Solar power company SunEdison Inc. faces whistleblower lawsuits filed by two former executives who claim they were fired in retaliation for voicing their concerns about the company’s precarious financial state.
According to the Wall Street Journal, Carlos Domenech, formerly a senior executive at TerraForm Power, a SunEdison subsidiary, and Pancho Perez, a former senior exec at TerraForm Global Inc., seek an unspecified amount of back pay and damages for being fired, they claim, in retaliation for sounding an alarm about misrepresentations the company was making about its financial health.
Both plaintiffs also name a number of top officials as defendants in their complaints, including Ahmad Chatila, CEO of SunEdison.
The lawsuits state that Mr. Domenech was fired in late November 2015 and Mr. Perez was forced to resign the following January, just weeks before SunEdison filed for bankruptcy protection.
“Mr. Chatila’s ambition to create a renewable-energy conglomerate the size of Google Inc. was brought down by a combination high debt, financial engineering and years of aggressive deal making. A planned takeover of a rooftop-solar company in 2015 was the tipping point, and the easy money that had been supplied by investors and Wall Street quickly dried up,” the Wall Street Journal reported.
Even as the company’s situation grew bleaker, senior management misled investors about the company’s financial standing, the whistleblowers allege. The company pressured executives to revise their internal projections to look more optimistic “even as the company was hemorrhaging cash, delaying payments and seeking emergency sources of funding,” according to the Wall Street Journal.
In November 2015, an internal report circulated showing SunEdison had about $90 million in available cash, yet that same day a presentation to investors said the company had $1.4 billion in cash. In another internal meeting, the company projected it would spend $1.3 billion over the next six months. At a board meeting a week later, however, projected expenses were set at $650 million.
Mr. Domenech and Mr. Perez claim company executives either pressured them into going along with the bogus projections or brushed them off whenever they voiced their objections.
In addition to bankruptcy proceedings, SunEdison is also under investigation by the U.S. Department of Justice and the Securities and Exchange Commission over whether management deliberately misled investors in the months leading up to its bankruptcy filing.
Source: Wall Street Journal