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Entries in Solyndra Inc. (12)

Monday
Oct032011

ABC News Exclusive: Obama on Solyndra -- 'Hindsight Is Always 20/20'

Paul Chinn-Pool/Getty Images(WASHINGTON) -- President Obama told ABC News Monday that he does not regret touting the solar company Solyndra as a model of his jobs program, or loaning $535 million in taxpayer money to the company before it declared bankruptcy.

"Hindsight is always 20/20," Obama told Good Morning America anchor George Stephanopoulos in an interview broadcast online Monday. "It went through the regular review process and people felt that it was a good bet." The interview was the first under a new alliance between ABC News and Yahoo! News.

ABC News asked the president about the Solyndra loan as Congress released White House emails that show a top donor to Obama was in direct contact with one of the president's closest advisers about the federal energy loan program. Steve Westly, a California venture capitalist who raised more than $500,000 for Obama's campaign, exchanged emails with Valerie Jarrett, one of Obama's closest advisers, to warn her about political fallout that could ensue if the president visited the factory being built by Solyndra.

"Could you perhaps check with [the Energy Department] to make sure they're comfortable with the company? I just want to help protect the president from anything that could result in negative or unfair press," Westly said. "If it's too late to change/postpone the meeting, the president should be careful about unrealistic/optimistic forecasts that could haunt him in the next 18 months if Solyndra hits the wall, files for bankruptcy."

In May 2010, White House officials began to organize a trip for President Obama to visit the Solyndra factory that ultimately occurred on May 25, 2010.

The emails were released by Democrats on the House Energy and Commerce Committee Monday to emphasize that no government decisions relating to Solyndra were influenced by considerations relating to campaign donations. However, the emails also show for the first time that a major donor had access to top presidential advisers on matters concerning the loan program.

"The Democrats deny that any political influence was involved, yet in their own memo they highlight the role of Obama fundraiser Steve Westly in the discussions," said Rep. Cliff Stearns, R.-Fla., who chairs the Energy and Commerce subcommittee that has been investigating the Solyndra loan.

The emails also show deep reservations from analysts at the Office of Management and Budget about the decision to loan $535 million to Solyndra -- reservations that have since been justified. Last month, the California solar power company filed for bankruptcy, and their offices were raided by the FBI. The new documents also show there was vigorous debate inside the White House about the wisdom of making risky investments in clean energy with taxpayer dollars.

The most pointed example of that came during an email exchange between top White House economic advisor Larry Summers and Solyndra investor Brad Jones, of Redpoint Ventures. In December 2009, Summers sought advice from Jones about the administration's economic policy.

Jones' reply included a harsh assessment of the Energy Department's loan program.

"The allocation of spending to clean energy is haphazard," he wrote. "The government is just not well equipped to decide which companies should get the money and how much....One of our solar companies with revenues of less than $100 million (and not yet profitable) received a government loan of $580 million; while that is good for us, I can't imagine it's a good way for the government to use taxpayer money."

Summers accepted the critique, saying, "I relate well to your view that [government] is a crappy vc [venture capitalist]…"

The email exchanges between Summers and Jones, and the exchange between Jarrett and Westly, all point to a common practice inside the White House, according to an administration official who agreed to answer questions from ABC News about the documents on the condition he not be identified because the subject is sensitive.

"Part of Valerie Jarrett's job is to interact with folks from the business community in all different sectors of the economy. It's in her job description to do that kind of outreach with folks in the private sector," the administration official said.

Both the White House and the Energy Department said the emails simply prove that the department engaged in healthy debate about the loan decision before freeing up taxpayer money for Solyndra's use.

"This program was established by Congress to support innovative, cutting-edge projects that by their nature carry a degree of risk," said Damien LaVera, an Energy Department spokesman. "These emails show that the Administration was aware of those risks, and that decisions were based on more than two years of rigorous analysis and due diligence by career officials spanning two administrations. As we have consistently said, there was a thoughtful and appropriate debate within the Administration and decisions were made solely on the merits of the project."

Eric Shultz, a White House spokesman, said the emails "validate what we've said all along, which is this was a merit-based decision made by career staffers at the Department of Energy. And as we've said from the beginning, supporting fledgling innovative technologies assumes some risk, but that doesn't mean we should throw up our hands and do nothing, ceding the jobs of the future to China or any other country."

In releasing the emails, House Democrats said they saw a healthy internal debate about the wisdom of investing in the clean energy sector. Obama had embraced the idea, dedicating hundreds of millions of dollars in an effort to help jump start the fledgling "green energy" industry, create jobs, and improve the environment.

A statement from Rep. Henry Waxman, D-Calif., ranking member of the House Energy and Commerce Committee, said the emails show there was "internal disagreement within the Administration about Solyndra's viability and the effectiveness of the loan guarantee program throughout the process."

At the Office of Management and Budget -- where analysts were tasked with assessing the financial risks -- internal emails show deep reservations about lending money to Solyndra.

"Bad days are coming," one email warned in April 2010. OMB officials also seemed concerned with the Department of Energy's apparent failure to monitor the progress at companies that were heavily backed by government loans.

One OMB official wrote: "DOE's 'system' for monitoring loans is quite problematic (barely any review of materials submitted, no synthesis for program management, inherent conflicts in origination team members monitoring the deals they structured, etc) and does not seem to be a program priority."

The emails surrounding the Obama's plans to visit the Solyndra plant offer a rare look behind the scenes at how every move by the president is carefully measured in advance for political benefits and risks. And they show top donors, such as Westly, have the connections and the ability to weigh in on such decisions.

In March, ABC News and The Center for Public Integrity's iWatch News documented how Westly straddled the worlds of big time bundler, venture capitalist for green energy firms -- and White House insider.

In August 2010, Westly was appointed to a high-powered advisory board to Energy Secretary Steven Chu. Before that appointment, four companies in the Westly Group portfolio secured more than a half billion dollars in DOE support. Last month -- as Westly continued to raise money for Obama and advise Chu -- a fifth firm secured DOE backing. Energy Department officials said the loans and grants were awarded on merit.

In the emails, Westly's warnings about the political risks of visiting Solyndra are countered by other considerations.

One White House staffer writes: "POTUS [the President] could meet with workers/make remarks at the new building site, which is very construction/new jobs heavy. 400+ union labor workers in hard hats using heavy machinery both indoors and outdoors."

At the same time, a July 21 email from Solyndra's representatives at the Glover Park Group to staff at the White House Office of Communications pushes a positive message about the company, under the heading "Solyndra Messages," touting the company's "strong future," "growth market," and emphasizing the benefits of solar panels being "Made in the USA."

Ultimately, the White House decided to go ahead with the factory visit. Ron Klain, then the chief of staff to Vice President Biden, wrote in an email that everyone involved understood there were going to be risks whenever fledgling companies like Solyndra were involved.

"Sounds like there are some risk factors here -- but that's true of any innovative company that POTUS would visit. It looks like it is OK to me, but if you feel otherwise, let me know."

An unnamed Energy Department official throws in support for the visit, telling the White House, "the company should be strong going into the fall with their new facilities on line."Another Department of Energy official wrote: "Bottom line is that we believe the company is okay in the medium term, but will need some help of one kind or another down the road."

But OMB analysts remained skeptical. One official wrote darkly of the president's plans to appear before Solyndra workers on the factory floor in California: "Hope doesn't default before then."

Copyright 2011 ABC News Radio

Friday
Sep302011

US Officials Say Solyndra Execs Stonewall on Financial Info

Ken James/Bloomberg via Getty Images(WASHINGTON) -- Top executives at Solyndra have refused to tell U.S. officials whether they received executive bonuses after the company began to fail, and they have frustrated bankruptcy proceedings by refusing to answer questions about the solar firm's sudden and dramatic shutdown, according to papers filed by Justice Department lawyers late Friday.

A Solyndra attorney told U.S. officials the reason he would not identify the company's customers or talk about its contracts was because "the topic would likely be the subject of investigation and possibly litigation," according to the court filing.

The fresh allegations that Solyndra is refusing to cooperate in bankruptcy proceedings come just days after two top Solyndra executives declined to answer questions from Congress, invoking their Fifth Amendment rights against self-incrimination. The government's claim that Solyndra is refusing to answer questions was detailed in papers filed by the attorneys representing the U.S. government during bankruptcy proceedings in Delaware. The solar company was awarded a $535 million federal loan as part of President Obama's program to help spur growth in emerging forms of alternative energy. Now, federal lawyers are seeking to recover at least some of that money.

In their filing, government attorneys called on the bankruptcy court judge to put the company in the hands of an independent trustee, so its books could be pried open.

"Management's invocation of the Fifth Amendment does not excuse them from performing their fundamental disclosure and reporting duties under the Bankruptcy Code," the filing says.

One topic of deep concern to federal attorneys is the accuracy of Solyndra's financial statements. According to a report Thursday by Bloomberg, a focus of a federal investigation into the firm's behavior is whether it lied to Energy Department officials in order to secure additional financing after the company started to fail.

Friday's filings note that Solyndra executives refused to say "whether financial information submitted or represented to investors, creditors, and others was accurate."

According to the government, the executives have also refused to say when they determined the company was in financial trouble, and "whether the company paid management bonuses after management realized the company's poor financial condition."

"Such topics lie at the core of the information that [Solyndra] must disclose," the court filing said.

A spokesman for Solyndra has not replied to an email seeking comment.

In March, ABC News, in partnership with the Center for Public Integrity's iWatch News, began reporting on simmering questions about the process that led the Obama administration to make Solyndra the first company to receive a loan under a program designed to provide government support to companies that would create jobs while generating energy from cleaner sources, such as solar, wind and nuclear. President Obama personally visited the Solyndra complex, hailing it as a leader in this emerging field.

In August, though, Solyndra abruptly shut its doors, laying off 1,100 workers. And within days it declared bankruptcy. The FBI raided the plant days later, part of an investigation that involves inspector generals for the Energy Department and the Treasury Department. In addition, Republicans in the House Energy and Commerce Committee have been working to dissect the deal and understand how signs of Solyndra's financial trouble had been overlooked by the Department of Energy.

Copyright 2011 ABC News Radio

Friday
Sep232011

Pleading the Fifth: Solyndra Execs Stonewall Congress

David Paul Morris/Bloomberg via Getty Images(WASHINGTON) -- The two top executives of the bankrupt solar power company Solyndra sat stone-faced before a Congressional committee Friday and invoked their Fifth Amendment rights, rather than explain how they blew through $535 million in taxpayer money.

"Let me just warn you and the other folks involved in this taxpayer rip-off," Energy and Commerce Chairman Fred Upton (R-Mich.) told the Solyndra executives.  "We're not done.  No we're not."

The decision of Solyndra CEO Brian Harrison and Chief Financial Officer W. G. Stover to repeatedly refuse to answer questions about Solyndra's Energy Department loan guarantee was the latest twist in an unfolding investigation into the failure of the California solar panel manufacturer, which just one year earlier had been touted as a model of President Obama's green jobs program.

The Obama administration had selected Solyndra as the first to receive a loan under a program designed to provide government support to companies that would create jobs while generating energy from cleaner sources, such as solar, wind and nuclear.  President Obama personally visited the Solyndra complex, hailing it as a leader in this emerging field.

In August, though, Solyndra abruptly shut its doors, laying off 1,100 workers.  And within days it declared bankruptcy. Friday's hearing was the second in two weeks by the House Energy and Commerce Committee's investigative subcommittee, intending to unwind the deal and understand how signs of Solyndra's financial trouble had been overlooked by the Department of Energy.

"I want to ask Mr. Harrison if he thinks the American people who invested over a half a billion dollars deserve to know what happened to that money?" Rep. Joe Barton (R-Texas) asked the two executives.  Both declined to answer, invoking their Fifth Amendment rights.

"I don't understand what's self-incriminating about a yes or no answer to whether the American people deserve to know what happened to over a half a billion dollars of their money," Barton said.

For just over an hour, the two men continued to remain mum.

Rep. Tim Murphy (R-Pa.) appeared annoyed, asking the men to explain their "plan to pay back the taxpayers $535 million you owe them."

"And when will you pay them back? Mr. Harrison?" he pressed to no reply.

Democrats said they, too, were puzzled by the silence of executives who just months earlier had sent a memo to Congress describing the company as "ramping" up its production, "competitive" with foreign rivals, and "on track" to hit its financial targets for the year.

The document obtained by ABC News, entitled "Exceeding Expectations: Solyndra Today," appears to have grossly distorted the company's actual financial standing.  Since Solyndra sent the document to Congress on June 23, followed by a mid-July letter and personal visit making more claims about its financial strength, the company has not only declared bankruptcy, it has been raided by the FBI.

"When Mr. Harrison was in my office in July he said that Solyndra's future was bright, with sales and production booming," said Rep. Henry Waxman (D-Calif.).  "I 'd like to know why he told me that in July and then filed for bankruptcy one month later.  Unfortunately I will not get an answer today."

Earlier this week, a Solyndra spokesperson said in a statement that both Harrison and Stover would be "unable to provide substantive answers to the Subcommittee's questions," and said that "present circumstances require both gentlemen to exercise their Fifth Amendment rights."

The statement added that Solyndra is unaware of any wrongdoing by company officials related to the loan guarantee "or otherwise," and is cooperating with federal investigators.  "The company believes that the record will establish that Solyndra carefully followed the rules of the competitive application process, starting in December 2006 under the Bush administration and continuing under the Obama administration."

The subcommittee's investigation into the massive federal loan to Solyndra had already been underway for months.  In March, ABC News, in partnership with the Center for Public Integrity's iWatch News, began reporting on simmering questions about the role political influence may have played in Solyndra's selection as the Obama administration's first loan guarantee recipient.

Damien LaVera, an Energy Department spokesman, has told ABC News that politics never entered the decision to grant the loan, or restructure it earlier this year.  LaVera said the department decided it was worth trying to redo the terms to try and salvage the government's initial investment.

"[P]olitical or optical considerations took a backseat to putting the company and its workers in a better position to succeed and repay the loan," he said.

On Wednesday, the House Energy and Commerce Committee escalated its inquiry into the deal by seeking information from Solyndra's prime investors -- including Oklahoma oil billionaire George Kaiser, a bundler of campaign contributions to the president in 2008.

That quest for information could shift the spotlight from DOE to the big money players behind Solyndra: Kaiser's Argonaut Private Equity, and another group, Madrone Capital Partners.  Madrone is affiliated with the Walton family, founders and WalMart and major Republican donors. Kaiser and other investors get to recoup the $75 million they invested earlier this year before the U.S. government recoups taxpayer money in Solyndra's bankruptcy proceedings.

The House committee said it sent letters to Argonaut and Madrone seeking documents on the $535 million loan guarantee, the investors' $75 million financing this year -- and any communications with the Obama administration, including telephone calls between the White House and companies.  Kaiser has not responded to interview requests from iWatch News and ABC News since March.

The June memo and July letter both appeared to be efforts to counter claims that the company was in financial trouble, saying they were providing "the most accurate and up-to-date information."

The letter, signed by Solyndra CEO Brian Harrison, said, among other things, that the company had just completed a "record quarter for shipments," and that it was using "American innovation and ingenuity to compete on the global solar market."  Later, Solyndra would blame competition from China for its downfall.  Solyndra declared bankruptcy on Aug. 31.

Congressional investigators have also released a copy of a Sept. 10, 2011 email from an attorney for Solyndra to staff of the House Energy and Commerce Committee stating that the company's CEO "will appear voluntarily and answer the Committee's questions on any day the Committee chooses."

Just days later, an attorney for Harrison, the Solyndra CEO, wrote back to say his client would not answer any questions from the committee, and planned to invoke his Fifth Amendment rights when he appears before the committee Friday.

Copyright 2011 ABC News Radio

Thursday
Sep222011

House Republicans Look to End Solyndra Loan Program

Ken James/Bloomberg via Getty Images(WASHINGTON) -- In an attempt to win support from the 48 House Republicans who voted against the stalled stopgap funding bill Wednesday night, the House Republican leadership is considering slashing the remaining $100 million from the loan program that granted a $535-million loan guarantee to the now-bankrupt Solyndra solar company.

GOP aides said the Department of Energy loan program cuts would help offset disaster relief funding. The House is expected to vote on the tweaked continuing resolution Thursday evening.

Earlier, at a House Oversight Committee hearing, the loan program was blasted by Republicans for failing to create the jobs President Obama claimed it would when he promoted the Recovery Act program in 2009.

The Republican committee members released a report during the hearing that claimed the $41.7 billion allocated to green initiatives as part of the 2009 Recovery Act “has done little to create jobs or speed recovery.”

“In fact,” the report noted, “by many accounts it has destroyed jobs. This is a dangerous strategy that will drastically increase the price consumers pay for energy, hurt economic growth and restrict job creation.

Democratic committee members fired back with their own report that detailed the number of people currently employed by the green jobs sector in each Republican member’s district along with the federal loans given to green industries within both their district and state as a whole.

Copyright 2011 ABC News Radio

Wednesday
Sep212011

Solyndra Told Congress It Was 'On Track' for Success

David Paul Morris/Bloomberg via Getty Images(WASHINGTON) -- Less than three months before declaring bankruptcy, the federally-backed solar power company Solyndra sent a memo to Congress describing the company as "ramping" up its production, "competitive" with foreign rivals, and "on track" to hit its financial targets for the year.

The document obtained by ABC News and entitled "Exceeding Expectations: Solyndra Today," now appears to have grossly distorted the company's actual financial standing at a time when congressional investigators were already asking tough questions about the $535 million in federal backing Solyndra had received.

Since Solyndra sent the document to Congress on June 23, followed by a mid-July letter making more claims about its financial strength, the company has laid off nearly its entire workforce, has declared bankruptcy, and has been raided by the FBI.

The promises to the House Energy and Commerce Committee's investigative subcommittee arrived this summer, after the subcommittee's investigation into the massive federal loan to Solyndra had already been underway for months. In March, ABC News, in partnership with the Center for Public Integrity's iWatch News, began reporting on simmering questions about the role political influence may have played in Solyndra's selection as the Obama administration's first loan guarantee recipient.

The June memo and July letter both appeared to be efforts to counter claims that the company was in financial trouble, saying they were providing "the most accurate and up-to-date information."

The letter, signed by Solyndra CEO Brian Harrison, said, among other things, that the company had just completed a "record quarter for shipments," and that it was using "American innovation and ingenuity to compete on the global solar market." Later, Solyndra would blame competition from China for its downfall. Solyndra declared bankruptcy on Aug. 31.

Congressional investigators have also released a copy of a Sept. 10, 2011, email from an attorney for Solyndra to staff of the House Energy and Commerce Committee stating that the company's CEO "will appear voluntarily and answer the Committee's questions on any day the Committee chooses."

Just days later, an attorney for Harrison, the Solyndra CEO, wrote back to say his client would not answer any questions from the committee, and planned to invoke his Fifth Amendment rights when he appears before the committee Friday.

The loan Solyndra received had been shelved by the Bush administration but was fast-tracked just days after President Obama took office, and one of the major investors in the company is an Obama fundraiser -- Oklahoma billionaire George Kaiser -- who has visited the White House 16 times, including four meetings with such senior aides as Valerie Jarrett, Austan Goolsbee and Pete Rouse in the months prior to the loan's approval.

The White House has maintained that those meetings covered other topics -- including Kaiser's charitable work. And both the White House and the Department of Energy have been steadfast in their position that politics played no role in the decision to grant Solyndra the loan.

Copyright 2011 ABC News Radio

Tuesday
Sep202011

Solyndra Execs Will Take the Fifth Before Congress

Ken James/Bloomberg via Getty Images(WASHINGTON) -- Two top executives from the embattled company Solyndra will appear before Congress later this week, but their lawyers announced Tuesday that they will invoke their Fifth Amendment rights and decline to answer questions.

"This is not a decision arrived at lightly, but it is a decision dictated by current circumstances," wrote Walter F. Brown Jr., the lawyer for Solyndra CEO Brian Harrison, in a letter to Congress.

Among those circumstances, the lawyer said, is a broadening investigation by the FBI and the U.S. Department of Justice into the Obama administration's decision to loan $535 million to the California solar power company, and the abrupt financial ruin of the firm, which shut its doors late last month.

"It would be irresponsible for anyone in his position not to [take the Fifth]," wrote Jan Nielsen Little, the lawyer for Solyndra's chief financial officer, W.G. Stover, Jr., in a separate letter.

In a statement, a Solyndra spokesperson said Harrison and Stover would be "unable to provide substantive answers to the Subcommittee's questions," and said that "present circumstances require both gentlemen to exercise their Fifth Amendment rights."

The statement added that Solyndra is unaware of any wrongdoing by company officials related to the loan guarantee "or otherwise," and is cooperating with federal investigators. "The company believes that the record will establish that Solyndra carefully followed the rules of the competitive application process, starting in December 2006 under the Bush administration and continuing under the Obama administration."

Members of the House Energy and Commerce Committee, which has been conducting its own investigation into the loan, expressed outrage that the executives -- after promising to freely answer questions -- would now insist on remaining silent.

"Who exactly are Solyndra's executives trying to protect and what are they trying to hide?" said a statement released by Energy Committee Chairman Fred Upton, R.-Mich., and Rep. Cliff Stearns, R-Fla., who chairs the oversight and investigations subcommittee.

"We have many questions for Solyndra's executives on their dealings with the Obama administration, their efforts to secure federal support for a project that appeared doomed from the outset, and why they made certain representations to Congress regarding their dire financial situation just two months ago," the statement said.

Friday's hearing was intended to be the second act to hearings held last week, during which a senior Energy Department official and a top White House budget analyst attempted to explain why they decided to grant the loan to Solyndra, and why they agreed to restructure the loan after it became increasingly clear the firm was in dire financial trouble.

Copyright 2011 ABC News Radio

Tuesday
Sep202011

Outrageous Tax Credits, from Snooki to Solyndra

Photos.com/Thinkstock(WASHINGTON) -- In a time of pinched public budgets, should governments still be giving tax credits to companies?  Recent examples of economic development money gone awry range from the egregious to the silly.

In California, solar panel maker Solyndra went bust after having soaked up $528 million in federal development aid.  In New Jersey, angry taxpayers are protesting the so-called Snooki-subsidy -- a $420,000 tax break given by the state's Economic Development Authority to producers of the TV show Jersey Shore, which some residents say depicts the state's citizenry in an unflattering light.

In Washington, poultry farmers get tax-free chicken-bedding.  Georgia gives a tax break to people who patronize companies that refurbish corporate jets.  Michigan subsidizes restaurant meals eaten by restaurant employees.

Still, other breaks apply to corporate relocations: One company is paid millions to stay put, while another is paid millions to move.

In every case, the rationale is the same: Public money is being used to promote what development authorities believe is public good -- job creation or job retention; the nurture of a promising new industry or the protection of one old and ailing.

Economic development spending by states and cities totals $70 billion a year, according to Kenneth Thomas, associate professor of political science at the University of Missouri at St. Louis.  The biggest chunk of that, he says -- some $46.8 billion -- goes for incentives effecting the location of private investment: ensuring, for example, that the company filming the Jersey Shore films it on the Jersey shore.

Thomas says there's little evidence that this spending results in net job creation.  What more typically results, he and other experts say, is a re-shuffling of existing jobs.  At a time when governments are cutting programs and collectively laying off hundreds of thousands of workers, he asks if now might not be the time to re-think economic development.

Greg LeRoy, executive director of Good Jobs First, an organization that rides herd on economic development, says if he were given a choice between no development and spending the way it is now, he'd opt for none.

"The better course of action would be not to provide any credits," he says.  "It's not that credits cannot have their place," it's that most turn out to be nothing more than "windfalls" to corporations that would have done the same thing they're being incentivized to do, without incentives.  When credits are given, he says, they always should include clawback provisions, so that if the beneficiary fails to provide the hoped-for jobs or otherwise fails to live up to his end of the deal, the state or city isn't left holding the bag.

Copyright 2011 ABC News Radio

Monday
Sep192011

Solyndra Bankruptcy Unlikely to Hamper Gov’t Investment in Green Jobs

Ken James/Bloomberg via Getty Images(WASHINGTON) -- Two weeks ago, an American solar company declared bankruptcy.  It was one of three U.S. solar companies to go under in a month, but this one was special.

Solyndra, the solar panel manufacturer, risked losing as much as $528 million in taxpayer money the day it shuttered its Freemont, Calif., factory and is now calling into question the integrity of the government’s loan guarantee program for renewable energies.

But while the evidence continues to prove that gambling millions in taxpayer money on a company that made just $3 for a product that took $7 to produce was rather unwise, it doesn’t look like the one bad apple has ruined the whole orchard of green energy investments.

“I think renewable energy remains one of the best long-term investments one can make as long as you’re careful to pick your companies,” said Garvin Jabusch, chief investment officer at Green Alpha Advisers, which focuses on environmentally sustainable investments.  “If some companies go bankrupt, this is just normal capitalism.”

The Solyndra bankruptcy has inspired an investigation from the House Energy Committee, whose chairman Fred Upton (R-Mich.) said was a “classic case of fraud and abuse and waste.”

But the Energy Department argues the bankruptcy is not emblematic of the entire loan program.  The solar company loan represents about 1.3 percent of the entire loan guarantee program, which was a $2.4 billion initiative created under the 2009 Recovery Act to support the new green technology investments, which can be risky.  Under the program, the government does not actually pay out any money, but guarantees that if the company fails, the Treasury will repay the private loan.

“What this program is intended to do is leverage private sector capital towards innovative clean energy technology that can help American manufacturing remain competitive, but might not otherwise receive project financing on the open market,” said Damien LaVera, a spokesman for the Energy Department.  “Congress recognized that investing in innovative tech carries intrinsic amount of risk.”

The Solyndra bankruptcy is not symptomatic of the entire solar industry either, Jabusch said.  According to the Solar Energy Industries Association, the solar market nearly doubled from 2009 to 2010 and is anticipated to add about 24,000 jobs, a 26 percent increase, over the next year.

Copyright 2011 ABC News Radio

Wednesday
Sep142011

Solyndra Loan: Now Treasury Department Is Launching Investigation

David Paul Morris/Bloomberg via Getty Images(WASHINGTON) -- The Treasury Department's inspector general has opened a new front in the investigation of the government loan to Solyndra, the now-bankrupt company that had been touted as a model of President Obama's ambitious green energy program, ABC News and the Center for Public Integrity/iWatch News have learned.

The new probe involves the $535-million loan, arranged by the Energy Department, but actually processed by the Federal Financing Bank, a government lending institution that falls under Treasury's control. Already, the FBI and the Energy Department's inspector general have executed search warrants at Solyndra's headquarters and questioned company executives.

"We're going to look at everything the FFB had to do with its role in this thing," Rich Delmar, a spokesman for the Treasury Department's inspector general, told ABC News and iWatch News.

Word of the broadening probe came as the head of the Energy Department's loan program came before Congress at a contentious hearing on Capitol Hill Wednesday.

After spending months touting the Obama administration's decision to loan $535 million to Solyndra, top officials took a new tack Wednesday while testifying about the company's abrupt shutdown and bankruptcy: the loan, they said, was actually the Bush administration's idea.

The Energy Department's top lending officer told Congress that the Solyndra loan application was not only filed during President Bush's term, but it surged towards completion before Obama took office in January 2009.

Even after the loan was restructured in 2011, the Energy Department and other administration officials continued to tout Solyndra's prospects.

In May, Silver told ABC News and iWatch News that questions about the loan guarantee were unfounded, and that Solyndra's canceled public offering and restructuring were hiccups that are typical for startup companies.

Republicans pushed back hard against this version of events, unearthing internal Energy Department emails that indicate the panel evaluating the loans had made the unanimous decision to shelve Solyndra's application two weeks before Obama took office.

As the hearing was underway, the Department of Energy was sending out emails to the press intended to convey that Solyndra was a bipartisan problem.

"At several points in the hearing, folks have pointed out the party affiliation of the private investors who lost a billion dollars of their own private capital on this deal," wrote Dan Leistikow, the department's director of public affairs. "Of the two major investment firms who risked and lost the most, one happens to be associated with a Democratic donor and one with a Republican donor. I frankly can't understand what that has to do with anything, but I suppose it's always good to see a little bipartisanship."

But Rep. Cliff Stearns, a Florida Republican, made note during the hearing that "the administration officials held out the company as a shining example of how the stimulus was creating jobs and invigorating the economy."

Indeed, when the loan was announced in March of 2009, Energy Secretary Chu issued his own press release, identifying Solyndra as "part of President Obama's aggressive strategy to put Americans back to work and reduce our dependence on foreign oil."

Copyright 2011 ABC News Radio

Tuesday
Sep132011

Emails: Obama White House Monitored Huge Loan to 'Connected' Firm

Ken James/Bloomberg via Getty Images(WASHINGTON) -- Newly uncovered emails show the White House closely monitored the Energy Department's deliberations over a $535-million government loan to Solyndra, the politically-connected solar energy firm that recently went bankrupt and is now the subject of a criminal investigation.

The company's solar panel factory was heralded as a centerpiece of the president's green energy plan -- billed as a way to jumpstart a promising new industry. And internal emails uncovered by investigators for the House Energy and Commerce Committee that were shared exclusively with ABC News show the Obama administration was keenly monitoring the progress of the loan, even as analysts were voicing serious concerns about the risk involved. "This deal is NOT ready for prime time," one White House budget analyst wrote in a March 10, 2009 email, nine days before the administration formally announced the loan.

"If you guys think this is a bad idea, I need to unwind the W[est] W[ing] QUICKLY," wrote Ronald A. Klain, who was chief of staff to Vice President Joe Biden, in another email sent March 7, 2009. The "West Wing" is the portion of the White House complex that holds the offices of the president and his top staffers. Klain declined comment to ABC News.

Beginning in March, ABC News, in partnership with the Center for Public Integrity's iWatch News, was first to report on simmering questions about the role political influence may have played in Solyndra's selection as the Obama administration's first loan guarantee recipient. Federal auditors had flagged the loan, saying some applicants had benefitted from special treatment.

The emails were uncovered by investigators for the House Energy and Commerce Committee, which will hold hearings on the Solyndra loan Wednesday. The Republican-led House has been investigating the Obama administration's green energy loan program for months. That probe took on new urgency two weeks ago, when Solyndra abruptly shut its doors and laid off 1,100 employees. Last week, the FBI raided the factory as part of a joint investigation with the Energy Department's inspector general.

"This is not right. This is not good," said Rep. Fred Upton, R-Mich., who chairs the House committee that is examining the loan. "It makes you sick to your stomach. This is taxpayer money."

As federal authorities examine whether Solyndra misled the government about its true financial state, the Obama White House is fielding fresh questions over why it pushed so hard for Solyndra. Officials with DOE and the Office of Management and Budget are expected to testify Wednesday. Executives with Solyndra, invited to appear as witnesses, will not attend Wednesday's hearing but have told the House committee they will voluntarily appear next week.

Obama's DOE has said it backed Solyndra as a potential game changer in the clean tech movement, but the company's collapse came after clear warning signs the venture was a high risk from the start.

The White House has argued that any effort to finance startup businesses in a relatively new field like solar energy is bound to include risky ventures that could fail. They reject the notion being pushed by Republicans that Solyndra was chosen for political reasons. One of the largest private investors in the deal, Oklahoma billionaire George Kaiser, was also a prominent fundraiser for Obama's 2008 presidential campaign.

White House officials said the emails shared with ABC News Tuesday do show White House interest in the timing of the Solyndra decision -- only because the president was considering announcing the decision himself while on a trip to California.

"I think that it is clear that folks understood at DOE that they were supposed to make their decision on the merits and do whatever they were supposed to do to kick the tires on the decision," an administration official told ABC News. "Folks were interested in being updated as to whether the decision-making process was completed."

The White House also noted to ABC News that the Bush administration was the first to consider Solyndra's application and that some executives at the company have a history of donating to Republicans. The results of the congressional probe shared Tuesday with ABC News show that less than two weeks before President Bush left office, on January 9, 2009, the Energy Department's credit committee had voted against offering a loan commitment to Solyndra.

Even after Obama took office on Jan. 20, 2009, analysts in the Energy Department and in the Office of Management and Budget were repeatedly questioning the wisdom of the loan. In one exchange, an Energy official wrote of "a major outstanding issue" -- namely, that Solyndra's numbers showed it would run out of cash in September 2011.

There was also concern about the high-risk nature of the project. Internally, the Office of Management and Budget wrote that "the risk rating for the project sponsor [Solyndra] … seems high." Outside analysts had warned for months that the company might not be a sound investment.

Peter Lynch, a New York-based solar energy analyst, told ABC News it took only a cursory glance through Solyndra's prospectus to see there was a problem with their numbers.

"It's very difficult to perceive a company with a model that says, well, I can build something for six dollars and sell it for three dollars," Lynch said. "Those numbers don't generally work. You don't want to lose three dollars for every unit you make."

In 2008, Solyndra, then just three years old, pushed ahead with its application for government backing to build a new plant to produce its unique solar panels. An outside rating agency, Fitch, gave Solyndra a B+ credit rating that August. Two months earlier, in June 2008, Dun & Bradstreet issued a credit appraisal of the company. Its assessment: "Fair."

Those are not top-of-the-line scores, Fitch Ratings spokeswoman Cindy Stoller told the Center for Public Integrity's iWatch News, which has been investigating the deal in partnership with ABC News since March. She could not discuss the Solyndra review specifically, but said of a B+ rating: "It's a non-investment grade rating." She provided a company ratings definition, showing that B+ falls between a "highly speculative" B and "speculative" BB.

Asked about those ratings, and how significantly the department viewed the risk, energy officials said Monday the department conducted "extensive due diligence" on the application, which included consideration of the Fitch rating.

"We believed the rating, which is used to inform our analysis of potential risks associated with the loan, was appropriate for the size, scale and innovative nature of the project and was consistent with the ratings of other innovative startup companies," said Damien LaVera, an Energy Department spokesman.

"The Department conducted exhaustive reviews of Solyndra's technology and business model prior to approving their loan guarantee application," LaVera said. "Sophisticated, professional private investors, who put more than $1 billion of their own money behind Solyndra, came to the same conclusion as the Department: that Solyndra was an extremely promising company with innovative technology and a very good investment."

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