Biden-Backed Solar Company Lied About Effectiveness of Solar Modules, Lawsuit Says

Biden gave First Solar $500 million loan last month

Alana Goodman • January 14, 2022 5:01 am

Investors are suing a Biden-backed solar energy company that received a $500 million federal loan last month, claiming the company lied to shareholders about the effectiveness and financial viability of its solar modules.

A Michigan municipal pension fund alleges that executives at First Solar, which is owned by Biden megadonor and Walmart heir Lukas Walton, made “false and misleading statements” to investors and failed to disclose that its solar module was “grossly underperforming and was unable to hit its wattage targets.” Those claims and omissions, the fund alleges, artificially inflated the company’s stock price in 2019 and led to investor losses.

The class-action suit comes after the U.S. International Development Finance Corporation (DFC) granted First Solar a $500 million federal loan in December to build a module manufacturing facility in India as part of President Joe Biden’s “Build Back Better World” initiative. The funding drew concerns from ethics watchdogs that questioned whether the company’s political connections—including Walton’s substantial donations in 2020 to Biden and the Democratic National Committee—played any role in the decision. The DFC has denied any political considerations.

First Solar and the DFC did not respond to requests for comment.

In the lawsuit filed last week, the Pontiac City General Employees Retirement System claimed that First Solar’s CEO and other senior executives failed to disclose that the company’s solar module technology was “not commercially ready at the time of its release, had a component that was failing in the field and causing fires, was not able to hit its projected and touted wattage targets, and had an inconsistent output—all of which put First Solar at a competitive disadvantage.”

Lawyers for the plaintiffs said investors became aware of these inconsistencies after a series of reports by the financial analysis firm Barclays, which downgraded First Solar’s stock rating in January 2020.

“Defendants made materially false and misleading statements and omissions, and engaged in a scheme to deceive the market. This artificially inflated the price of First Solar common stock and operated as a fraud or deceit on the [investors],” said the lawsuit. “Later, when Defendants’ prior misrepresentations and fraudulent conduct were disclosed to the market, the price of First Solar stock fell precipitously as the prior artificial inflation came out of the price over time.”

In 2020, First Solar paid $350 million to settle another shareholder lawsuit brought by two U.K. pension funds that claimed the company had made misleading financial statements that artificially inflated its stock price between 2008 and 2012.

The Biden administration announced the $500 million loan to First Solar in December, touting it as the DFC’s “largest single debt financing transaction” since the agency’s creation in 2019. Ethics watchdogs pointed out the political connections between the company and the Biden administration, noting that First Solar’s billionaire owner Walton in 2020 contributed $300,000 to the Biden campaign and $100,000 to the DNC.

Prior to 2019, the Development Finance Corporation was called the Overseas Private Investment Corporation and had a “history of deals gone bad when mixing taxpayer dollars with politically connected entities like First Solar,” according to Tom Anderson, director of the Government Integrity Project at the National Legal and Policy Center.

A spokesperson for the DFC told the Washington Free Beacon in December that the loan was a “milestone in the U.S. effort to drive alternative supply chains that do not utilize forced labor” and had “absolutely nothing to do with politics.”

First Solar came under scrutiny in 2012, when the GOP-led House Oversight Committee investigated a series of Department of Energy loans issued to solar companies by the Obama administration. The investigation was prompted by a scandal that involved another politically connected solar energy company, Solyndra, which had declared bankruptcy and defaulted on a $500 million federal loan.