GOP: Solyndra deal was rushed
The Obama administration ignored “red flags” about failed Northern California solar panel manufacturer Solyndra, rushing through a $535-million loan guarantee for the company in 2009 and improperly restructuring the deal last winter in a failed attempt to boost the economy and the green energy industry, House Republicans said.
A House Energy subcommittee released internal administration documents Wednesday showing a push to finish work on the loan package in mid-2009 so that Vice President Joe Biden could announce it. And lawmakers spent four hours grilling two administration officials about the decision to risk so much taxpayer money on Solyndra’s uncertain technology.
“This was a half-billion-dollar mistake,” said Rep. Brian Bilbray (R-Solana Beach).
But the documents failed to produce any smoking guns in a brewing controversy that Republicans are using to try to discredit Obama’s push for additional stimulus spending in his new jobs bill.
Though the documents indicated concerns about Solyndra’s financial prospects, they also showed that its application began moving forward during the Bush administration. The rush, in the summer of 2009, came after the Energy Department had approved the package and was awaiting a final estimate on its budgetary cost.
Obama administration officials defended the decision to back Solyndra in the face of huge investments in solar technology by China. They said the loan guarantee wasn’t rushed and that the company ultimately failed because of unforeseen circumstances: a 42% drop in prices for competing solar panels this year and an economic crisis in Europe that significantly reduced demand.
“It’s a disappointing outcome, but it comes with the terrain of backing innovative technology,” said Jeffrey Zients, deputy director of the White House Office of Management and Budget.
Last year, Obama hailed Solyndra as an innovative company that would use stimulus money to create jobs and help lead the economic recovery. But the firm laid off most of its 1,100 workers Aug. 31 and announced it would cease operations. It filed for Chapter 11 bankruptcy last week.
Two days later, agents with the FBI and Energy Department’s inspector general’s office raided Solyndra’s Fremont headquarters. The FBI hasn’t said what prompted the search.
Under questioning Wednesday, Obama administration officials said they did not know the focus of the investigation. Lawmakers also said they were in the dark.
Reps. Henry A. Waxman (D-Beverly Hills) and Diana DeGette (D-Colo.) said they were upset that Solyndra executives said this summer that the company would double its revenue this year.
“I’m perplexed how they could be in my office in July telling me things were looking better and filing for bankruptcy two months later,” DeGette said.
The criminal probe is likely focusing on whether Solyndra executives made misleading statements or omissions in their dealings with government officials, said John Hueston, a former lead prosecutor in the case against Enron’s top executives who now practices white-collar defense at Irell and Manella.
Jonathan Silver, executive director of the Energy Department’s Loan Programs Office, said he had no indication Solyndra provided inaccurate information. “I have no reason sitting here today to believe we were misled,” Silver told the subcommittee.
Subcommittee Chairman Cliff Stearns (R-Fla.) and other Republicans said the Energy Department’s credit committee rejected the Solyndra loan in early January 2009, but it was resurrected after Obama took office later that month and conditionally approved in March.
Documents released Wednesday, however, showed that the credit committee didn’t reject Solyndra’s application. It said a number of “unresolved” issues made a recommendation for approval “premature” at the time. The credit committee requested an independent market analysis and other research, which Silver said was completed within weeks, allowing for the approval.
With the White House eager to start announcing stimulus programs, a special assistant for Biden sent an email to an Office of Management and Budget staffer on Aug. 31, 2009, asking how they could “help speed along” the Solyndra deal so the vice president could announce it four days later.
The OMB staffer preferred that the announcement be postponed. And another OMB email to Biden’s office complained of “having to do rushed approvals.”
Zients said the approval was not for Solyndra’s loan, but for its budgetary cost. He denied any political influence.
But Republicans charged that political concerns rushed the deal.
Zients and Silver also defended the decision to restructure Solyndra’s loan guarantee in February amid the company’s mounting financial problems. Government officials believed the restructuring provided the best chance for taxpayers to recoup their money, Silver said.
The restructuring deal put the government in a secondary position to recover its money in bankruptcy, behind $75 million in new private capital raised by the company. Republicans said that violated the 2005 law that created the loan program, which says government money should be first in line.
Silver said Obama administration lawyers determined that the law applied only to the initial loan guarantee, not to any restructuring.