WASHINGTON (AP) - A four-year investigation has concluded that officials of the solar company Solyndra misrepresented facts and omitted key information in their efforts to get a $535 million loan guarantee from the federal government.
WASHINGTON (AP) — A four-year investigation has concluded that officials of the solar company Solyndra misrepresented facts and omitted key information in their efforts to get a $535 million loan guarantee from the federal government.
The company's collapse soon after getting federal backing provided ammunition to lawmakers and other critics who portrayed it as wasteful government spending. The company's failure likely will cost taxpayers more than $500 million.
The report by the Energy Department's inspector general was released Wednesday. It's designed to provide federal officials with lessons learned as it proceeds to grant billions of dollars in additional loan guarantees. The inspector general found fault with the Department of Energy, describing its due diligence work as "less than fully effective." The report also said department employees felt tremendous pressure to process loan guarantee applications.
In the end, however, the inspector general said the actions of the Solyndra officials "were at the heart of this matter."
"In our view, the investigative record suggests that the actions of certain Solyndra officials were, at best, reckless and irresponsible or, at worst, an orchestrated effort to knowingly and intentionally deceive and mislead the department," the IG's report said.
A federal loan guarantee program for energy projects was established in 2005 during President George W. Bush's administration. Four years later, the Democratic-led Congress passed an economic stimulus bill that substantially expanded the program. In the ensuing two years, the department disbursed more than $500 million to Solyndra, but in September 2011, the company laid off 1,100 employees, ceased operations and filed for bankruptcy protection. Obama personally visited the plant in 2010 to cite it as an example of economic progress stemming from the Democratic-led stimulus bill.
The IG's report did not provide any response to its findings from a Solyndra representative. Nor did it identify by name any particular Solyndra leader who gave misleading information. Miles Ehrlich, counsel for the company's former CEO, Chris Gronet, disputed the findings. He said the allegations were investigated by three of the most aggressive federal prosecutors in the country, and each time, "they rejected this DOE spin as contrary to the actual facts."
"Solyndra executives were completely truthful and accurate in their representations during this loan process, and the DOE was never misled about Solyndra's business or prospects," Ehrlich said.
Ehrlich said the real cause of Solyndra's failure had nothing to do with fraud, but was caused by the unexpected dumping of solar panels subsidized by China's government.
The report notes that federal prosecutors and the Federal Bureau of Investigation also participated in the interviewing of witnesses and the examination of hundreds of thousands of documents. In early 2015, the Department of Justice informed the inspector general's office that it would not pursue criminal prosecution of any Solyndra officials.
The inspector general's report said the department relied on third-party evaluations for part of its analysis of Solyndra. In one case, an engineering firm, R.W. Beck, Inc., issued a report on the solar panel market relying on company representations that it had $1.4 billion in revenue under contract through 2012. The report said Solyndra's "firm" sales contracts supported its financial model. But, by the time Beck issued its final report, all four of Solyndra's customers had been offered price concessions.
"Solyndra's failure to directly disclose these significant material changes in its contractual relationships distorted the view the department and its consultants had of the market for Solyndra's products," the inspector general said.
Solyndra was also required to hire an outside firm, Fitch Ratings Inc., to prepare a credit assessment of the project, located in Fremont, Calif. A Fitch official told investigators that he asked Solyndra if any contract customers had received price concessions and was told no. Additionally, the company's largest customer had informed the company it would not buy more panels in 2009 because Solyndra's price was too high. A Fitch official told investigators that if it had been aware of price concessions it would have assigned Solyndra a lower credit rating.
The report was less detailed about the Energy Department's shortcomings in conducting due diligence. It said the department needed to consider using "new and more intrusive validation techniques." It also said consultants the department hires must be held accountable for their work.
Solyndra's failure was the subject of numerous congressional hearings and a report from Republicans on the House Energy and Commerce Committee. The August 2012 report concluded that Solyndra was a cautionary tale on how political pressures and other factors can result in poor decision-making.
"The red flags about Solyndra's financial condition and the turbulence in the solar market were there for DOE to see when it reviewed Solyndra's application in 2009. DOE staff and (Office of Management and Budget) staff noted these concerns at the time the loan guarantee was under consideration," the congressional report concluded.