Solyndra May Have Lied to Get Loan Guarantee, Watchdog Says

(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

jsnyder24@bloomberg.net

To contact the editors responsible for this story:

Jon Morgan at

jmorgan97@bloomberg.net

Steve Geimann

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