Solyndra project in France
There are a few in the federal government yet for whom half a billion dollars or more is not something to be ignored.
That’s why Rep. Cliff Stearns, R-Fla., is demanding answers from some of the officials in Barack Obama’s administration about how some $535 million in loan guarantees were given to a company that now has declared bankruptcy.
And specifically, why was the promise of those guarantees renegotiated earlier this year to give private investors including some Obama supporters in the California-based Solyndra, a maker of solar heat system components, a priority over taxpayers should the company collapse, as it has.
“Although numerous red flags indicated that Solyndra was financially troubled and unviable in the global market, the administration went ahead and committed over half-a-billion dollars in taxpayer funds to this company that went bankrupt,” Stearns, chairman of the House Energy and Commerce Committee’s subcommittee on Oversight and Investigations, said today.
“Furthermore, in restructuring the loan, the administration allowed the private investors to have the ‘first out’ in case of Solyndra’s collapse. Then there is the FBI raid raising the likelihood of criminal activity,” he said. “I want to find out what happened to this money and who is responsible for putting these dollars at risk.”
He has called a hearing tomorrow at the Rayburn House Office Building where senior officials from the Department of Energy and the Office of Management and Budget who were involved in the loan effort “will testify.”
On the witness list are Jeffrey Zients, deputy director of the OMB, as well as Jonathan Silver, the executive director of the loans programs office in the U.S. Department of Energy.
Other testimony is expected to come later from company officials, and perhaps others as well.
A spokesman in Stearns’ office explained the congressman wants to start by finding out just exactly how much taxpayer money went to the company – and into whose bank accounts it was put when the company spent it.
He called it a “pretty high burn rate” of churning through loans of $535 million in a period of just two years, if that is in fact what happened.
The company, which made “innovative cylindrical solar systems for commercial rooftops,” announced at the end of August that it was suspending operations and firing 1,100 fulltime and temporary employees.
It explained, “Despite strong growth in the first half of 2011 and traction in North America with a number of orders for very large commercial rooftops, Solyndra could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers. This competitive challenge was exacerbated by a global oversupply of solar panels and a severe compression of prices that in part resulted from uncertainty in governmental incentive programs in Europe and the decline in credit markets that finance solar systems.”
CEO Brian Harrison was quoted in the company announcement at the time saying, “We are incredibly proud of our employees, and we would like to thank our investors, channel partners, customers and suppliers, for the years of support that allowed us to bring our innovative technology to market. Distributed rooftop solar power makes sense, and our customers clearly recognize the advantages of Solyndra systems.”
However, the half a billion lost by taxpayers wasn’t mentioned. Stearns’ spokesman said that’s where the investigation has to begin, with just exactly what was paid to or on behalf of the company, by whom, and for what purpose, officials said.
According to a report in The Hill, company officials also are expected to testify before House Republicans next week.
The report also said Stearns has indicated while some documentation about the loss has been provided by the Obama administration, Republicans might consider using subpoena power to obtain needed documents from the White House.
A commentary from Bruce Krasting at Business Insider said it was of special interest that no witnesses so far have been scheduled for the main owner of the company, Argonaut Ventures, a family investment vehicle for George Kaiser, a major Obama supporter.
“George Kaiser could step up in a bankruptcy court and offer to put $300 [million] into S. The proceeds would be used to substantially pay down the government IOU. The balance of the debt would be converted into common stock. If S were around in 5-7 years, the government might get the rest of its money back,” he suggested. “That’s my challenge to George Kaiser. Step up and fix this problem.”
A commentary that appeared in the Salt Lake Tribune noted that when Obama was promoting renewable energy projects, and working to grant money for the work, he visited the California company and stated, “The future is here.”
But the commentary noted that by now, FBI agents have visited the company’s offices, and have taken what they want. They also have visited officials’ homes for related reasons.
“Obviously, everyone should reserve judgment as to whether there has been any wrongdoing, criminal or otherwise. But it’s not too early to draw some policy lessons from Solyndra’s ignominious downfall,” the commentary said. “The first is that government is no better than the private sector at picking industrial winners – and usually worse. Solyndra’s novel solar-panel design was supposed to produce electricity more efficiently than more traditional panels, offsetting its higher production costs. Many private analysts questioned that business model, especially given modest global demand for solar power and competition from China’s heavily subsidized producers. But the Energy Department swiftly approved Solyndra’s loan guarantee anyway. The department has also placed large financial bets on electric vehicles and related battery technology, despite private forecasts that the market for that technology is not ripe.”
In response to a request from from the Wall Street Journal, FBI spokeswoman Julianne H. Sohn declined to comment on much of what is going on.
But the report said two of the company’s founders were taken off the payroll just last year because the company “was burning through cash and had to rein in costs.”
A blog column at Think Progress blamed the project on President Bush, explaining that the loan guarantee program was begun at the company in 2007.
“Because one of the Solyndra investors, Argonaut Venture Capital, is funded by George Kaiser, a man who donated money to the Obama campaign – the loan guarantee has been attacked as being political in nature,” the commentary said.
But it said some of the original investors also made major contributions to GOP candidates.
However, the timeline did reveal that a conditional commitment setting terms was approved under the Obama administration in March 2009. Then in February 2011, the company agreement was restructured. Another company request to restructure last month was refused.
The result was the closure.
One commenter on the site said, “Really, Obama’s team just signed the papers and took credit for the whole thing.”