BB+ by Fitch, August 2011, DOE loan for $967 million––was purchased from First Solar by NRG Solar, LLC, and a subsidiary of NRG Energy. The plant would supply power to PG&E, and be made with panels from the Tempe-based First Solar Inc. Billionaire George Soros, a 2008 Obama donor, who “gave advice and direction on how President Obama should allocate so-called stimulus money in a series of regular private meetings and consultations with White House senior advisers,” owns more than half a million shares of NRG Energy.

First Solar Swindle synopsis:
First Solar sought to create turnkey projects with the assistance of DOE loan guarantees and direct loans.

Favoritism

A Government Accountability Office report found that the Energy Department loan program skipped steps in its review process when evaluating loans, while in some cases it was impossible to determine if the review steps were even completed. The DOE apparently manipulated its analysis and strategically modified evaluations in order to issue loans to First Solar. Through the funding of First Solar’s projects, favoritism was shown, as regulations may have been violated that required innovativeness and that allows for only one technology per project sponsor—which may have been why the projects were sold as soon as the loans were funded. (Did they think we wouldn’t notice?)

Layoffs and Outsourcing

Since DOE finalized First Solar’s three loan guarantees (for over $3 billion), First Solar has encountered serious financial problems that put the DOE funded projects in jeopardy. First Solar’s stock declined the greatest compared to any S&P 500 companies in 2011 and has lost more than $100 per share over the past year. First Solar has cut production of its solar panels worldwide.  Based upon the company’s financial troubles, First Solar fired its CEO in October 2011. In April 2012, First Solar laid off 2000 workers and closed factories. In May, a massive round of furloughs was announced. In a May 16, 2012 hearing, CEO Michael Ahern admitted: “in sheer numbers, most of our full-time employees are outside the US.” Delay, as listed below, means that the indirect jobs that the White House wanted to create with the three loan guarantees will likely never materialize.

Inferior Quality and Lawsuits

Problems that directly impact First Solar’s DOE loan guarantee projects have been revealed. It was announced in late February that First Solar would postpone manufacturing solar panels at its Mesa Arizona plant, which is still under construction, because of financial problems. First Solar intended for the Mesa facility to provide panels to the First Solar projects. This delay raises questions about whether First Solar will have problems supplying solar panels to its DOE loan guarantee projects.  Additionally, millions of dollars worth of its solar panels have had to be replaced under warranty because they did not last in hot climates. All three of First Solar’s DOE-based solar generation projects are located in hot desert climates—which raises serious concerns about whether the panels will work properly long term. According to the Phoenix Business Journal, “First Solar Inc. has been hit with an investor lawsuit in federal court, alleging the solar panel manufacturer misled investors over how much it would cost to replace defective panels.” Reports indicate that manufacturing flaws cost $253 million in replacement costs.

Corporate Welfare

First Solar received a US Taxpayer loan guarantee to sell solar panels to itself! The subsidy came from the Import-Export Bank. In 2011, First Solar received $455.7 million to subsidize the sale of solar panels to two solar farms in Canada—owned by a small corporation called St. Clair Solar. But St. Clair Solar was a wholly owned subsidiary of First Solar.

First Solar’s CEO has admitted to selling more than 700,000 shares of his own stock netting him $68.5 million—though claiming that the company “remains financially strong and well positioned to execute through the current market environment.” HumanEvents.com reports “between 2008 and 2012––a period when First Solar’s stock value dropped by almost 95 percent––Ahearn sold over $450 million of his own company’s stock.”

Obama’s insistence on green-energy subsidies manifests itself as rank corporate welfare.

Threats and exaggeration

First Solar came under extreme heat in the House Oversight Investigation—“The First Solar Scheme” (pp. 29-38), noting a series of violations and application misrepresentation as well as “persistent pressure,” with even documents of a “threatening” letter to Jonathan Silver.

A First Solar investor puffed up the potential of these green projects: “Goldman Sachs Group Inc. plans to channel investments totaling $40 billion over the next decade into renewable energy projects, an area the investment bank called one of the biggest profit opportunities since its economists got excited about emerging markets in 2001.”

A Romantic Dalliance

Every movie needs some love. This is provided in the First Solar Swindle through senior DOE official Steve Black who leads the Renewable Energy Policy Group and NextEra Lobbyist Manal Yamout—who are in a romantic relationship.

An application that should otherwise fail, but instead passes under improper influence and through the manipulation of analysis, results in the defrauding of taxpayers and misappropriation of assets.

As the reporter for the First Solar Swindle, I’d like to be played by Cameron Diaz or Renee Zellweger. As the investigator, Christine Lakatos pictures Julia Roberts of the Pelican Brief playing her part. Yes, the First Solar Swindle will be a blockbuster—or should I say, it is a bank buster?

Author’s note: Thanks to Christine Lakatos, the Green Corruption blogger, for research assistance.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). Together they work to educate the public and influence policy makers regarding energy, its role in freedom, and the American way of life. Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations’ combined efforts serve as America’s voice for energy.

First published @Townhall.com, July 21, 2012 
Part Four of Obama's Green-Energy, Crony, Corruption Story, The Special Seven 

UPDATE: During the course of writing this article, on July 19, 2012 Bloomberg News reported, "The U.S. Export-Import Bank approved $57.3 million to Solar Field Energy Two Private Ltd. and Mahindra Surya Prakash Private Ltd. to help finance the purchase of First Solar panels, according to a statement yesterday."