(Bloomberg) — Solyndra LLC executives may have
intentionally misled the Energy Department as they sought $535
million in federal loan guarantees, the agency’s inspector
general concluded after a four-year investigation.
“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 or mislead the department,” Gregory Friedman, the Energy Department’s inspector general, wrote in an
Aug. 24 report released Wednesday.
The department’s review of the Solyndra application was
“less than fully effective,” according to the report.
Solyndra collapsed two years after it received its first
U.S. loan in 2009. Its September 2011 bankruptcy led to an
investigation by congressional Republicans and withering
criticism of the loan guarantee program, which had been funded
by the 2009 economic stimulus program. It’s failure became an
issue in the 2012 presidential campaign.
The Justice Department also investigated the handling of
the Solyndra loan, but the inspector general was notified early
this year that no criminal charges would be filed, according to
the report.
The watchdog’s findings are “consistent with the facts”
already known, Energy Department spokesman Eben Burnham-Snyder
said in a statement. He pointed to the conclusion that Solyndra
officials’ actions “were at the heart” of the case and
undermined the agency’s ability to monitor the process.
Rigorous Reviews
The department has made improvements to the loan guarantee
program to make reviews more rigorous, Burnham-Snyder said.
The investigation by the Republican-led Congress largely
focused on whether Solyndra investor and Democratic donor George
Kaiser influenced the department’s decision. Republicans weren’t
able to show a link, but lawmakers said Energy Department
officials missed “red flags” showing the company was in
trouble as they lent it more money.
The allegations of political pressure weren’t a focus of
the inspector general. But employees told auditors that they
felt “tremendous pressure” to process the loan guarantees,
based on the “significant interest in the program” by
department leadership, the White House, Congress and the
applicants themselves, the report states.
Not ‘Forthcoming’
As early as November 2008, Solyndra officials were being
“less than forthcoming,” the audit found. They cited four
sales contracts valued at about $1.4 billion, but one customer
accounting for about $325 million of the total told the company
it didn’t intend to buy more panels unless Solyndra lowered its
costs, according to the audit report.
Solyndra executives also knew they had understated the
costs of its panels in its application for the loan guarantee.
But the company didn’t pass on that information before the loan
was approved.
The report also lists opportunities missed by department.
In June 2009, Solyndra notified a consultant working for the
department that one sales contract had fallen through.
Auditors found no evidence that the consultant told the
department, even though it might have indicated prospective
business “was not nearly as robust as that portrayed by
Solyndra’s executives.”
Friedman said the episode likely cost taxpayers more than
$500 million and a “loss of confidence in the loan guarantee
program.”
To contact the reporter on this story:
Jim Snyder in Washington at
To contact the editors responsible for this story:
Jon Morgan at
Steve Geimann