White House ignored warnings about solar company’s problems

. (AP Photo/Paul Sakuma, File)

White House officials discussed the political ramifications of a possible default by a troubled solar energy company that received more than $500 million in federal loans, newly released emails show.

Emails released Thursday night show that Obama administration privately worried about the effect of a default by Solyndra Inc. on the president’s re-election campaign.

“The optics of a Solyndra default will be bad,” an official from the Office of Management and Budget wrote in a Jan. 31 email to a senior OMB official. “The timing will likely coincide with the 2012 campaign season heating up.”

The email, released by the House Energy and Commerce Committee as part of its investigation into the Solyndra loan, showed that Obama administration officials were concerned about Solyndra’s financial health even as they publicly declared the solar panel maker in good shape.

Solyndra, which received $528 million in federal loans under the stimulus law, declared bankruptcy late last month and laid off 1,100 workers.

The Silicon Valley company was the first renewable-energy company to receive a loan guarantee under the 2009 stimulus law, and the Obama administration frequently touted Solyndra as a model for its clean energy program. President Barack Obama visited the company’s Fremont, Calif., headquarters last year.

Even as Obama praised the company’s plans to hire more than 1,000 workers, warning signs were being sent from within the government and from outside analysts who questioned Solyndra’s viability as a “going concern.”

At least three reports by federal watchdogs over the past two years warned that the Energy Department had not fully developed the controls needed to manage the multibillion-dollar loan program that provided more the loan to Solyndra Inc., a now-bankrupt solar panel manufacturer.

Emails obtained by The Associated Press show that a White House official dismissed reports about Solyndra’s gloomy future. An email from Greg Nelson, a White House official who had been involved in the planning of Obama’s May 2010 trip to Solyndra’s headquarters, to a Solyndra executive downplayed a July 2010 news story in a trade publication that criticized the company’s financial health.

“Seems B.S.,” Nelson wrote.

A 2009 report by the Energy Department’s inspector general warned that the DOE lacked the necessary quality control for the loan guarantee program, which was created in 2005 to support clean-energy projects that could not obtain conventional bank loans due to high risks.

In July 2010, the Government Accountability Office said the Energy Department had bypassed required steps for funding awards to five of 10 applicants that received conditional loan guarantees.

The report did not publicly identify the companies that were not properly vetted, but congressional investigators say one of them was Solyndra. The company was the first to receive a loan guarantee after the program was expanded under the 2009 stimulus law.

In March, DOE Inspector General Gregory Friedman again faulted the loan program for poor record keeping. A report by Friedman said the program “could not always readily demonstrate, through systematically organized records … how it resolved or mitigated relevant risks prior to granting loan guarantees.” According to the report, the department kept limited or no electronic data on 15 of 18 loan guarantees examined.

Documentation for the remaining three projects was more robust, the report said, “but did not include all of the information necessary … to evaluate the applicant’s credit worthiness and/or the risks associated with the projects.”

Damien LaVera, a spokesman for the Energy Department, said all reviews were completed before any taxpayer money was obligated.

Even so, warnings about the company persisted. A report last year by auditor PricewaterhouseCoopers said Solyndra had suffered recurring losses from operations and negative cash flows, raising “substantial doubt about its ability to continue as a going concern.”

But last May, a Solyndra email informed the White House that “things are going well” at the company and that it had “good market momentum, the factory is ramping up and our plan puts at cash positive later this year. Hopefully, we’ll have a great story to tell toward the end of the year.”

Nelson, the White House official, replied: “Fantastic to hear that business is doing well — keep up the good work! We’re cheering for you.”

White House spokesman Jay Carney said the White House did not influence the Solyndra loan, which he said was made on “a merit-based process” by DOE.

“There’s no evidence that the White House was involved in the loan,” Carney said Thursday. Emails that show White House officials pressuring the administration’s budget office about the loan were about scheduling, he said.

“The White House was involved in trying to find out when a decision would be made, so … staff here could make a decision about the vice president’s having an event” at Solyndra headquarters in September 2009, Carney said.

The FBI recently raided Solyndra’s headquarters, shortly after Solyndra filed for bankruptcy and laid off 1,100 workers.

A U.S. official, who spoke on condition of anonymity because the case under seal, said the search was related to a fraud investigation into whether Solyndra filed inaccurate documents with the government.

Meanwhile, the Treasury Department’s inspector general said Thursday it has opened an investigation into the Solyndra loan.

Spokesman Richard Delmar said the inspector general is reviewing the role and actions of the Federal Financing Bank, a government corporation supervised by the Treasury Department. The bank provided the low-interest loan to Solyndra. The loan is one at least 15 loans totaling more than $6 billion made by the financing bank as part of the stimulus program

The FBI has executed search warrants at Solyndra’s headquarters and talked to top executives. The Energy Department’s inspector general and the House Energy and Commerce Committee also are investigating Solyndra and the DOE’s loan guarantee program, which has provided billions in loan guarantees to renewable energy companies.

The loan guarantees essentially make it easier for the companies to get financing, because the government guarantees repayment in the event of default. In Solyndra’s case, the loan came from the government itself, but private banks often provide the financing.

The Obama administration is moving to finalize as many as 15 loan guarantees for renewable-energy companies before the stimulus program ends on Sept. 30. Republicans question whether that could lead to more loans to companies that fail like Solyndra.

LaVera said the department won’t take any shortcuts during the approval process.

“We will only close the deals that are ready to close on Sept. 30,” he said.

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Associated Press writers Jack Gillum, Jim Kuhnhenn and Larry Margasak contributed to this report.

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8 Responses to "White House ignored warnings about solar company’s problems"

  1. griff  September 16, 2011 at 6:43 am

    Don’t worry folks, it’s only your money they’re throwing away.

  2. Bill Cravener  September 16, 2011 at 7:07 am

    Yep, more wasted monies, so what’s new? Way can’t we put those monies into fixing our crumbling roads and bridges? After all, with all the cheap coal and gas we the US have at hand (both plentiful here in PA) a cleaner greener future is a long way coming!

    • griff  September 16, 2011 at 5:37 pm

      I happen to work in the “green energy” department at my company. We design and develop solar- and wind-powered LED lighting systems and LED billboards and signage.

      I believe you are correct in that a cleaner, greener future is a long way off in terms of energy production, but the shorter term solution is in energy efficiency and savings by developing systems and devices that simply consume less energy.

      But when government gets involved in choosing who or what is best suited for the task, in lieu of a free and fair market determining what is best, there is always waste and corruption involved, and it always falsl to the taxpayer to assume all the risk.

      I’m sure the executives at this company lived high on the hog at our expense while they buried this company.

      • Bill Cravener  September 17, 2011 at 7:11 am

        I do agree with you. As to your green employment, PA’s turnpike and freeways often have solar LED information signs as one travels. One of my hobbies is playing around with electronics and low-cost LED thingies. Sounds like you have an interesting job there griff. ;)

        • griff  September 18, 2011 at 4:27 am

          Yeah I play with those things every day. In fact my company was just awarded the contract to replace the American flags at the Armed Forces recruting center in Times Square. They are currently made of fluorescent bulbs and measures some 40 ft by 12 ft, and will be done in LED. It’s a custom design from the ground up and will be 100% American engineered and built.

  3. Carl Nemo **==  September 16, 2011 at 12:59 pm

    If this were only a ‘single bad story’ about wasted stimulus money then things would be great…no?

    Billions of stimulus money was squandered and we’ve witnessed the negligible benefit, but now Obama & Co. have come up with an idea that they need another ‘stimulus';I.E., $476 billion more debt bucks to squander prior to him and his coterie of retreads from prior administrations exiting office.

    They want to steal even moreso from taxpayers in order to line the pockets of their patrons and themselves to the very gunnels of their lifeboats as they row away from an intentionally scuttled USS America… X-(

    Carl Nemo **==

  4. Almandine  September 18, 2011 at 2:50 pm

    Call it what it is…

    http://www.nationalreview.com/articles/print/277512

    • Carl Nemo **==  September 18, 2011 at 6:04 pm

      Thanks Almandine for the superb link. As referenced in the link material this is a case of monumental fraud and no doubt the ‘Big O’ and his close cronies are involved up to their armpits in this scam. Don’t forget Obama learned from some of the best like Tony Rezco, now doing hard downtime for his Chicago based scams.

      They need to enforce the mandate of the “Energy Policy Act of 2005″ that protects taxpayers against such fraud; all involved post being found guilty as charged to a minimum of thirty years in “Super Max” no different than a John Gotti et al. that deserved such extreme sanctions.

      Obama needs to be impeached and ridden out of D.C. on a sharp-edged rail, lookin’ like the feathered, jive turkey that he is under 1876 styled justice.

      Will it happen, never because all three branches of our government are now suffering terminal core rot. x-(

      Carl Nemo **==

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