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President Obama committed, Monday, to financing a new generation of “alternative energy” industrialists under his Clean Power Plan, but one of the original Department of Energy program loan recipients, solar power company Solyndra, reportedly misled DOE officials in pursuit of government money, a federal investigators report has found.
According to the Energy Department’s Inspector General, who conducted a four-year investigation alongside the FBI, while Solyndra claimed that they had a guaranteed $2.2 billion in firm contracts for their innovative, cylindrical solar panels, Solyndra had quietly offered secret discounts to all of its customers, many of whom never made good on their full contracts.
According to the Washington Post:
Solyndra’s leaders engaged in a “pattern of false and misleading assertions” that drew a rosy picture of their company enjoying robust sales while they lobbied to win the first clean energy loan the new administration awarded in 2009, a lengthy investigation uncovered. The Silicon Valley start-up’s dramatic rise and then collapse into bankruptcy two years later became a rallying cry for critics of President Obama’s signature program to create jobs by injecting billions of dollars into clean energy firms…
Solyndra officials told the government in 2009, for example, that they had firm contracts to sell $2.2 billion worth of their unique cylindrical solar panels over the next five years. But behind the scenes, investigators found, Solyndra was struggling with customers who were balking at the high panel prices, arranging secret side deals to pay discounted prices and refusing to buy as many panels as they once promised.
In addition, investigators discovered that Department of Energy employees, in charge of reviewing Solyndra’s loan application, felt “pressure” from inside the Administration to approve the Solyndra loan, and so overlooked many of the warning bells in the application’s finer print.
If you recall, in one of his first acts in office, President Obama approved a whopping $787 billion federal stimulus program, part of which would be dedicated to funding upstart alternative energy companies. The Department of Energy was responsible for overseeing these loans, and many of the loans were awarded to major campaign donors and bundlers, rather than to deserving alternative energy programs. According to Peter Schweizer, $16.4 billion of the $20 billion in DOE loans granted went to “companies either run by or primarily owned by Obama backers,” members of his finance committee and Democratic National Committee mega-donors. The program itself was run by Steve Spinner, a major Obama donor and finance committee member who “happened” to join the DOE as their “chief strategic operations officer” after Obama’s 2008 campaign. Spinner was ultimately put in charge of the alternative energy loan program.
Solyndra was no exception to the crony rule; according to a report compiled for National Review, Solyndra’s biggest backer was the Kaiser Family Foundation, run by George Kaiser, a major donor to Obama’s campaign (at one event for Obama, Kaiser reportedly bundled more than a quarter million for Obama’s 2008 campaign). Kaiser Family Foundation’s primary investment arm is Argonaut Ventures LLC, which was also Solyndra’s largest shareholder. While the DOE was considering Solyndra’s loan, Kaiser himself visited the White House, and Solyndra officials had meetings with the President and his staff no fewer than 20 times. In the end, although Solyndra had been turned down for loans under the Bush Administration because of its questionable economics, and against the better judgment of specific officials at the DOE and Office of Management and Budget, Solyndra received $535 million in DOE loans, which they then used in an ill-fated effort to go public.
After Solyndra finally collapsed and shut its doors, the Administration and friendly Democrats in Congress were quick to deny any wrongdoing in the DOE loan process, blaming Solyndra’s abysmal failure on the economic downturn, and reassuring now skeptical taxpayers that Solyndra had at least created a “ripple” effect, sparking other solar energy companies to take on new and innovated processes. Taxpayers were left on the hook for about $527 million of the $535 million loan – but George Kaiser, whose investment company’s claim was ahead of the Federal government’s in the bankruptcy process, managed to recover most of their investment from auctioned assets, leaving nothing for taxpayers or the DOE to recover for their loans.
The Inspector General’s report goes into detail on exactly how Solyndra inflated it’s financial status, from offering its customers quiet discounts, to submitting income spreadsheets to clearly disinterested DOE analysts, to giving fake excuses to DOE consultants so investigators wouldn’t contact any real customers for their opinion. Solyndra, for its part, maintains that it provided all necessary information to the DOE, and that the DOE, not Solyndra, had rushed through the loan process in order to approve the money before a major press event – a now-infamous speech President Obama gave at Solyndra’s California headquarters. The IG said it would not pursue a detailed investigation into political pressure the DOE may have felt from both Solyndra and the Administration, but did note that pressure was part of the reason they felt the DOE did not take appropriate measures in vetting the loan to begin with.
So far, the Department of Justice, despite seemingly having enough evidence to pursue a case in Califrnia, has so far declined to press charges for fraud against Solyndra and its executives. The Inspector General plans to press DOJ officials to take a second look at the case.