Solyndra, bankruptcy records show, was among the companies doling out thousands in executive payments -- in its case, just months prior to its late August collapse and early September bankruptcy. As a criminal investigation and House inquiry continue into the company's implosion, the government must navigate bankruptcy proceedings in hopes of recovering a piece of its $535 million investment.
In interviews, executives with companies backed by public dollars defended the payments as proper. Some said bonuses were granted for work done in a previous year, before financial storm clouds had fully developed, and that the executive cash infusions were sometimes linked to broad corporate milestones.
One company executive said the Energy Department explicitly allows for federal funds to be used to pay out executive bonuses.
DOE does not set salaries and benefits of companies it backs, "but we do closely scrutinize all of the expenses submitted by the companies before they are reimbursed to ensure that taxpayer dollars are being used appropriately," said spokeswoman Stutsman. "Funds are paid out as the work is actually completed."
Secretary Steven Chu declined an interview request. The department has long defended the green energy movement as a way for government to help spur development of cutting-edge products that aid the environment and economy. Sometimes, they say, investments in potential game-changing technologies simply don't work. The potential default rate, they say, is within the parameters set by Congress.
Yet some members of Congress -- already concerned about lucrative paydays at bankrupt Solyndra -- say they're particularly troubled that failed companies backed by Energy Department funds would pay bonuses at all.
"Any company that's going into bankruptcy or any executive that ran a company into bankruptcy shouldn't be getting bonuses in the first place," said Sen. Charles Grassley, R-Iowa, former chairman of the Senate Finance Committee. "In the case where there might be federal grants or federal loans, I would be very concerned."
Grassley added: "The purpose of our grants for energy or almost any other grant of government is for the purpose of innovation. It's not for the purpose of feathering the nest of a private company executive."
Bruce Kogut, director of the Sanford C. Bernstein Center for Leadership and Ethics at the Columbia Business School, said it is not uncommon for corporate bonuses to be awarded when executives meet key achievement milestones.
"The problematic issue," Professor Kogut said, is giving out bonuses "near the time of bankruptcy."
Solyndra executives, bankruptcy records show, pocketed thousands in payments just months before the company dismissed 1,100 workers. At least 17 company executives received two sets of payments -- ranging from $37,000 to $60,000 per payment -- on the same days in April and July 2011. The insider payments, reported last year in the San Jose Mercury News, came as the company catapulted toward bankruptcy in early September. A Solyndra spokesman did not reply to interview requests.
Solyndra's crash last August put a sharp focus on the selection process the Energy Department follows in awarding taxpayer dollars. The administration backed the upstart firm despite concerns even from some government officials worried about Solyndra's financial viability, email records show. And energy officials committed to the financing before all due diligence was in hand.