Did Obama Administration Cut Corners For a Green Energy Company?
Solyndra got loan before reviews were complete.
May 24, 2011 — -- The Obama administration bypassed procedural steps meant to protect taxpayers as it hurried to approve an energy loan guarantee to a politically-connected California solar power startup, ABC News and the Center for Public Integrity's iWatch News have learned.
The Energy Department in March 2009 announced its intention to award Solyndra Inc. a $535 million loan guarantee before receiving final copies of outside reviews typically used to vet such deals. An independent federal auditor who has reviewed the energy loan program said moving so quickly without completing thorough reviews risked exposing the program to claims of political influence and put taxpayers at greater risk.
"There's a consequence if you don't follow a rigorous process that's transparent," said Franklin Rusco, an analyst with the Government Accountability Office. "It makes the agency more susceptible to outside pressures, potentially."
The Solyndra loan guarantee, advertised by the administration as part of its signature effort to create jobs while weaning the U.S. from traditional energy sources, already has drawn scrutiny on Capitol Hill. Republican members of the House Energy and Commerce Committee have requested documents from the Energy Department as part of an investigation into how the company qualified for government support and then, a year later, closed a plant, laid off workers, and eventually had to renegotiate the terms of the loan guarantee. The shortcuts at the dawn of the deal identified by government auditors have stoked more questions.
Energy Department officials said their analysts had gathered more than enough information to bet on Solyndra. They said politics played no role, and they did not give Solyndra or any other company special treatment.
"All applicants within any solicitation are treated the same way," said Jonathan Silver , executive director of the Energy Department's Loan Programs Office, which oversees the administration's $90 billion in spending on promising alternative energy and on green automobile projects.
The loan guarantee, the administration's first for a clean energy project, benefited a company whose prime financial backers include Oklahoma oil billionaire George Kaiser, a "bundler" of campaign donations. Kaiser raised at least $50,000 for the president's 2008 election effort.
Several political allies of the president have ties to companies receiving Energy Department loans, grants or loan guarantees. For instance, the venture firm of another top Obama bundler, Steve Westly, has financially supported companies that won more than half a billion dollars in energy grants and loans during President Obama's time in office, iWatch News and ABC News reported in March. Relatively few applicants succeed in winning such benefits. The Energy Department said every one of those awards was won on merit.
When the Obama administration announced financing for Solyndra in 2009, the company was only four years old, and had been shipping solar panels for about a year. Officials said the administration was eager to stimulate the economy and encourage green energy start-ups. Energy Secretary Steven Chu promised Solyndra's package alone would create more than 4,000 jobs.
One year later, in March 2010, the signs were not so encouraging. "The Company has suffered recurring losses from operations, negative cash flows since inception and has a net stockholders' deficit," is how Solyndra's accountant, PricewaterhouseCoopers LLC, assessed its financial status in an audit being prepared for an initial public offering. Those factors, it stressed, "raise substantial doubt about its ability to continue as a going concern."
Solyndra has since boosted revenues, though some analysts remain skeptical about its long-term prospects.
"Secretary Chu credited the Department's loan team for their work accelerating the process to offer this conditional commitment in less than two months, demonstrating the power of teamwork and the speed at which the Department can operate when barriers to success are removed," it said.