Former Employees Allege Widespread Illegality at Taxpayer-Backed Solar Company

Spanish firm under federal investigation routinely violated U.S. immigration, workplace safety laws, former employees claim

Abengoa Chairman Felipe Benjumea walks with Spain's King Juan Carlos / AP
July 31, 2014

A solar company backed by billions in stimulus funds routinely violated U.S. immigration law, workplace safety codes, and environmental regulations, replaced American workers with foreigners, and may be on the verge of bankruptcy, former employees tell the Washington Free Beacon.

The employees describe a pervasive culture of illegality and irresponsibility at the highest levels of the politically connected Spanish solar firm Abengoa.

Despite receiving $2.6 billion in taxpayer backing through President Barack Obama’s stimulus package, they say, the company brazenly flouts U.S. laws that could slow production or hurt its bottom line.

The stimulus was designed to put Americans back to work after the financial and economic catastrophes of 2008, but the employees say taxpayer funds are being used to employ foreign expats, even for menial jobs that could easily be filled by American workers.

The allegations could be another black eye for an Obama Energy Department (DOE) that has been criticized for years over what its critics describe as poor oversight of its green energy subsidies and the economic troubles of the companies they benefit.

Abengoa has been one of the top recipients of such subsidies. It received a $1.4 billion loan guarantee in 2010 to build one of the world’s largest parabolic trough solar plants near Phoenix, Ariz.

The following year it received another $1.2 billion in loan guarantees to build another solar plant in California’s Mojave Desert.

Both loan guarantees were issued through DOE’s 1705 loan guarantee program, the American Recovery and Reinvestment Act-backed program that financed the now-bankrupt solar firm Solyndra.

The department declined to comment for this story. Abengoa did not return requests for comment.

The Arizona Republic reported in January that two federal agencies, the Department of Labor and U.S. Immigration and Customs Enforcement, had opened investigations into Abengoa’s activities in the United States.

Neither agency has revealed details of those investigations. However, new interviews with two former employees, each of whom worked at one of the company’s DOE-funded projects, offer previously unreported insight into alleged illegality that they say pervades the company’s government-funded work.

Hiring foreigners on fraudulent visas

Lydia Evanson "was really excited" to work at Abengoa "because I’m a huge fan of green energy," she told the Free Beacon in an interview.

"I’m far, far to the left" politically, she said. "I voted for Obama twice, [and I] believed in the ARRA […] I was so thrilled to have the opportunity to work there."

As the director of human resources at Abengoa’s construction and engineering subsidiary, Evanson immediately began to see hiring practices that she knew were illegal.

"It started right away," she said. "They started bringing people from Uruguay and Spain who didn’t have a visa in the U.S."

Abengoa is a Spanish company. According to Evanson, who worked at the company’s facilities in Arizona, it went out of its way to hire Spanish or South American employees, even for positions that could have been filled by American workers.

"Over the three years I was working for them, we’re talking about hundreds of people [working without visas], not just a couple. Probably three or four hundred people," she said.

Immigrants must obtain U.S. work visas before gaining employment domestically. However, she said Abengoa would put foreign employees to work before the necessary paperwork was submitted and their visas were obtained.

"You can’t just bring people over and put them to work," she said. "I kept trying to explain that to the CEO and the CFO of the company, and they didn’t want to listen to me."

Initially, Evanson thought the company’s refusal to consider her objections was the result of a language barrier or a general unfamiliarity with U.S. laws. She hired an external law firm with attorneys fluent in Spanish to explain the situation to Abengoa brass.

"What I came to realize, and it took me a while because I didn’t want to realize it, is that they understood. They knew the law. They didn’t care," she said. "And I really came to believe that they’re so politically connected that it’s just hubris and arrogance."

Mike Alhalabi, the former senior lead mechanical engineer at Abengoa subsidiary Abener, says he saw the same illicit hiring practices at work in California.

Alhalabi recalled the company telling an Indian engineer whose visa had expired to continue working even while he sorted through his application for another one.

The company was instructed to have the engineer return to India and reapply for a work visa, Alhalabi said. However, Abengoa superiors "instructed him otherwise."

"My immediate supervisor told him, ‘we’ll give you work, you take it home, you work from home,’" Alhalabi recalled. "So he was telling him to stay illegally, to stay in the Untied States until they got his visa approved."

Alhalabi echoed Evanson’s estimate of the scale of these schemes.

"This exact example was repeated hundreds of times because many of the Spanish people came as tourists and they were working for the company under tourists visas until the company got them the proper visas," he said.

"So they broke immigration laws. And this is hundreds of employees, not one or two, I’m talking about hundreds of employees."

Both he and Evanson expressed dismay at the company’s insistence on hiring employees from its native Spain. "We didn’t even try to recruit in the U.S.," Evanson said. "It completely defied what ARRA was all about."

Such hiring practices are contrary to the terms of the company’s DOE loan guarantees.

"Abengoa Solar adheres to a ‘local to global’ hiring practice, which targets local communities first to fill open positions before considering regional, national, or international candidates," DOE wrote in an internal assessment of the company’s Arizona loan guarantee application in 2010.

Its Mojave project was bound by similar terms.

"In order of consideration, Mojave Solar would search for qualified candidates from Barstow, Victorville, and Adelanto, other small nearby communities, San Bernardino County, California, nationwide, and if necessary, internationally," DOE’s assessment for that loan guarantee stated.

Despite these stipulations, the company hired foreigners even for menial tasks that could easily be filled by workers from the surrounding communities, Alhalabi said.

"They [hired] people to move furniture around and they were all Spanish," he said. "I mean, this is work that you can hire Americans to do. Why would you bring people from Spain to move furniture around?"

Workers who were hired domestically were paid substantially less than their expatriate employees, both he and Evanson said.

"We would hire activity managers from the U.S. and they would make about $70,000 to $75,000," Evanson recalled. "When they would bring the people over from Spain and Uruguay, they would pay them about $150,000 a year.

"The whole thing was cockamamie, for lack of a better word," she said. "I kept trying and trying and writing emails and memos and trying to explain this. I watched this happen and finally gave up at the end."

Workplace safety violations and an impending ‘environmental disaster’

"At the end of the day, my goal as an American citizen is to do my job and to do my job with a clear conscience," Alhalabi said. Accordingly, he spoke out about numerous instances of unsafe or illegal design and engineering work.

Alhalabi said he was forced out of the company as a result of his comments.

He was hired to lead a team of engineers [on] Abengoa’s Mojave solar plant. As the engineer of record on the project, Alhalabi had the final say on the safety and regulatory compliance of the facility’s construction work. That meant that he was on the hook if any of its work ran afoul of state or federal laws.

That put him in a precarious spot when the company began "putting pressure on us to do illegal things, to approve illegal things," he said.

Engineers in Spain did much of Abengoa’s design work, Alhalabi said. However, many of those engineers were not familiar with applicable U.S. laws and he "refused to rubber stamp their work."

Some of that work violated regulations by the Occupational Safety and Health Administration (OSHA), he said.

At Abengoa’s Mojave facility, solar energy is used to heat synthetic oil, which is used to generate steam, which in turn generates power. OSHA codes require that the heat on the exterior of such chemical equipment not exceed 140 degrees. As designed, Alhalabi said, the pipes at the Mojave facility would reach 169 degrees.

Rather than address that problem, Abengoa engineers in Spain incorporated assumptions regarding wind speed that dramatically reduced the exterior temperatures of those pipes—at least on paper.

"I can tell you on certain days there is no wind whatsoever," he said. "They designed the plant with a wind speed minimum of 5 MPH." That could result in serious burns for workers who touch overheated pipes.

"When I came back to the office, I met with my superiors, and I told them what the problem was, and they said ‘okay, okay, okay,’ but they told me they weren’t going to do anything about it because it would delay the project and it would cost them more money," Alhalabi said.

They also refused to install additional insulation on the outside of the pipes, again citing costs. Alhalabi refused to sign off on the plans.

"From my standpoint, I don’t care how much it costs," he said. "You have to meet all standards and rules and regulations. You cannot cut corners because it’s going to delay the project."

Abengoa brass was not happy about that.

"My immediate supervisor threatened that he was going to get rid of me and replace me with somebody else," he recalled. "I told him I don’t care, I’m not going to break any laws, and I’m going to do what I was hired to do."

The Indian engineer who Alhalabi alleged was illegally working in the United States without a visa was actually brought on to replace him, he said. When his visa was renewed, in April of last year, "he started rubber-stamping left and right."

"So in July, they started working on easing me out of the company, because of course they have people in place who will rubber-stamp whatever they want," he said. "In October they told me they didn’t need me anymore."

Alhalabi assumes that the "rubber-stamping" has continued since he left, and says the consequences to human health and the environment could be dire as a result. He cited another defect that came to light during the latter stages of his engineering work: insufficient support for the pipes that carry the synthetic oil.

According to Alhalabi, Abengoa refused to assign the proper seismic "importance factor," a designation under California law that requires certain measures to withstand earthquakes, to those pipes, leaving them vulnerable to earthquake damage.

"If you have an earthquake there […] the supports will fail, the restraints that keep the piping in place will all fail, and when it fails, that pipe will break apart, spilling oil all over 2,000 acres, causing an environmental disaster," he said.

A wealth of political connections

In addition to its two DOE loan guarantees, Abengoa is the beneficiary of significant support from the U.S. Export-Import Bank (Ex-Im), which finances the purchases of U.S. exports by foreign governments and corporations.

Ex-Im approved two loans totaling more than $33 million for the company last year. The financing supported the use of American-made goods by Abengoa subsidiaries in Spain and South Africa.

The year before, Ex-Im awarded the company an additional $152 million in taxpayer-backed loans.

Observers noted that Abengoa and Ex-Im shared a board member at the time: New Mexico’s former Gov. Bill Richardson (D.). It was one of a litany of political connections that Alhalabi says have paid dividends for the company.

"Behind the scenes, what brought Abengoa to the United States, based on my research, [was] Al Gore," Alhalabi said. "He promised to bring U.S. dollars to the company."

The former vice president, whose anti-fossil fuel activism frequently dovetails with his green energy investments, bought a stake in the company in 2007 through his firm, Generation Investment Management (GIM).

In June 2010, months before Abengoa received its first DOE loan guarantee, the company selected University of California professor Mario Molina for a seat on its advisory board. Molina also sits on GIM’s advisory board.

Gore, Alhalabi said, "has his own team in the U.S., including Senator [Dianne] Feinstein [(D., Calif.)] and a few other senators, who pushed whatever it takes to make sure that Abengoa is getting business, it’s getting money, it’s getting tax dollars."

Feinstein, distressed by permitting delays for Abengoa’s Mojave facility, wrote a March 2010 letter to then-Interior Secretary Ken Salazar asking him to expedite regulatory processes that would allow the company to move forward with the project.

She asked Salazar to "specifically intervene to make sure the short list of viable solar projects proposed on California's private lands" were able to work through red tape associated with the Endangered Species Act.

The following month, the Department of the Interior’s Fish and Wildlife Service officially backed DOE’s assessment that construction of an Abengoa solar facility "is not likely to result in adverse impacts to Special Status or Federally Listed species."

While Feinstein was lobbying on Abengoa’s behalf, the company had built its own sizable government relations shop. Despite federal scrutiny of its operations and allegations of law breaking, the company is flexing its political muscle in an effort to win yet more federal backing.

The company is lobbying DOE and members of the House on DOE’s 1703 "Innovative Technology Loan Guarantee Program," according to recently filed disclosure forms.

It is also working on legislation that would extend additional tax credits to solar energy companies and afford more opportunities to develop renewable energy projects on federal land.

Congressional investigators stay quiet

More than 20 of Abengoa’s subcontractors have filed complaints against the company, claiming it collectively owes them about $40 million in payments, the Arizona Republic reported in January.

Resulting liens against the company, as well as the pair of ongoing federal investigations, led to congressional scrutiny of DOE’s support for the company. Sen. Jeff Flake (R., Ariz.) brought up the company’s two loan guarantees during Energy Secretary Ernest Moniz’s confirmation hearings last year.

A Flake spokeswoman said they "don't typically comment on any correspondence that might occur between federal agencies and our office on behalf of constituents." She noted that the senator "has not supported stimulus spending on this or other projects."

Flake may have been tipped off to some of those problems by complaints from Evanson. She said she has contacted his staff and the office of House oversight committee Chairman Darrell Issa (R., Calif.), who has led investigations into DOE subsidies for green energy companies.

But oversight has not done much with the information, she said. "I actually spoke to some of his senior aides, and they’ve done nothing with it […] It’s beyond my comprehension that nobody cares about this."

The committee did not respond to a request for comment.

Scrutiny of the company could increase if it hits dire financial straits, as Alhalabi says it almost certainly will.

"This company eventually will go bankrupt," he insisted. "The question is at what expense to the United States people and government."