House GOP issues scathing report on Solyndra loan guarantee

The Republican majority on the House Energy and Commerce Committee, which has been pounding the White House for months on the Solyndra solar bankruptcy, on Aug. 2 released a report detailing the findings of its investigation into the U.S. Department of Energy’s management of its loan guarantee program.

The 147-page report chronicles the committee’s 18-month investigation into DOE’s failed $535m loan guarantee to Solyndra, which included the review of over 300,000 pages of documents, interviews with numerous individuals, and five committee oversight hearings.

The report was released following the committee’s approval Aug. 1 of the “No More Solyndras Act,” which is legislation authored by full Committee Chairman Fred Upton, R-Mich., and Oversight and Investigations Subcommittee Chairman Cliff Stearns, R-Fla.

The report details the evidence gathered during the course of the investigation and the committee’s conclusions. “The evidence demonstrates administration officials knew Solyndra was a bad bet from the beginning, but the White House was determined to make Solyndra a stimulus success story at any cost,” said a GOP statement about the report. “Despite repeated warnings that Solyndra was doomed to fail, the Obama administration went ahead in backing the solar company, cutting corners in the process, and rushed the loan guarantee out the door. The investigation also found DOE knowingly violated the law when it restructured the terms of the loan guarantee and subordinated taxpayers’ interest to the interests of private investors.”

Documents obtained by the committee “exposed” a relationship between Solyndra and another stimulus-backed project, the GOP said. The report details Solyndra’s role as a supplier for Prologis’ Project Amp, a solar panel installation project and the recipient of a partial loan guarantee for $1.4bn. “The White House was well aware of Solyndra’s deteriorating financial condition when it allowed DOE to move forward with Project Amp,” said the majority statement. “DOE would later use the relationship between Project Amp and Solyndra as a key bargaining tool to push for a second restructuring while directly engaging in last minute negotiations between Solyndra and the Project Amp sponsor.”

The report also gives an in-depth look into the role played by one of President Barack Obama’s prominent backers in the administration’s decision to issue the loan guarantee and the loan’s restructuring that put taxpayers behind two private investors.

Key decisionmakers at DOE, including head of the loans program office Jonathan Silver, knew of billionaire George Kaiser’s influence and attempted to leverage it, the majority statement said. According to the report: “Individuals connected to the George Kaiser Family Foundation (GKFF) — whose primary investment arm, Argonaut, was Solyndra’s largest shareholder — played important roles in a series of critical discussions and negotiations with DOE. George Kaiser, whose fortune funds the GKFF, was closely involved in financial decisions related to Solyndra, often authorizing key disbursements and restructuring proposals, as well as in Solyndra’s lobbying, public relations, and government procurement strategies in Washington.”

Upton: this is why feds shouldn’t be in venture capital business

“Solyndra will be remembered in the history books as a sad hallmark of a newly installed administration that felt it was above the rules, lusting for positive headlines rather than focused on delivering results,” said Upton. “We now know the first domino of the Solyndra mess was DOE cutting the Treasury Department out of the approval process in the rush to send what will go down as the most expensive press release known to man. Now, Solyndra is a painful reminder of why the federal government should not be in the venture capital business.”

“What was once the poster child for the administration’s green energy spending plan, Solyndra is now a symbol of President Obama’s failed stimulus economy,” said Stearns. “Our investigation uncovered a political saga starring key White House officials and big Obama donors. The story reaches a turning point when DOE subordinates taxpayers to outside funding and then Solyndra files for bankruptcy, laying off employees and leaving taxpayers on the hook for millions of dollars. While this may make for a great Hollywood drama, it is a disturbing truth for taxpayers. We must ensure that the Solyndra story is never repeated.”

Among the committee’s findings included in the report:

  • The timing of the Solyndra Conditional Commitment was coordinated with the White House, and scheduled before DOE had reached an agreement with the company on key terms.
  • DOE failed to consult with the Department of the Treasury during the course of its review of Solyndra’s application, as required by the Energy Policy Act of 2005. Instead, DOE asked Treasury to review the terms only after it had made the decision to issue the conditional commitment to Solyndra. Even then, Treasury was only given one day to review the terms.
  • DOE should have better anticipated the market challenges that contributed to Solyndra’s financial condition.
  • DOE ignored critical red flags about Solyndra’s financial condition prior to closing the loan guarantee in September 2009.
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.