Solyndra

By MATTHEW DALY The Associated Press

WASHINGTON — The Obama administration restructured a half-billion dollar federal loan to a troubled solar energy company in such a way that private investors — including a fundraiser for President Barack Obama — moved ahead of taxpayers for repayment in case of a default, government records show.

FILE - In this Aug. 31, 2011, file photo, Solyndra workers leave Solyndra in Fremont, Calif. Newly released emails show that the Obama administration was worried about the financial health of a troubled solar energy company even as officials publicly declared the company in good shape. An email from a White House budget official to a co-worker discussed the likely effect of a default by Solyndra Inc. on President Barack Obama’s re-election campaign. (AP Photo/Paul Sakuma, File)

Administration officials defended the loan restructuring, saying that without an infusion of cash earlier this year, solar panel maker Solyndra Inc. would likely have faced immediate bankruptcy, putting more than 1,000 people out of work.

Even with the federal help, Solyndra filed for Chapter 11 bankruptcy protection earlier this month and laid off its 1,100 employees.

The Fremont, Calif.-based company was the first renewable-energy company to receive a loan guarantee under a stimulus-law program to encourage green energy and was frequently touted by the Obama administration as a model. Obama visited the company's Silicon Valley headquarters last year, and Vice President Joe Biden spoke by satellite at its groundbreaking.

Since then, the implosion of the company and revelations that the administration hurried Office of Management and Budget officials to finish their review of the loan in time for the September 2009 groundbreaking has become an embarrassment for Obama as he sells his new job-creation program around the country.

An Associated Press review of regulatory filings shows that Solyndra was hemorrhaging hundreds of millions of dollars for years before the Obama administration signed off on the original $535 million loan guarantee in September 2009. The company eventually got $528 million.

Given the company's shaky financial condition, Republican lawmakers say the decision to restructure the loan raises questions about whether the administration protected political supporters at taxpayers' expense.

"You should have protected the taxpayers and made some forceful actions here after this analysis," Rep. Cliff Stearns, R-Fla., told a top Energy Department official this week. "Because you should have seen the problems. And you should have said, 'Taxpayers need to be protected and this has got to stop.' "

The loan restructuring is one element congressional investigators are focusing on as they look into the federal loan guarantee Solyndra received under the economic stimulus law.

Under terms of the February loan restructuring, two private investors — Argonaut Ventures I LLC and Madrone Partners LP — stand to be repaid before the U.S. government if the solar company is liquidated. The two firms gave the company a total of $69 million in emergency loans. The loans are the only portion of their investments that have repayment priority above the U.S. government.

Argonaut is an investment vehicle of the George Kaiser Family Foundation of Tulsa, Okla. The foundation is headed by billionaire George Kaiser, a major Obama campaign contributor and a frequent visitor to the White House. Kaiser raised between $50,000 and $100,000 for Obama's 2008 campaign, federal election records show. Kaiser has made at least 16 visits to the president's aides since 2009, according to White House visitor logs.

Madrone Partners is affiliated with the Walton family, descendants of Wal-Mart founder Sam Walton. Rob Walton, the eldest son of Sam Walton, contributed $2,500 last year to the National Republican Congressional Committee.

The AP review also found that officials at Solyndra had been seeking a second round of loans from the Energy Department to expand the company's Silicon Valley headquarters. The request for a second loan was denied.

"We have incurred significant net losses since our inception, including a net loss of $114.1 million in 2007, $232.1 million in 2008 and $119.8 million in the first nine months of fiscal 2009, and we had an accumulated deficit of $505 million at Oct. 3, 2009," the company said in a December 2009 filing to the SEC. "We expect to continue to incur significant operating and net losses and negative cash flow from operations for the foreseeable future."

Energy Department spokesman Damien LaVera said Friday that the company's financial losses were not uncommon for a high-tech startup and were a major reason Solyndra applied for the federal loan. The loan program is intended to help promising companies that cannot receive financing through private banks because of high risk.

Jonathan Silver, executive director of the Energy Department's loan program, said DOE officials faced a stark choice late last year and early this year: Refuse to allow the loan restructuring, "thereby ensuring that Solyndra would close its doors immediately" or allow the company to accept emergency financing, "thereby giving it and its almost 1,000 workers a fighting chance at success, and the government a higher expected recovery on its loan."

The decision by Energy Secretary Steven Chu was not an easy one, Silver told the House Energy and Commerce Committee, but appeared to be the right action at the time.

"Without DOE's agreement to restructure Solyndra's loan, the company likely would have faced bankruptcy much earlier — in December 2010" or soon after, Silver said. "Restructuring gave them a fighting chance to compete and succeed, and kept approximately 1,000 workers from losing their jobs."

Republicans were not impressed.

"If their model was weak to begin with, and then the market gets worse, doesn't that mean that maybe we should have just not thrown good money after bad?" asked Rep. Morgan Griffith, R-Va. "Because now we're in a worse position in the bankruptcy courts to get our money back."

GOP presidential candidate Michele Bachmann called the Solyndra loan an example of "crony capitalism" that benefited political donors.

"It's wrong to abuse executive authority with unilateral actions" Bachmann said at a campaign event Friday in California. "And of course the other problem with Solyndra is the fact that it appears there was crony capitalism, that there were political donors that benefited by this $535 million loan."

Newly released emails show the White House was worried about the likely effect of a default by Solyndra on Obama's re-election campaign.

"The optics of a Solyndra default will be bad," an OMB official wrote in a Jan. 31 email to a colleague. "The timing will likely coincide with the 2012 campaign season heating up."

The budget official, whose name is blacked out in the email, wondered whether Solyndra should be allowed to restructure its loan.

"Questions will be asked as to why the administration made a bad investment, not just once (which could hopefully be explained as part of the challenge of supporting innovative technologies), but twice (which could easily be portrayed as bad judgment, or worse)," the email says.

Associated Press writer Gillian Flaccus in Costa Mesa, Calif., contributed to this story.

Follow Jack Gillum at http://twitter.com/jackgillum and Matthew Daly at http://twitter.com/MatthewDalyWDC

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Obama fundraiser linked to loan program that aided Solyndra

The revelation is likely to spur new inquiries about the solar company's political influence. Separately, California lawmakers seek investigation of a state tax break the firm received.

President Barack Obama lifts a solar panel with Solyndra Chief Executive Officer Chris Gronet during a tour of the company in May 2010. (Mandel Ngan, AFP/Getty Images)

The White House faced mounting political complications as a second top fundraiser for President Obama was linked to a federal loan guarantee program that backed a now-bankrupt Silicon Valley solar energy company, and as two California lawmakers called for investigations of a state tax break granted to the firm.

Steve Spinner, who helped monitor the Energy Department's issuance of $25 billion in government loan guarantees to renewable energy projects, was one of Obama's top fundraisers in 2008 and is raising money for the president's 2012 reelection campaign.

Spinner did not have any role in the selection of applicants for the loan program and, in fact, was recused from the decision to grant a $535-million loan guarantee to Solyndra Inc. because his wife's law firm represented the company, administration officials said Friday.

But Spinner's role as a top official in the Energy Department program, which had not been previously revealed, is likely to spur new inquiries into whether political influence played a role in the handling of the "green" energy fund. Solyndra faces a congressional probe, a criminal investigation and separate internal inquiries at the Energy and Treasury departments.

"This will fuel more questions, and now you've got real people involved at the inspector-general level who will be turning over chairs and cabinets, asking questions," said Stanley Brand, a criminal defense and ethics lawyer in Washington who has served as general counsel to the U.S. House of Representatives.

He noted that none of the details that had emerged suggested any laws had been broken. "It's embarrassing, it's ham-handed, it looks bad, but so far all we have is the White House trying to advantage itself in a political way with a loan," he said.

The largest investments in Solyndra were funds operated on behalf of the family foundation of billionaire George Kaiser, another major fundraiser for Obama in 2008. Kaiser has denied personally investing in the solar energy company or talking to White House officials about the loan.

Some Republicans in Congress charge that the White House pushed to get the loan approved for political reasons, which the White House denies.

Before its collapse, Solyndra was a showcase of the White House initiative to develop clean-energy alternatives. Obama visited the factory in May and praised Solyndra as a green technology company that would create jobs and help lead the country's economic recovery.

The company filed for Chapter 11 bankruptcy protection Sept. 6. Two days later, agents with the FBI and Energy Department's inspector general served a search warrant at Solyndra headquarters in an inquiry focusing on whether the company misled the government in applying for the loans.

In announcing its closure, Solyndra cited an unexpected reduction in demand for its products and intense competition from Chinese companies that drove down the price of solar panels it could sell.

Spinner, who raised at least $500,000 for Obama in 2008, is leading efforts to raise money from the technology industry for the president's reelection campaign. He did not respond to requests for comment Friday.

Last week, he invited Obama fundraisers who were in Chicago for a national finance committee meeting to the launch of the Technology for Obama fundraising program. In July, the Obama campaign credited Spinner with raising between $200,000 and $500,000 so far this year.

Spinner was a Silicon Valley investor who founded a sports and wellness company before he joined the administration in April 2009 after serving on Obama's transition team. He was named an advisor to Energy Secretary Steven Chu and was charged with helping oversee a loan guarantee program authorized by the American Recovery and Reinvestment Act, the economic stimulus program.

"Steve Spinner acted as a liaison between the Recovery Act Office and the Loan Programs Office," Energy Department spokesman Damien LaVera said in a statement Friday. "In that capacity, he played no role in the decision-making or evaluation of the Solyndra loan application."

During his tenure, the program approved 20 loan guarantees totaling $25 billion for energy storage, wind power and solar generation, according to Spinner's resume on LinkedIn. Among them was final approval for Solyndra, which planned to manufacture thin solar modules for flat rooftops.

The company applied for a loan guarantee in December 2006, filing under a program created by George W. Bush's administration. It received a conditional commitment for $535 million in March 2009, shortly before Spinner arrived.

In the months that followed, department staffers negotiated the final terms and provided the Office of Management and Budget with data as it assessed the risks of the deal.

In August 2009, while that risk assessment was underway, White House officials began expressing interest in having Vice President Joe Biden announce the deal during a trip to California the following month, according to emails released to House investigators this week. That spurred exchanges between officials

at the White House, the Energy Department and the OMB about whether they could speed up the final approval.

Spinner was the recipient of at least one of the emails, administration officials confirmed Friday — an Aug. 25, 2009, message from Biden's office saying that "we would want the VP [to] satellite into the event on 9/4. It's the same day the unemployment numbers come out, and we'd want to use this as an example where the Recovery Act is helping create new high tech jobs."

Spinner forwarded the email to another Energy Department staffer, who responded that she thought the event was scheduled for Sept. 8.

Spinner, who left the department a year ago, remains an enthusiastic proponent of the loan guarantees. In an op-ed he co-wrote on the blog ThinkProgress on July 13, he urged Congress to appropriate more money to the effort, calling it "an outright success."

"Even the most controversial loan guarantee recipient — Solyndra, a solar manufacturer — is seeing an operational turnaround," he wrote with Richard Caperton, a senior policy analyst at Center for American Progress, a liberal think tank where Spinner is a

senior fellow. He did not

disclose in the piece that he had played a role in the program.

Two months later, after the department declined to restructure the loan a second time, Solyndra declared bankruptcy. By that time, $527 million in taxpayer money that Solyndra borrowed from the Federal Financing Bank, operated under the supervision of the Treasury Department, had been disbursed to the company — funds that the government may not be able to recoup.

Separately, lawmakers in Sacramento questioned a $27-million tax break given to Solyndra under a state law intended to encourage clean-energy companies to do business in California.

State Sen. Alex Padilla (D-Pacoima), who co-wrote the bill, said he planned to examine the tax break at a hearing this fall.

"We're certainly revisiting the due diligence that was done before an award was given," he said.

Assemblyman Brian Nestande (R-Palm Desert) said he intended to ask Treasurer Bill Lockyer's staff to explain "what their vetting process was."

The law, which was approved unanimously by the state Senate and Assembly and signed by then-Gov. Arnold Schwarzenegger in March 2010, exempts qualified clean-technology companies from paying sales tax when buying manufacturing equipment.

The law established a committee to review applications from companies that sought the tax breaks. In November, Solyndra applied for a credit that would allow it to avoid paying nearly $35 million in sales tax on the purchase of more than $380 million of equipment.

The request was granted, but the company used only $27 million of the credit before it went out of business, said Joe DeAnda, a Lockyer spokesman.

Solyndra also received other indirect benefits from state agencies.

Under the California Solar Initiative, a program created by Schwarzenegger and the Legislature, customers that bought Solyndra-manufactured solar-power modules received about $4.9 million in state subsidies, according to Terrie Prosper, a spokeswoman for the California Public Utilities Commission.

Prosper emphasized that the state subsidies went to Solyndra's customers and not to the company, which is how the program works.

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Obama's Solyndra scandal reeks of the Chicago Way

Those of us from Chicago know exactly what the Solyndra scandal smells like. And It doesn't smell fresh and green.

President Barack Obama tours the Solyndra solar panel company plant in Fremont, Calif., last year. Solyndra, which got a $535 million government-backed loan, recently went bankrupt. (Paul Chinn, Getty photo / September 18, 2011)

Solyndra execs will decline to testify at hearing

Sept 20 (Reuters) - Solyndra LLC's chief executive and chief financial officer will invoke their Fifth Amendment rights and decline to answer any questions put to them at a Congressional hearing on Friday, according to letters from their attorneys obtained by Reuters.

In the letters sent to the House Energy and Commerce Committee's Subcommittee on Oversight and Investigations, attorneys for Solyndra CEO Brian Harrison and CFO W. G. Stover said they advised their clients not to provide testimony during the hearings.

The bankrupt company's $535 million federal loan guarantee is being investigated by the House Energy and Commerce Committee.

Harrison is represented by Orrick, Herrington & Sutcliffe and Stover is represented by Keker & Van Nest.

Solyndra's offices were raided by the FBI two days after the company filed for bankruptcy, although the FBI did not say what prompted the raid. (Reporting by Nichola Groom in Los Angeles, editing by Gerald E. McCormick)

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White House’s Testimony ‘Guidance’

A second government official has come forward saying the White House tried to influence his testimony concerning a wireless broadband project backed by a Democratic donor that military officials fear might impair sensitive satellite navigation systems.

Anthony Russo, director of the National Coordination Office for Space-Based Positioning, Navigation, and Timing, told The Daily Beast he rejected “guidance” from the White House’s Office of Budget and Management suggesting he tell Congress that the government’s concerns about the project by the firm LightSquared could be resolved in 90 days, a timetable favorable to the company’s plans.

“They gave that to me and presumably the other witnesses,” Russo said. “There is one sentence I disagreed with, which said that I thought the testing could be resolved in 90 days. So I took it out.”

Russo said he objected to that language because “I have low confidence that we can complete all of the testing in 90 days.” He estimated that such testing would take at least six months. Russo called the White House efforts to alter his testimony “guidance rather than pressure.”

Russo’s comments come just days after four-star Air Force Gen. William Shelton, who heads U.S. Space Command, told Congress in a classified briefing that he felt pressured by the White House to change his testimony about the same project to make it more favorable to the company.

Anthony Russo, National Coordination Office, Space-Based Positioning, Navigation and Timing at NOAA, testifies on Capitol Hill in Washington, Sept. 15, 2011., Lauren Victoria Burke / AP Photo

Shelton also rejected the suggested edits and testified he has concerns LightSquared’s project could interfere with Global Positioning Satellite (GPS) signals key to military navigation and targeting systems.

Eric Schultz, a White House spokesman, said the OMB review of the witness testimony was routine and not designed to curry political favor, and that all the witnesses who testified to Congress were allowed to state their concerns about the LightSquared project and its potential ramifications for conflicting with GPS signals.

“Every administration witness testifying at every hearing on LightSquared has been explicit in identifying the problems it would cause for GPS, and that LightSquared should not be allowed to move forward unless those interference issues are resolved,” he said. “If OMB professionals were making sure that testimony before Congress was consistent with administration policy, that means they were doing their jobs because OMB reviews and clears all agency communications with Congress, including testimony, to ensure consistency in the administration’s policy positions.”

“We did not ask for any special favors and we have not asked for any special handouts, and consequently did not receive any special favors or handouts,” Falcone said.

House Republicans now want to know whether the White House’s suggested edits to the testimony amounted to an effort to help the company.

Philip Falcone, who owns a majority stake in LightSquared, told the Beast that while he met with White House officials and a federal regulator he “did not ask for any special favors and we have not asked for any special handouts, and consequently did not receive any special favors or handouts.”

Falcone acknowledged, however, he told anyone in the federal government willing to listen that testing his company’s signal for GPS interference on commercial and military equipment “should not take that long.”

“Everything is already set up, the labs are set up. All we need are the list of devices that need to be tested. We have been telling the people who are asking for the testing of this for months now,” he said in an interview Monday.

The Beast obtained the paragraph the OMB asked government witnesses to insert into their recent congressional testimony, which says in part, “We hope that testing can be complete within 90 days.”

LightSquared has told Congress and regulators that the strength of its signal was approved in the mid 2000s by a Republican-led Federal Communications Commission and that its proposal to convert its satellite license to one for terrestrial mobile wireless devices would not change these interference issues.

Nonetheless, the issue of the timeline for testing is crucial to LightSquared, which wants to build a new wireless broadband service on a spectrum close to GPS signals as part of President Obama’s mandate to expand wireless access for Americans.

“The FCC mandated the most aggressive build-out in the history of telecommunications,” Falcone said. “We expect that we will have consumers on this network by the second half of 2012.”

Harold Furchtgott-Roth, a former Republican-appointed FCC commissioner, said it was highly unusual to put a timeline on the kinds of technical tests discussed in the OMB paragraph.

“Primarily these types of tests sometimes have a finite end and sometimes they don’t,” he said. “Sometimes they go on for long periods of time. To pick a number and say the tests have to end by a certain date is not consistent with commission precedent. Secondly, you don’t know what you will find when you do the test; you can’t predetermine that you will absolutely be finished after 90 days.”

Rep. Paul Broun (R-GA), the chairman of the House Science Committee’s Subcommittee on Investigations and Oversight, said he was troubled that four out of the five government witnesses before his Sept. 8 hearing had “identical language in their written testimony reflecting the administration’s view of the LightSquared project. The language diminished the otherwise blunt assessments the witnesses articulated during the hearing when pressed by committee members.”

Last week, the Center for Public Integrity first reported a batch of emails between LightSquared executives and staffers of the White House Office of Science and Technology Policy (OSTP). The nonprofit investigative journalism organization reported that LightSquared CEO Sanjiv Ahuja met with the chief of staff for OSTP just eight days before Falcone and his wife gave $30,400 each to the Democratic Senatorial Campaign Committee (DSCC). Ahuja also contributed $30,400 to the Democratic Party, though he made the same contribution to the Republican Party in 2009.

Falcone told The Daily Beast he made the donations to the DSCC because his wife was hosting a fundraiser for women in politics. “She asked me to contribute,” he said. “If I had said no, all hell would have broken loose.” He also said in a separate interview with Fox News that he was a registered Republican.

Falcone had one meeting with an official from the OSTP, he told The Daily Beast. He also said he met with FCC Chairman Julius Genachowski in September 2009. “I did not want the FCC to be surprised,” he said. “It was a kind of in and out thing.”

Falcone said he does not believe he has received any favors from the White House. “I met in September of 2009 with somebody from the Office of Science and Technology. I never met Obama and I never met his advisers,” he said. “The discussion was around wireless in the marketplace and some of the things we were thinking and some of the different things we were doing.”

Furchtgott-Roth questioned the process by which the FCC granted a waiver to LightSquared so that it may use its initial license for satellite bandwidth to service terrestrial mobile devices.

“In January the commission said LightSquared could use its license for exclusive terrestrial purposes,” he said. “That decision from January was an unprecedented and surprising development. That they would make this decision at the bureau level and not at the full commission level is just stunning.”

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Ex-President Clinton: Green movement needs money

By MEGHAN BARR
Associated Press

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NEW YORK (AP) -- Former President Bill Clinton said Tuesday that the success of the alternative energy movement is hampered by a lack of financing. His comments came as world leaders attending his annual philanthropic conference expressed fears about rising seas.

The ex-president's three-day Clinton Global Initiative for VIPs with deep pockets began Tuesday with a frank discussion about addressing global climate challenges, co-hosted by Mexican President Felipe Calderon and South African President Jacob Zuma.

There was a sense of frustration among the world leaders over the failure to create a legally binding world agreement on carbon emissions.

"We have seen much less progress than we hoped for," said Norwegian Prime Minister Jens Stoltenberg.

Pointing to Germany's successful creation of solar energy jobs as a model for other nations to emulate, Clinton said the main issue with green energy is a lack of proper funding.

"This has to work economically," he said. "You have to come up with the money on the front end."

Clinton's talk of renewable energy financing comes as Republicans are criticizing the Obama administration for awarding billions of dollars in taxpayer subsidies for such projects, including a $528 million loan to a now-bankrupt California solar panel maker.

Fremont, Calif.-based Solyndra filed for Chapter 11 bankruptcy protection earlier this month and laid off its 1,100 employees. It was the first renewable energy company to receive a loan guarantee under a stimulus law program to encourage green energy and was frequently touted by the Obama administration as a model.

Rising seas are a matter of life and death for small island nations, Zuma said.

"Not theoretical, not in the future, now," he said. "And they can't understand why we're failing to realize that."

Noting that the Kyoto Protocol on climate change is set to expire next year, Calderon said progress must be made toward establishing new rules at the United Nations convention on climate change in Durban, South Africa, in November.

Calderon said he is concerned that the world's economic problems are overshadowing the need for action on climate change.

"Last year we had the worst rains ever in Mexico, and this year we are living with the worst drought ever in Mexico," he said. "I know that the world has a lot of troubles, but we are still facing the most challenging problem for human kind in the future, and that is climate change."

Sheikh Hasina, prime minister of Bangladesh, said rising seas would submerge one-fifth of her country, displacing more than 30 million people. Clinton said the next countries most likely to be affected by climate change are places that are inland and hot - such as Mali, a landlocked nation in western Africa.

"A few years ago, after the south Asian tsunami, I spent a lot of time in the Maldives," Clinton said. "I think it's quite possible that the Maldives won't be here in 30 or 40 years."

Clinton said Caribbean nations are microcosms of the problems associated with combating climate change. Every Caribbean nation should be energy-independent, he said, by generating solar, wind and geothermal energy.

"But only Trinidad has natural gas," Clinton said. "Everybody else imports heavy oil to burn old-fashioned generators at high cost."

Other leaders who participated in Tuesday's panel included European Commission President Jose Barroso, Slovenian President Danilo Turk, Tillman Thomas, the prime minister of Grenada, and Cisse Mariam Kaidama Sidibe, the prime minister of Mali.

Last year's GCI conference generated nearly 300 new commitments valued at $6 billion to tackle major global issues from poverty and disease to climate change.

This year, the conference is happening during an especially rancorous debate in Washington over government spending. Earlier this month, President Barack Obama scrubbed a clean-air regulation that aimed to reduce health-threatening smog, yielding to bitterly protesting businesses and congressional Republicans who complained the rule would kill jobs in America's ailing economy.

"We've got to somehow involve the imagination of ordinary people," Clinton said. "They have to understand that this is not a burden, it's an opportunity."

Other panels on the first day of the conference touched on subjects ranging from women and jobs in technology fields to the challenges and opportunities facing the world's increasingly urbanized population living in a growing number of cities.

In a discussion on disaster preparedness, speakers emphasized the needs for preventative action such as improved building standards to mitigate the impact of hurricanes and earthquakes. They also spoke about how to best help when a disaster does occur, in terms of the public outpouring of donations and goodwill that usually follows.

It's important for people to realize what can really help, like cash donations, and what isn't as useful, like medications that end up not being usable or clothes that victims of disasters don't want or can't use, said Valerie Amos, Under-Secretary General for Humanitarian Affairs and Emergency Relief Coordinator for the United Nations. When well-meaning people send things that aren't usable, aid agencies can waste precious time and money disposing of them.

"Let's really check what's needed and make sure we're helping rather than being part of the problem," she said.

---

Associated Press writer Deepti Hajela contributed to this report.

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Solyndra executives repeatedly invoke the Fifth

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Both executives said they hoped to assist the committee, but wouldn't answer questions. | AP Photo

By DARREN SAMUELSOHN | 9/23/11 10:46 AM EDT Updated: 9/23/11 7:25 PM EDT

Solyndra executives repeatedly invoked the Fifth Amendment this morning as House lawmakers pressed them to answer questions about the company's financial collapse and any hopes of repaying their $535 million federal loan guarantee.

"While I hope to have an opportunity to assist this committee in the future, on the advice of my attorney, I must respectfully decline to answer any questions," Solyndra CEO Brian Harrison told Energy and Commerce oversight subpanel Chairman Cliff Stearns (R-Fla.), who opened the questioning.

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Execs' silence upsets members

POLITICO 44

 

CFO Bill Stover gave a similar response.

The repeated questions drew an objection from Rep. Henry Waxman (D-Calif.), who slammed Republicans for persisting even after knowing that the executives would invoke their right to remain silent.

"I just want to take this moment to assert the fact that I think it's unseemly and inappropriate for members to be asking questions that you know they will not answer," Waxman said, saying the GOP questions were "sound bites" for the press.

Meanwhile, full committee Chairman Fred Upton called it unseemly for the White House to respond to the Solyndra scandal by highlighting Republican lawmakers' past support for clean energy projects in their districts.

"The administration's actions in this case are deeply troubling and so is their response to our findings," said the Michigan Republican, who quoted from a POLITICO story on the White House efforts.

He added: “This is not a debate about the virtues of clean energy, it is a serious inquiry into reckless use of taxpayer dollars on a company that was known to pose serious risks before a single dime went out the door.

"Let me just warn you and the other folks involved in this taxpayer rip-off," Upton said. "We're not done. No we're not."

But Waxman sounded a theme similar to the White House's.

"Republicans in Congress are now dancing on Solyndra's grave, but they seem to have a case of collective amnesia," said Waxman. He cited several members of the panel who have sought federal subsidies on energy, including Upton, Marsha Blackburn of Tennessee, Charlie Bass of New Hampshire, Brian Bilbray of California and Mary Bono Mack of California.

This article first appeared on POLITICO Pro at 10:38 a.m. on September 23, 2011.

CORRECTION: A previous version of this story misidentified Solyndra's CFO. His name is Bill Stover.

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In Rush to Assist a Solar Company, U.S. Missed Signs

Luke Sharrett/The New York Times

President Obama toured Solyndra, a solar panel manufacturer in Fremont, Calif., in May 2010. There were signs that the company's business plan was imploding.

By ERIC LIPTON and JOHN M. BRODER

Published: September 22, 2011

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WASHINGTON — President Obama’s visit to the Solyndra solar panel factory in California last year was choreographed down to the last detail — the 20-by-30-foot American flags, the corporate banners hung just so, the special lighting, even coffee and doughnuts for the Secret Service detail.

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• The Bay Citizen: Asking Why Employees of Solar Firm Lost Jobs (September 18, 2011)

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Solyndra has declared bankruptcy, laid off 1,100 workers and was raided by F.B.I. agents seeking evidence of possible fraud.

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“It’s here that companies like Solyndra are leading the way toward a brighter and more prosperous future,” the president declared in May 2010 to the assembled workers and executives. The start-up business had received a $535 million federal loan guarantee, offered in part to reassert American dominance in solar technology while generating thousands of jobs.

But behind the pomp and pageantry, Solyndra was rotting inside, hemorrhaging cash so quickly that within weeks of Mr. Obama’s visit, the company canceled plans to offer shares to the public. Barely a year later, Solyndra has become one of the administration’s most costly fumbles after the company declared bankruptcy, laid off 1,100 workers and was raided by F.B.I. agents seeking evidence of possible fraud.

Solyndra’s two top officers are to appear Friday before a House investigative committee where, their lawyers say, they will assert their Fifth Amendment right against self-incrimination.

The government’s backing of Solyndra, which could cost taxpayers more than a half-billion dollars, came as the politically well-connected business began an extensive lobbying campaign that appears to have blinded government officials to the company’s financial condition and the risks of the investment, according to a review of government documents and interviews with administration officials and industry analysts.

While no evidence has emerged that political favoritism played a role in what administration officials assert were merit-based decisions, Solyndra drew plenty of high-level attention. Its lobbyists corresponded frequently and met at least three times with an aide to a top White House official, Valerie B. Jarrett, to push for loans, tax breaks and other government assistance.

Administration officials lay the blame for Solyndra’s problems in part on the global collapse in the price of solar energy components, which forced the company to sell its innovative solar panels at less than it cost to make them. Some lawmakers on Capitol Hill question whether the firm’s executives may have engaged in a cover-up of their precarious financial condition, allegations the company denies.

But industry analysts and government auditors fault the Obama administration for failing to properly evaluate the business proposals or take note of troubling signs already evident in the solar energy marketplace.

“It was alarming,” said Frank Rusco, a program director at the Government Accountability Office, which found that Energy Department preliminary loan approvals — including the one for Solyndra — were granted at times before officials had completed mandatory evaluations of the financial and engineering viability of the projects. “They can’t really evaluate the risks without following the rules.”

The Energy Department’s senior staff has acknowledged in interviews the intense pressure from top Obama administration officials to rush stimulus spending out the door.

“We had to knock down some barriers standing in the way to get these projects funded,” Matthew C. Rogers, the Energy Department official overseeing the loan guarantee program, said in March 2009, just days before Solyndra got its provisional loan commitment. Mr. Rogers said Energy Secretary Steven Chu had been personally reviewing loan applications and urging faster action on them.

Two committees of Congress, the Department of Energy’s inspector general and the Department of Justice are now investigating what went wrong in the Solyndra case. In Washington, it has set in motion a highly partisan battle over the benefits or failings of Mr. Obama’s stimulus program.

Some Republican lawmakers have raised questions about political interference in the loan decision, pointing to the fact that George B. Kaiser, a billionaire from Tulsa, Okla., was a fund-raiser for Mr. Obama’s 2008 campaign and the backer of a foundation that is Solyndra’s leading investor. While he has met with top White House and administration officials multiple times, Mr. Kaiser and administration officials say they discussed issues related to his foundation, not Solyndra.

But during the period when Solyndra’s loan guarantee was under review and management by the Energy Department, the company spent nearly $1.8 million on Washington lobbyists, employing six firms with ties to members of Congress and officials of the Obama White House. None of the other three solar panel manufacturers that eventually got federal loan guarantees spent a dime on lobbyists.

Energy Department officials said the lobbying had no impact on their decisions. But Solyndra, which had been among 143 companies to express an interest in a loan guarantee and 16 that were asked to submit a formal application — ended up securing the first financial commitment. Solyndra’s loan guarantee was the highest of the four companies.

Tim Harris, the chief executive of Solopower, which got a $197 million loan guarantee last month to build solar panels in San Jose, Calif., said his company had never considered employing a Washington lobbyist to grease the application. “It was made clear to us early in the process that that was clearly verboten,” Mr. Harris said. “We were told that it was not only not helpful but it was not acceptable.”

If there was a single bet made by the Obama administration that would determine the success or failure of its investment in Solyndra, it centered on the global price its competitors pay for one of earth’s most common elements: silicon.

Solyndra’s unique tube-shaped solar panels — which harvest early morning and evening light for electricity instead of just midday sun — do not rely on silicon. But it assumed its competitors would continue to pay a relatively high price for silicon, allowing Solyndra to charge the premium required to turn a profit on its panels. It was an assumption Obama officials bought into. But industry experts outside the federal government, going back to 2008, were predicting silicon prices were headed for a steep fall.

Bush administration officials had started the review of the Solyndra application in May 2008. They were anxious to approve the deal, because members of Congress were complaining that the loan guarantee program, signed into law in 2005, still had not given out its first award. But in the final weeks of the administration, Energy Department officials put the brakes on any loan commitment to Solyndra, partly out of concern that its costs made the price of manufacturing power capacity significantly higher than its competitors.

The Obama administration, though, was determined to move ahead. “DOE is trying to deliver on the first loan guarantee within 60 days from inauguration,” one March 2009 e-mail from an Office of Management and Budget official said.

Damien LaVera, an Energy Department spokesman, said administration officials realized the Solyndra plan posed some certain risks. The loan program was designed to help finance cutting-edge projects that could not otherwise find enough private-sector investors.

“But we did not just take what this company was telling us,” Mr. LaVera said. “We did the analysis on our own and decided it was a good bet.”

But Shyam Mehta, a senior analyst at GTM Research who follows the solar energy industry, said that he questions just how careful this review was, given the obvious warning signs.

“There was just too much misplaced zeal at the Department of Energy for this company,” Mr. Mehta said.

Solyndra executives, seeking an edge in the competition for federal loan guarantees, began employing Washington lobbyists in 2008. The company stepped up its efforts in early 2009, retaining McBee Strategic Consulting. Five lobbyists employed by the McBee group eventually worked on Solyndra’s behalf, including Michael Sheehy, a former top aide to Representative Nancy Pelosi of California, the House Democratic leader. Solyndra has paid McBee Consulting $340,000 since 2009.

Steve McBee, the firm’s founder and a former Senate aide, did not return calls seeking comment, but in an April 2009 press release he said that his firm could help technology companies gain a chunk of the projected bonanza of $100 billion in federal money for clean-energy projects.

Mr. McBee said that lobbying was not allowed as part of the process. But in early 2009, the firm filed a disclosure form saying it was retained by Solyndra to lobby on stimulus act spending related to the Energy Department’s loan guarantee program. A critical piece of the stimulus bill removed a requirement that firms like Solyndra pay a substantial up-front fee to cover the risk of a loan, a provision that had slowed approvals of loan guarantees. Once that was removed, loans began to flow and Solyndra was the first to benefit.

Over the next three years, Solyndra retained two other lobbying firms, hired two in-house lobbyists and aggressively pushed for White House meetings to plead its case. Another lobbying and public relations firm with close ties to the White House — Glover Park Group — also worked on Solyndra’s behalf.

In January 2010, four months after the loan was finalized, Solyndra executives and lobbyists pressed Gregory S. Nelson, an aide to Ms. Jarrett, a senior adviser to Mr. Obama, for a meeting to boast about progress at the plant financed with federal money and to discuss a possible second loan, according to White House e-mails. That meeting occurred on Jan. 15, 2010, records show. White House scheduling officials later began talks that led to Mr. Obama’s visit in May.

But signs were increasing in 2010 that the company’s business plan was imploding. The dive in silicon prices, which had started in late 2008, accelerated by the end of 2010. Solyndra sales were growing, but so were its losses. It was forced to slash prices much lower than its costs in order to compete with conventional silicon panel producers. Trade publications began to question whether Solyndra would survive — even its own accountant in March 2010 said it had “substantial doubt about its ability to continue as a going concern.”

But Solyndra and its lobbyists continued to provide assurances to the White House and the Energy Department, which still could have stopped the flow of federal money that was being given out for construction of a new factory.

“We have no intention of going out of business,” David Miller, a Solyndra executive, wrote to Mr. Nelson, the White House aide, in July 2010. Mr. Miller, added in May 2011, as the cash crunch had severely worsened, that “we have good market momentum.”

Mr. Nelson wrote back encouraged. “Fantastic to hear that business is doing well,” he said, according to a May 2011 e-mail released by the White House. “Keep up the good work.”

Similar positive predictions were shared with members of Congress this year, after the company sought and received permission from the Obama administration to restructure its $535 million loan, which put private investors ahead of the government for some of the debt if the company was liquidated.

That disconnect has led some members of Congress to question if Solyndra was intentionally misleading officials in Washington.

“Even as late as this summer, Solyndra executives told us here in Washington that the company’s finances were improving,” said Representative Cliff Stearns, Republican of Florida, and the chairman of the panel leading the Solyndra inquiry. “Solyndra was never profitable, and it was obviously poorly managed and unviable in the global market.”

*******************************************************************

In Rush to Assist a Solar Company, U.S. Missed Signs

Luke Sharrett/The New York Times

President Obama toured Solyndra, a solar panel manufacturer in Fremont, Calif., in May 2010. There were signs that the company's business plan was imploding.

By ERIC LIPTON and JOHN M. BRODER

Published: September 22, 2011

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WASHINGTON — President Obama’s visit to the Solyndra solar panel factory in California last year was choreographed down to the last detail — the 20-by-30-foot American flags, the corporate banners hung just so, the special lighting, even coffee and doughnuts for the Secret Service detail.

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• Solyndra Executives to Invoke Fifth Amendment Rights (September 21, 2011)

• The Bay Citizen: Asking Why Employees of Solar Firm Lost Jobs (September 18, 2011)

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Solyndra has declared bankruptcy, laid off 1,100 workers and was raided by F.B.I. agents seeking evidence of possible fraud.

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“It’s here that companies like Solyndra are leading the way toward a brighter and more prosperous future,” the president declared in May 2010 to the assembled workers and executives. The start-up business had received a $535 million federal loan guarantee, offered in part to reassert American dominance in solar technology while generating thousands of jobs.

But behind the pomp and pageantry, Solyndra was rotting inside, hemorrhaging cash so quickly that within weeks of Mr. Obama’s visit, the company canceled plans to offer shares to the public. Barely a year later, Solyndra has become one of the administration’s most costly fumbles after the company declared bankruptcy, laid off 1,100 workers and was raided by F.B.I. agents seeking evidence of possible fraud.

Solyndra’s two top officers are to appear Friday before a House investigative committee where, their lawyers say, they will assert their Fifth Amendment right against self-incrimination.

The government’s backing of Solyndra, which could cost taxpayers more than a half-billion dollars, came as the politically well-connected business began an extensive lobbying campaign that appears to have blinded government officials to the company’s financial condition and the risks of the investment, according to a review of government documents and interviews with administration officials and industry analysts.

While no evidence has emerged that political favoritism played a role in what administration officials assert were merit-based decisions, Solyndra drew plenty of high-level attention. Its lobbyists corresponded frequently and met at least three times with an aide to a top White House official, Valerie B. Jarrett, to push for loans, tax breaks and other government assistance.

Administration officials lay the blame for Solyndra’s problems in part on the global collapse in the price of solar energy components, which forced the company to sell its innovative solar panels at less than it cost to make them. Some lawmakers on Capitol Hill question whether the firm’s executives may have engaged in a cover-up of their precarious financial condition, allegations the company denies.

But industry analysts and government auditors fault the Obama administration for failing to properly evaluate the business proposals or take note of troubling signs already evident in the solar energy marketplace.

“It was alarming,” said Frank Rusco, a program director at the Government Accountability Office, which found that Energy Department preliminary loan approvals — including the one for Solyndra — were granted at times before officials had completed mandatory evaluations of the financial and engineering viability of the projects. “They can’t really evaluate the risks without following the rules.”

The Energy Department’s senior staff has acknowledged in interviews the intense pressure from top Obama administration officials to rush stimulus spending out the door.

“We had to knock down some barriers standing in the way to get these projects funded,” Matthew C. Rogers, the Energy Department official overseeing the loan guarantee program, said in March 2009, just days before Solyndra got its provisional loan commitment. Mr. Rogers said Energy Secretary Steven Chu had been personally reviewing loan applications and urging faster action on them.

Two committees of Congress, the Department of Energy’s inspector general and the Department of Justice are now investigating what went wrong in the Solyndra case. In Washington, it has set in motion a highly partisan battle over the benefits or failings of Mr. Obama’s stimulus program.

Some Republican lawmakers have raised questions about political interference in the loan decision, pointing to the fact that George B. Kaiser, a billionaire from Tulsa, Okla., was a fund-raiser for Mr. Obama’s 2008 campaign and the backer of a foundation that is Solyndra’s leading investor. While he has met with top White House and administration officials multiple times, Mr. Kaiser and administration officials say they discussed issues related to his foundation, not Solyndra.

But during the period when Solyndra’s loan guarantee was under review and management by the Energy Department, the company spent nearly $1.8 million on Washington lobbyists, employing six firms with ties to members of Congress and officials of the Obama White House. None of the other three solar panel manufacturers that eventually got federal loan guarantees spent a dime on lobbyists.

Energy Department officials said the lobbying had no impact on their decisions. But Solyndra, which had been among 143 companies to express an interest in a loan guarantee and 16 that were asked to submit a formal application — ended up securing the first financial commitment. Solyndra’s loan guarantee was the highest of the four companies.

Tim Harris, the chief executive of Solopower, which got a $197 million loan guarantee last month to build solar panels in San Jose, Calif., said his company had never considered employing a Washington lobbyist to grease the application. “It was made clear to us early in the process that that was clearly verboten,” Mr. Harris said. “We were told that it was not only not helpful but it was not acceptable.”

If there was a single bet made by the Obama administration that would determine the success or failure of its investment in Solyndra, it centered on the global price its competitors pay for one of earth’s most common elements: silicon.

Solyndra’s unique tube-shaped solar panels — which harvest early morning and evening light for electricity instead of just midday sun — do not rely on silicon. But it assumed its competitors would continue to pay a relatively high price for silicon, allowing Solyndra to charge the premium required to turn a profit on its panels. It was an assumption Obama officials bought into. But industry experts outside the federal government, going back to 2008, were predicting silicon prices were headed for a steep fall.

Bush administration officials had started the review of the Solyndra application in May 2008. They were anxious to approve the deal, because members of Congress were complaining that the loan guarantee program, signed into law in 2005, still had not given out its first award. But in the final weeks of the administration, Energy Department officials put the brakes on any loan commitment to Solyndra, partly out of concern that its costs made the price of manufacturing power capacity significantly higher than its competitors.

The Obama administration, though, was determined to move ahead. “DOE is trying to deliver on the first loan guarantee within 60 days from inauguration,” one March 2009 e-mail from an Office of Management and Budget official said.

Damien LaVera, an Energy Department spokesman, said administration officials realized the Solyndra plan posed some certain risks. The loan program was designed to help finance cutting-edge projects that could not otherwise find enough private-sector investors.

“But we did not just take what this company was telling us,” Mr. LaVera said. “We did the analysis on our own and decided it was a good bet.”

But Shyam Mehta, a senior analyst at GTM Research who follows the solar energy industry, said that he questions just how careful this review was, given the obvious warning signs.

“There was just too much misplaced zeal at the Department of Energy for this company,” Mr. Mehta said.

Solyndra executives, seeking an edge in the competition for federal loan guarantees, began employing Washington lobbyists in 2008. The company stepped up its efforts in early 2009, retaining McBee Strategic Consulting. Five lobbyists employed by the McBee group eventually worked on Solyndra’s behalf, including Michael Sheehy, a former top aide to Representative Nancy Pelosi of California, the House Democratic leader. Solyndra has paid McBee Consulting $340,000 since 2009.

Steve McBee, the firm’s founder and a former Senate aide, did not return calls seeking comment, but in an April 2009 press release he said that his firm could help technology companies gain a chunk of the projected bonanza of $100 billion in federal money for clean-energy projects.

Mr. McBee said that lobbying was not allowed as part of the process. But in early 2009, the firm filed a disclosure form saying it was retained by Solyndra to lobby on stimulus act spending related to the Energy Department’s loan guarantee program. A critical piece of the stimulus bill removed a requirement that firms like Solyndra pay a substantial up-front fee to cover the risk of a loan, a provision that had slowed approvals of loan guarantees. Once that was removed, loans began to flow and Solyndra was the first to benefit.

Over the next three years, Solyndra retained two other lobbying firms, hired two in-house lobbyists and aggressively pushed for White House meetings to plead its case. Another lobbying and public relations firm with close ties to the White House — Glover Park Group — also worked on Solyndra’s behalf.

In January 2010, four months after the loan was finalized, Solyndra executives and lobbyists pressed Gregory S. Nelson, an aide to Ms. Jarrett, a senior adviser to Mr. Obama, for a meeting to boast about progress at the plant financed with federal money and to discuss a possible second loan, according to White House e-mails. That meeting occurred on Jan. 15, 2010, records show. White House scheduling officials later began talks that led to Mr. Obama’s visit in May.

But signs were increasing in 2010 that the company’s business plan was imploding. The dive in silicon prices, which had started in late 2008, accelerated by the end of 2010. Solyndra sales were growing, but so were its losses. It was forced to slash prices much lower than its costs in order to compete with conventional silicon panel producers. Trade publications began to question whether Solyndra would survive — even its own accountant in March 2010 said it had “substantial doubt about its ability to continue as a going concern.”

But Solyndra and its lobbyists continued to provide assurances to the White House and the Energy Department, which still could have stopped the flow of federal money that was being given out for construction of a new factory.

“We have no intention of going out of business,” David Miller, a Solyndra executive, wrote to Mr. Nelson, the White House aide, in July 2010. Mr. Miller, added in May 2011, as the cash crunch had severely worsened, that “we have good market momentum.”

Mr. Nelson wrote back encouraged. “Fantastic to hear that business is doing well,” he said, according to a May 2011 e-mail released by the White House. “Keep up the good work.”

Similar positive predictions were shared with members of Congress this year, after the company sought and received permission from the Obama administration to restructure its $535 million loan, which put private investors ahead of the government for some of the debt if the company was liquidated.

That disconnect has led some members of Congress to question if Solyndra was intentionally misleading officials in Washington.

“Even as late as this summer, Solyndra executives told us here in Washington that the company’s finances were improving,” said Representative Cliff Stearns, Republican of Florida, and the chairman of the panel leading the Solyndra inquiry. “Solyndra was never profitable, and it was obviously poorly managed and unviable in the global market.”

A version of this article appeared in print on September 23, 2011, on page A1 of the New York edition with the headline: In Rush To Assist A Solar Company, U.S. Missed Signs.

***************************************

Solyndra failure puts solar industry on defensive

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Thu Sep 22, 2011 5:52pm EDT

* Solyndra was isolated incident, solar industry says

* Industry wants key govt solar program extended into 2012

* Industry employs over 100,000 in U.S., costs are falling

By Nichola Groom

LOS ANGELES, Sept 22 (Reuters) - The U.S. solar industry, eager to shake off the shadow cast by Solyndra's high-profile collapse, has launched a full-scale public relations campaign as scrutiny of government support programs for renewable energy intensifies.

Solar industry officials are aiming to portray Solyndra's failure as an isolated incident in an industry that is otherwise thriving, thanks in part to support from Washington.

"A big part of what we're trying to do is correcting the record," said Rhone Resch, president of solar trade group the Solar Energy Industries Association, said in an interview. "You can't judge an industry by the bankruptcy of one company."

Resch and others point to fresh figures showing that the U.S. solar industry now employs more than 100,000 people at more than 5,000 companies.

In addition, installations of photovoltaic solar panels grew 17 percent in the second quarter from the first quarter, according to SEIA data, largely because the price of solar power is down 30 percent from a year ago, making it increasingly competitive with natural gas, coal and other fossil fuels.

"The cost of solar has dropped ferociously," Dan Shugar, chief executive of Fremont, California-based solar start-up Solaria Corp, said on a conference call with reporters in which he outlined the benefits of solar power versus nuclear, natural gas and coal.

Also on that call, the CEO of solar project developer Recurrent Energy, Arno Harris, blamed that price drop for Solyndra's failure, saying the company's technology couldn't keep up with a rapidly changing market.

"This is the way things work in innovative technology markets," Harris said. Recurrent is owned by Japan's Sharp Corp (6753.T)

FALLOUT FROM CONGRESSIONAL PROBE

Republican lawmakers in Washington are investigating not just Solyndra's $535 million loan guarantee from the U.S. Department of Energy, but all the remaining projects awaiting funding under that same program, which expires on Sept. 30.

Fallout from that probe may already be hitting the industry. One of the projects that received a conditional loan guarantee, a California solar power plant being built by industry heavyweight First Solar Inc (FSLR.O), said on Thursday it will not meet that deadline. [ID:nS1E78L0ET]

In a client note, UBS analyst Stephen Chin said Solyndra's bankruptcy earlier this month was one reason First Solar's Topaz project was unable to secure the loan guarantee. The company had no comment on Chin's statement.

A holdup in approval of outstanding loan guarantees would threaten several major U.S. solar projects, though the industry as a whole leans more heavily on a cash grant program that the industry's trade group is hoping Congress will extend beyond the end of this year.

Under that program, which is administered by the Treasury Department, solar and other renewable energy project owners can receive cash grants for up to 30 percent of the cost of a project in lieu of a tax credit. The program, which was created under the federal stimulus, has supported 45,000 jobs in more than 3,000 grants, according to SEIA's Resch.

"That is the single most important factor for why the solar industry has doubled in the last year and has doubled our employment over the past two years," Resch said, adding that getting Congress to extend the program into 2012 in the next three months is more challenging in the wake Solyndra's bankruptcy.

"It certainly prevents us from having a constructive dialogue about how to grow the economy and how to create jobs in the energy sector," Resch said. "We are caught in partisan gridlock that is going to make it very difficult to pass any legislation, let alone solar specific legislation," he said. (Editing by Steve Orlofsky)

***************************************

Share this page |

Posted 9/22/11 9:55 p.m.

CHICAGO (WLS) - Another top aide to President Obama is in Chicago talking about the bankruptcy of the solar power company Solyndra that got a big federal loan guarantee.

David Axelrod – Obama’s former senior adviser at the White House who is now back in Chicago running the president’s re-election campaign – is no joining former Chief of Staff Rahm Emanuel in denying any knowledge of the Solyndra deal.

“I don’t know anybody associated with Solyndra and I know nothing about the project,” Axelrod said.

(HEAR AXELROD'S RESPONSE HERE)

"How seriously has it hurt the president," Cameron asked.

“Now look, we have seeded clean energy technology projects all over this country. Many of them are very promising. Many of them are already showing success. And the fact is, when you invest in a large number of projects, some of them are not going to perform as they should. This was one of those cases,” Axelrod said.

But Republicans say it wasn’t necessary to put taxpayers on the hook for a half-billion dollar loan guarantee to meet that goal.

Last week Mayor Rahm Emanuel denied any knowledge of a developing scandal in Washington that dates back to his days as President Barack Obama’s chief of staff.

Emanuel was the chief of staff during the Obama administrations's green energy initiative when the loan was rushed through.

During a Chinatown news conference Friday, in which he was discussing his new wellness program, WLS Radio asked the mayor about his involvement with the Solyndra deal.

LISTEN: Hear Rahm's Response To Bill Cameron's Question - Click Here

“Bill, ya know, I’m focusing on a major announcement today for the city of Chicago,” Emanuel tells Bill Cameron, “I don’t actually remember that or know about it. So, what I’m dealing is with what I’m dealing with here today.”

When the Mayor was asked if he thought there was a due diligence on the deal, he responded by saying, “I’m talking about healthcare today.”

Internal emails uncovered by investigators for the House Energy and Commerce Committee show the Obama administration was keenly monitoring the progress of the loan, even as analysts were voicing serious concerns about the risk involved. "This deal is NOT ready for prime time," one White House budget analyst wrote in a March 10, 2009 email, nine days before the administration formally announced the loan.

"If you guys think this is a bad idea, I need to unwind the W[est] W[ing] QUICKLY," wrote Ronald A. Klain, who was chief of staff to Vice President Joe Biden, in another email sent March 7, 2009. The "West Wing" is the portion of the White House complex that holds the offices of the president and his top staffers.

Emanuel began his duties as White House chief of staff on January 20, 2009 and resigned on October 1, 2010 in order to pursue a bid to succeed Richard M. Daley as mayor of Chicago.

Leading GOP figures believe there was a gross negligence on the deal. The Republican-led House has been investigating the Obama administration's green energy loan program for months. That probe took on new urgency two weeks ago, when Solyndra abruptly shut its doors and laid off 1,100 employees. Last week, the FBI raided the factory as part of a joint investigation with the Energy Department's inspector general.

© Content Copyright 2011 WLS Radio 890AM and WLSAM.com. This material may not be published, broadcast, rewritten or

 

************************************

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Solyndra Said to Have Violated Terms of Its U.S. Loan

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By DEBORAH SOLOMON

Solyndra LLC had such steep financial problems in late 2010 that the company violated terms of its loan-guarantee agreement with the Department of Energy and technically defaulted on its $535 million loan, according to people familiar with the matter.

Report on Solyndra

See the Congressional Research Service's report on the solar-panel maker.

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The failed solar-panel maker, which is under numerous criminal and congressional investigations, ran so short of cash in December 2010 that it was unable to satisfy certain terms of its U.S. loan agreement, these people said. The agreement required Solyndra to provide $5 million in equity to a subsidiary building its factory but cash-flow problems prevented those payments.

WSJ's Ryan Tracy reports a new Congressional report says warnings about Solyndra's competitive abilities came out before the government awarded the company a $535 million loan guarantee and the company's subsequent collapse.

The Energy Department ultimately restructured the loan agreement to help keep the company afloat and Solyndra continued to draw money from its loan.

Solyndra's cash-flow problems in late 2010 had previously come to light but it was not known that the company technically defaulted on its loan and violated its agreement with the U.S. government.

The company's financial problems prompted the Energy Department early this year to allow it to reshuffle its debt. Under the arrangement, private investors agreed to provide a new $75 million loan and won the right to be paid ahead of the government if the company was liquidated.

The default is the latest indication of the serious financial troubles afflicting California-based Solyndra, which filed for bankruptcy protection earlier this month. It will likely add to questions surrounding the Obama administration's backing for the company even as its financial problems mounted.

Administration officials have defended the initial loan guarantee and subsequent restructuring, saying they were trying to protect taxpayers. Jonathan Silver, executive director of the loan program, recently told lawmakers the government faced the difficult choice of either forcing Solyndra to close its doors or approving the restructuring to give it "a fighting chance at success and the government a higher expected recovery on its loan."

On Tuesday, U.S. Bankruptcy Judge Mary Walrath of Delaware cleared the way for Solyndra's assets to be auctioned next month.

The company was the first to receive a loan guarantee under a program begun by President George W. Bush and expanded as part of President Barack Obama's 2009 economic stimulus package. Republicans have accused the Obama administration of rushing the guarantee for political reasons, and emails have surfaced showing administration officials ignored warning signs about the company's health.

Solyndra's problems came to a head in November 2010 when it told the Energy Department it needed $150 million to make it through early 2012, at which time it believed its cash flow would improve. On Dec. 1, 2010, it was unable to make a $5 million payment to its subsidiary and technically defaulted on its loan.

The loan was officially restructured in February 2011, giving the company enough money to carry it through August. The company, which had drawn down $475 million of the U.S. loan as of Dec. 31, 2010, ended up borrowing $527 million before its bankruptcy.

Rep. Cliff Stearns of Florida, who is heading the Republican congressional investigation into the company, said, "Solyndra ran out of cash in December 2010, yet DOE continued to ignore the red flags and astonishingly doubled down on a bad bet and restructured the loan, further putting taxpayers at risk for what could now be a half billion dollars."

Concerns about the program and its risk controls were raised several times by the Energy Department's inspector general, Gregory Friedman. In a March 2011 report, Mr. Friedman said his office "found that the Loan Guarantee Program could not always readily demonstrate, through systematically organized records, including contemporaneous notes, how it resolved or mitigated relevant risks prior to granting loan guarantees." A report in 2009 also faulted the loan-guarantee program's controls.

There are also questions about whether the Obama administration should have known about Solyndra's problems even before the loan guarantee was made. In a previously undisclosed Sept. 9 report, the Congressional Research Service said that by the time of the September 2009 guarantee one of the company's key advantages—the fact it didn't use high-priced polysilicon as competitors did—had disappeared.

Polysilicon cost more than $400 per kilogram in 2008 but dropped to slightly more than $50 per kilogram in September 2009, the report said.

White House officials received assurances from Solyndra as recently as May 2011 that its finances were solid, with the company dismissing concerns raised in media reports. Mr. Silver, in a radio interview in May, said Solyndra was employing more workers than in 2009 and added: "The story has been a little bit misunderstood."

—Ryan Tracy contributed to this article.

 

Solyndra’s $733M Plant Had Robots, Spa Showers

By Alison Vekshin and Mark Chediak - Wed Sep 28 16:27:33 GMT 2011

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Solar panels sit at Solyndra Inc. at their manufacturing plant in Fremont, California. Photographer: Tony Avelar/Bloomberg

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“That’s a lot of money that went into that factory and I just don’t get how that factory is going to make this company successful,” said Barry Cinnamon, chief executive officer at Westinghouse Solar, a Solyndra LLC competitor. “It’s one of those neck-snapping things every time you drove down the highway." Photo: David Paul Morris/Bloomberg

The glass-and-metal building that Solyndra LLC began erecting alongside Interstate 880 in Fremont, California, in September 2009 was something the Silicon Valley area hadn’t seen in years: a new factory.

It wasn’t just any factory. When it was completed at an estimated cost of $733 million, including proceeds from a $535 million U.S. loan guarantee, it covered 300,000 square feet, the equivalent of five football fields. It had robots that whistled Disney tunes, spa-like showers with liquid-crystal displays of the water temperature, and glass-walled conference rooms.

“The new building is like the Taj Mahal,” John Pierce, 54, a San Jose resident who worked as a facilities manager at Solyndra, said in an interview.

The building, designed to make far more solar panels than Solyndra got orders for, is now shuttered, and U.S. taxpayers may be stuck with it. Solyndra filed for bankruptcy protection on Sept. 6, leaving in its wake investigations by Congress and the Federal Bureau of Investigation and a Republican-fueled political embarrassment for the Obama administration, which issued the loan guarantee. About 1,100 workers lost their jobs.

Amid the still-unfolding postmortems, the factory stands as emblematic of money misspent and the Field of Dreams ethos that seemed to drive the venture, said Ramesh Misra, a solar-industry analyst in Los Angeles for Brigantine Advisors.

Cylindrical Modules

“When you don’t have the demand, you can’t go into something with the attitude, ‘Build it and they will come,’” Misra said. “You have to make sure the customers are already there when you build it.”

He is skeptical of the company’s statement, in a press release on the groundbreaking for the plant, that it had a backlog of $2 billion in orders for its cylindrical solar modules for commercial rooftops, which it touted as cheaper to install and more efficient than competing flat panels. “Backlog” is a term sometimes used loosely in the industry and may not represent firm orders at all, he said.

David Miller, a Solyndra spokesman, didn’t respond to a phone call and e-mail seeking comment.

Solyndra was the dream of founder Chris Gronet, who received a Ph.D. in semiconductor processing at Stanford University and had spent 11 years as an executive at Applied Materials Inc. (AMAT) He adopted as the company’s motto, “What we do here will someday change the world.” Gronet didn’t return a phone call seeking comment.

Prices Plunge

U.S. Energy Secretary Steven Chu and then-California Governor Arnold Schwarzenegger attended the 2009 groundbreaking for the plant. At the event, Chu said the U.S. solar-energy industry was losing out to countries like China and the loan guarantee, the first awarded by the department under President Barack Obama’s 2009 economic stimulus plan, would ensure the company’s orders would be filled by U.S. workers.

Even as Chu, Gronet and Schwarzenegger were thrusting their shovels into the dirt, market forces were working against Solyndra. The price of polysilicon, the main ingredient in competing traditional solar panels, had plunged. By the time the plant opened last January, the price would be down about 40 percent from when Solyndra got the loan guarantee. Chinese companies were ramping up production of their ever-cheaper competing flat panels.

Solyndra executives rushed construction in a race to fill orders, putting some work on a 24-hour, seven-day schedule. The factory was up and ready for equipment installation in 10 months. The project employed more than 3,000 union construction workers, according to a Solyndra background sheet.

‘First Class’

“They were anticipating large production,” Juancho Suntay, 51, a former Solyndra equipment maintenance technician, said in an interview. “That’s why they wanted to have a state- of-the-art factory.”

The plant features 19 loading docks, four electric car charging stations in the parking lot and landscaping of wild grass and a rock garden. An automated rail system moved parts through the assembly process.

Robots that resembled “a big freezer with wheels” maneuvered around the factory transporting panels from one machine to another, said George Garma, 49, a former Solyndra equipment maintenance technician from Fremont. The Disney tunes alerted workers to the robots’ presence.

“It was first class,” David Chan, 51, who was an information-technology contractor for Solyndra, said in an interview. “I’ve been in the business for 25 years and have seen some elaborate buildings. I’ve never seen a facility like it.”

Costly Real Estate

The plant caught the attention of competitors. “Everybody I know in the solar industry would remark on it and say ‘Boy, that’s a really, really big factory,’” said Barry Cinnamon, chief executive officer at Westinghouse Solar Inc., a Campbell, California-based solar-panel company that manufactures in China.

“That’s a lot of money that went into that factory,” Cinnamon said in an interview. “It’s one of those neck-snapping things every time you drove down the highway.”

Commercial real-estate agents in the region wondered why a new factory was being built in the Silicon Valley region, the epicenter of some of the priciest real estate in the country, where most new construction consists of office space.

“There hasn’t been a factory or warehouse building built in Silicon Valley in well over 10 years,” Jeff Fredericks, managing partner at Colliers International in San Jose, said in an e-mail.

The asking rate for industrial properties in Silicon Valley is the fourth-most expensive in the U.S., according to Jack DePuy, Bay Area research manager at CB Richard Ellis in Foster City, California.

Machinery Breakdowns

About 11.4 percent, or 950,801 square feet, of industrial space was vacant in Fremont in September 2009, according to data from Colliers.

“There was available space that we talked about with them,” Bob Wasserman, Fremont’s mayor, said in an interview. “It was their decision that they needed a new building. Was that a good decision? It didn’t turn out to be.”

John Olenchalk, senior vice president at Kidder Mathews, a commercial real-estate firm in Redwood City, said Solyndra executives considered existing space, including a former Sun Microsystems Inc. facility in nearby Newark that had 218,000 square feet of production space. The company wanted more space and to be near its existing operations, he said.

Solyndra used the new plant for the first phase of panel production. An older facility nearby finished and assembled the panels, former employees said. Problems developed at the old plant, when machinery wouldn’t work properly and needed constant repair, workers said.

“Everybody was talking about it,” said Edward Santos, 44, a former warehouse worker in Solyndra’s logistics department.

Advantage Lost

“A significant percentage of the product we built went into a dumpster because it was defective,” said Craig Ewing, 55, a former maintenance technician. “It seemed like the company accepted that,” he said.

Even if the old plant hadn’t had problems, by the time the company opened the new facility it was clear that Solyndra had lost whatever cost advantage it might have had, said Michael Butler, chairman and CEO of Cascadia Capital LLC, a Seattle- based investment-banking firm that advises renewable-energy companies.

“I’m sure there was a lot of panic at that point, because I’m sure that everyone saw the writing on the wall,” Butler said.

Workers noticed inventory piling up. “The drivers would tell us that the warehouses are getting full,” Santos said. “Sometimes, they’d stay there one or two days before the material was unloaded.”

About two weeks before the company closed, Solyndra CEO Brian Harrison gave an upbeat speech at the new factory, said Romie Sumera, 58, a former equipment-maintenance technician.

Solyndra was getting leads on new orders from companies including Wal-Mart Stores Inc., Harrison told them.

To contact the reporters on this story: Alison Vekshin in San Francisco at avekshin@bloomberg.net; Mark Chediak in San Francisco at mchediak@bloomberg.net.

To contact the editors responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net; Susan Warren at susanwarren@bloomberg.net.

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olyndra Said to Have Violated Terms of Its U.S. Loan

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By DEBORAH SOLOMON

Solyndra LLC had such steep financial problems in late 2010 that the company violated terms of its loan-guarantee agreement with the Department of Energy and technically defaulted on its $535 million loan, according to people familiar with the matter.

Report on Solyndra

See the Congressional Research Service's report on the solar-panel maker.

View Document

More photos and interactive graphics

The failed solar-panel maker, which is under numerous criminal and congressional investigations, ran so short of cash in December 2010 that it was unable to satisfy certain terms of its U.S. loan agreement, these people said. The agreement required Solyndra to provide $5 million in equity to a subsidiary building its factory but cash-flow problems prevented those payments.

WSJ's Ryan Tracy reports a new Congressional report says warnings about Solyndra's competitive abilities came out before the government awarded the company a $535 million loan guarantee and the company's subsequent collapse.

The Energy Department ultimately restructured the loan agreement to help keep the company afloat and Solyndra continued to draw money from its loan.

Solyndra's cash-flow problems in late 2010 had previously come to light but it was not known that the company technically defaulted on its loan and violated its agreement with the U.S. government.

The company's financial problems prompted the Energy Department early this year to allow it to reshuffle its debt. Under the arrangement, private investors agreed to provide a new $75 million loan and won the right to be paid ahead of the government if the company was liquidated.

The default is the latest indication of the serious financial troubles afflicting California-based Solyndra, which filed for bankruptcy protection earlier this month. It will likely add to questions surrounding the Obama administration's backing for the company even as its financial problems mounted.

Administration officials have defended the initial loan guarantee and subsequent restructuring, saying they were trying to protect taxpayers. Jonathan Silver, executive director of the loan program, recently told lawmakers the government faced the difficult choice of either forcing Solyndra to close its doors or approving the restructuring to give it "a fighting chance at success and the government a higher expected recovery on its loan."

On Tuesday, U.S. Bankruptcy Judge Mary Walrath of Delaware cleared the way for Solyndra's assets to be auctioned next month.

The company was the first to receive a loan guarantee under a program begun by President George W. Bush and expanded as part of President Barack Obama's 2009 economic stimulus package. Republicans have accused the Obama administration of rushing the guarantee for political reasons, and emails have surfaced showing administration officials ignored warning signs about the company's health.

Solyndra's problems came to a head in November 2010 when it told the Energy Department it needed $150 million to make it through early 2012, at which time it believed its cash flow would improve. On Dec. 1, 2010, it was unable to make a $5 million payment to its subsidiary and technically defaulted on its loan.

The loan was officially restructured in February 2011, giving the company enough money to carry it through August. The company, which had drawn down $475 million of the U.S. loan as of Dec. 31, 2010, ended up borrowing $527 million before its bankruptcy.

Rep. Cliff Stearns of Florida, who is heading the Republican congressional investigation into the company, said, "Solyndra ran out of cash in December 2010, yet DOE continued to ignore the red flags and astonishingly doubled down on a bad bet and restructured the loan, further putting taxpayers at risk for what could now be a half billion dollars."

Concerns about the program and its risk controls were raised several times by the Energy Department's inspector general, Gregory Friedman. In a March 2011 report, Mr. Friedman said his office "found that the Loan Guarantee Program could not always readily demonstrate, through systematically organized records, including contemporaneous notes, how it resolved or mitigated relevant risks prior to granting loan guarantees." A report in 2009 also faulted the loan-guarantee program's controls.

There are also questions about whether the Obama administration should have known about Solyndra's problems even before the loan guarantee was made. In a previously undisclosed Sept. 9 report, the Congressional Research Service said that by the time of the September 2009 guarantee one of the company's key advantages—the fact it didn't use high-priced polysilicon as competitors did—had disappeared.

Polysilicon cost more than $400 per kilogram in 2008 but dropped to slightly more than $50 per kilogram in September 2009, the report said.

White House officials received assurances from Solyndra as recently as May 2011 that its finances were solid, with the company dismissing concerns raised in media reports. Mr. Silver, in a radio interview in May, said Solyndra was employing more workers than in 2009 and added: "The story has been a little bit misunderstood."

—Ryan Tracy contributed to this article.

Write to Deborah Solomon at deborah.solomon@wsj.com

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Solyndra Nation

Sep 26, 2011, Vol. 17, No. 02 • By MATTHEW CONTINETTI

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To find a metaphor for the failed Obama presidency, look no further than Solyndra. Before it went bankrupt, the solar panel manufacturer was more than the recipient of a $535 million loan guarantee from the federal government. It was the model for the White House effort to put the American economy on a “new foundation.”

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Solyndra was environmentally friendly, technologically advanced, and politically correct. It was an exporter, not an importer. Politicians and government were instrumental in the company’s growth. The money disbursed to Solyndra, it was said, would “multiply” throughout the economy, creating jobs and increasing consumer spending. “Keep up the good work!” wrote an administration official to a Solyndra executive last May. “We’re cheering for you.”

That was before the bankruptcy filing. Before the 1,100 lost jobs and the empty 650,000-square-foot production facility in Fremont, California. Before the FBI raid of Solyndra headquarters. Before the House Energy Committee released emails suggesting the Solyndra loan was rushed and improperly vetted. These days the White House is tight-lipped. The only cheering comes from Republicans sensing a possible Obama scandal.

Emphasis on “possible.” So far, the leaked Solyndra emails raise more questions than they answer. We’ve yet to see hard evidence that the White House improperly pressured the bureaucracy to approve a risky deal for a supporter. Republicans should also remember that the Solyndra loan was issued under a lobbyist-friendly 2005 law passed by a GOP-controlled Congress and signed by President Bush. The real Solyndra scandal isn’t that White House staff were overeager for a photo-op. It’s that America increasingly resembles a bankrupt clean energy company.

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In today’s economy, risks are socialized while profit is privatized. The government uses deficit spending to shape investment decisions and support markets that otherwise wouldn’t exist. Political connections determine the recipients of government largesse. Rentiers conceal their self-interest behind the organic hemp cloak of environmentalism and global “competitiveness.” The illusion can be maintained for a time, but in the end the bill comes due. There’s no money left. And everything disappears.

If Solyndra had taken off, its private investors would have become extraordinarily rich. But it failed—and the American taxpayer has to foot the bill. And many other bills, too: The Solyndra loan was part of a $38.6 billion program to aid green energy that the Washington Post says has created exactly 3,545 jobs. (That’s $10,888,575 in loans per job, for those of you without a calculator.)

Government meddling isn’t limited to alternative energy. The U.S. Treasury stands behind Fannie Mae and Freddie Mac, General Motors, and AIG, not to mention all the other companies that profit from loopholes, sweetheart loans, and subsidies. The cliché has it that government is picking winners and losers. But that’s wrong: It picks only losers. Winning companies don’t need public support.

Fiscal and monetary policy serve the well connected. Wall Street titans benefited not only from TARP but also from the Federal Reserve’s money creation. Labor dictated the terms of the auto bailout. The health insurers were more than happy when the Democratic Congress handed them millions of new paying customers. The CEOs of GE and American Express got to sit next to the first lady at the president’s last address to Congress. Are we really surprised to learn that the Solyndra loan was approved a week after George Kaiser, the firm’s single largest shareholder and an Obama donor, met with White House officials?

The fastest way to earn government support is to say your efforts protect the environment and help America “win the future” over China and India. Solyndra was a twofer. “It’s here that companies like Solyndra are leading the way toward a brighter and more prosperous future,” President Obama said when he visited company headquarters on May 26, 2010. “Around the world, from China to Germany, our competitors are waging a historic effort to lead in developing new energy technologies.” Without intervention, he went on, “We risk falling behind.”

The event at which Obama said those words was well orchestrated. Throughout the Solyndra affair, the White House talent at “optics” was apparent. Berlin, Denver, Grant Park, Fremont—Obama knows how to put on a show. But he and his administration were so concerned with the images on the evening news that they ignored the invisible consequences of fiscal and monetary stimulus. “It almost always happens that when the immediate consequence is favorable, the later consequences are disastrous,” wrote the nineteenth-century economist Frédéric Bastiat. 

Such was the case with Solyndra, and with Obama. Do they have to take the rest of us down with them?

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