Solyndra: Chu Denies 'Incompetence,' 'Undue Political Influence'

PHOTO: Energy Secretary Steven Chu is sworn in on Capitol Hill in Washington, Nov. 17, 2011, prior to testifying before the House Oversight and Investigations subcommittee hearing on the Solyndra solar company loans.
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Energy Secretary Steven Chu told Congress Thursday he was surprised and dismayed to see emails surface suggesting his department "pushed very hard" for Solyndra to delay announcing its first round of layoffs until after the midterm elections in November 2010.

"I was not part of that decision, and I certainly would not have been in favor of that decision," Chu told a House investigative committee. "I don't believe it's a proper way to do business."

Chu told Congress politics never played a role in the selection of the California company for the first Obama administration green energy loan, and he testified that he never felt pressure from the White House or from Obama campaign donors to pick Solyndra for a $535 million loan. The government-supported solar-panel manufacturer shut its doors earlier this year, laying off 1,100 workers. It is now the subject of multiple federal investigations.

"I want to be clear," Chu said. "Over the course of Solyndra's loan guarantee, I did not make any decision based on political considerations. My decision to guarantee a loan to Solyndra was based on the analysis of experienced professionals and on the strength of the information they had available to them at the time."

Chu calmly answered questions from members of a House Energy and Commerce subcommittee that has spent the past nine months investigating the loan. Chu told them repeatedly that the decision to dedicate more than half a billion dollars to the California manufacturing firm was a calculated risk, and a necessary part of building a robust new clean energy industry.

"It is extremely unfortunate what happened to Solyndra," he said. "Was there incompetence? Was there undue outside political influence? I would have to say no."

He said the decision to restructure the loan deal as the company was struggling was a tough decision, but one he felt was in the government's best interest. When asked if that decision was legal -- even as it placed the government second in line behind private investors to recoup its losses during a bankruptcy -- Chu defended his department.

"We believe there was no violation of the law," Chu said.

Yet the Energy secretary acknowledged the public has likely lost most of its investment. Asked how much of the $535 million the government may recoup in Solyndra's bankruptcy, he replied: "Not very much."

The loan to the California energy firm was at one time held up by the Obama administration as a model of the president's plan to infuse start-up clean energy firms with federal support in hopes of sprouting a vibrant new high-tech industry. But as ABC News first reported in March, in partnership with the Center for Public Integrity, the model first loan was emerging as a troubling example of a program that was taking big risks with public funds, and was in some instances benefitting investors who had strong political ties to Obama. One of the top investors in Solyndra, Oklahoma billionaire George Kaiser, was also a prolific fundraiser for Obama during the 2008 campaign.

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Democrats vs. Republicans on Solyndra

As Chu took questions under oath, those on either side of the aisle used his appearance as a chance to air sharply-worded, partisan positions on the Solyndra affair.

Republicans described the loan decision as perplexing, given that the Energy Department agreed to grant the loan in the face of a series of red flags and dire financial assessments that suggested, even early on, that Solyndra would not succeed.

"The number of red flags about Solyndra that were raised along the way -- many from within DOE -- and either ignored or minimized by senior officials is astonishing," said Energy Committee Chairman Fred Upton, R-Michigan.

Democrats took the position that Solyndra was the victim of a drastic economic change, during which the solar-panel market was swamped by lower-priced panels from China. They argued that the investigation into the solar company loan has been partisan, gratuitous, and a boon to oil and gas interests that oppose the rise of alternative energy sources.

"Our focus should be getting Americans back to work and rebuilding the economy, not manufacturing controversy," said Rep. Henry Waxman, D-California.

Chu blamed the failure of Solyndra on a "Tsunami" that swamped the solar industry. But ultimately, he said, he would accept full responsibility for the decision to risk $535 million on the firm.

"As the Secretary of Energy, the final decisions on Solyndra were mine, and I made them with the best interest of the taxpayer in mind," Chu said.

Chu maintained that the program was untainted by politics, and that recipients of billions of dollars in federal loans were selected exclusively based on their potential for success – with no political consideration. In advance of Thursday's hearing, investigators with the Republican led committee released the latest batch of internal emails it has reviewed. Among them were emails that suggested that Energy officials asked the company to delay layoffs at its California facility until after the Nov. 2 midterm elections.

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On Oct. 30, 2010, according to the memo, "advisors for Argonaut Private Equity, Solyndra's largest investor, discussed the status of talks with DOE about the restructuring of the Solyndra [loan] guarantee." The subcommittee quotes an Argonaut email from Steve Mitchell, Argonaut's managing director and a Solyndra board member, that says DOE "did push very hard for us to hold our announcement of the consolidation to employees and vendors to Nov. 3rd -- oddly they didn't give a reason for that date."

An Oct. 27 Argonaut email says, "The DOE has requested a delay until after the election (without mentioning the election)," and in an Oct. 30 email an unidentified Argonaut exec tells Ken Levit, director of George Kaiser's charity, "No announcement till after elections at DOE request."

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