- Pope Francis wins another ‘Person of the Year’ — from gay rights magazine
- Rep. Steve Stockman: Give my campaign $10, and you’ll get an Obama barf bag
- Putin: Russia to buy $15 billion in Ukraine bonds
- Expert: Obamacare ‘death spiral’ fears exaggerated
- Alabama firefighters dig for survivors of apartment blast
- Big Sur wildfire destroys home of firefighting chief
- ‘ ’Twas the Night Before Christmas’ set for mock trial to argue authorship
- Angela Merkel’s third term as Germany’s chancellor to be marked by move to left
- Mega Millions entices with record-setting jackpot: Half a billion so far
- Dennis Rodman heads to North Korea — despite execution, political purge
Bankruptcy scenario played out before Solyndra collapse
Before solar-panel maker Solyndra LLC went bankrupt, the U.S. Department of Energy — which had signed off on more than a half-billion dollars in loans — approved paying up to $1.1 million for an investment bank’s advice on restructuring Solyndra “both in and out of bankruptcy,” records show.
The hiring of investment bank Lazard Ltd. before California-based Solyndra filed for bankruptcy this month and then saw its offices raided by the FBI reflects an earlier recognition within the government that the company, which had won praise from the White House and Energy Secretary Steven Chu, could be on the verge of collapsing.
Solyndra announced plans on Aug. 31 to layoff 1,100 employees, suspend operations and file for bankruptcy, a move the company called unexpected and blamed on foreign competition and a global oversupply of solar panels.
Six days earlier, the Energy Department signed a no-bid contract with investment powerhouse Lazard that foretold of a potential bankruptcy, though records show the effective date of the contract was even earlier, on Aug. 12. The contract was not competitively bid because the department said there was only one source for the services required.
Lazard could earn $1,180,000 under the contract, which will expire on Dec. 15. A company spokeswoman declined to comment Thursday.
Energy Department spokesman Damien LaVera confirmed the hiring, saying the department “retained Lazard to provide independent financial analysis associated with Solyndra.” Given the complexities involved, he said “the use of independent experts is an important part of our due diligence, and a sound investment in minimizing risk to the taxpayer.”
Federal contracting records state that under the contract, Lazard is to provide the department with “comprehensive financial advisory support for the restructuring of the Solyndra loan, give advice on restructuring the company both in and out of bankruptcy, and provide counsel on the path forward that offers the greatest protection of taxpayer interests.”
Scott Coffina, who served from 2007 to 2009 as associate counsel to President George W. Bush and who acted as White House legal liaison to the Energy Department, said it made sense for the department to hire Lazard, but he said it was strange that the company would provide advice on restructuring Solyndra.
“I do know it’s not up to the Department of Energy to restructure them in bankruptcy or hire a financial adviser for them,” he said.
The restructuring of the Solyndra loan, months before the company collapsed, has raised serious concerns that taxpayers weren’t as well protected as some of the company’s biggest private investors in case of a liquidation.
Under a restructuring deal earlier this year, the Energy Department agreed that $75 million in new funds from investors Argonaut Private Equity and Madrone Capital Partners would be paid back in the case of a liquidation before the hundreds of millions of dollars loaned to the company by taxpayers.
Obama administration officials have defended the decision, saying they thought it was the best chance of keeping the company in business and getting taxpayers repaid. At a hearing last week, Jonathan Silver, head of the Energy Department’s energy-loan program, said that without the restructuring the company would have closed even earlier.
“It is absolutely one of our essential concerns to focus as much as we can on the security of taxpayer monies, and that’s why we reached the decision we did,” Mr. Silver testified.
But Rep. Fred Upton, Michigan Republican and chairman of the House Committee on Energy and Commerce, disagreed. On Thursday, he called on the Energy Department to turn over communications among the department, the Treasury Department and the White House.
“Despite concerns over the company’s financial viability, the Obama administration restructured Solyndra’s loan in February 2011, and put venture capitalists at the front of the line, ahead of taxpayers, in the event of bankruptcy, which was in violation of the plain letter of the law,” a statement by the committee released Thursday said.
Rep. Cliff Stearns, Florida Republican and chairman of the House Energy and Commerce Committee’s investigations subcommittee, said at a hearing last week that the congressional probe turned up documents suggesting concerns within the government about the restructuring.
“These concerns are spelled out in an email between [Office of Management and Budget] staff in late January 2011, which notes that, ‘While the company may avoid default with a restructuring, there’s also a good chance it will not. At that point, additional funds would have been put at risk, recoveries may be lower, and questions will be asked,’” Mr. Stearns said, reading from the email.
The congressional probe has widened in recent days with investigators now seeking information from Argonaut Private Equity and Madrone Capital Partners. The committee called on the investors to turn over any documents they had concerning Solyndra’s $535 million loan guarantee, awarded in 2009, as well as a $75 million credit facility the company announced receiving in February.
Congressional investigators also are seeking any documents the investors have concerning meetings or phone calls between the investors and the White House.
Argonaut is the investment arm of a foundation headed by billionaire Oklahoma businessman George Kaiser, who raised between $50,000 and $100,000 for Barack Obama’s 2008 election. Madrone Partners has ties to Wal-Mart’s Walton family. The Wal-Mart political action committee has leaned Republican over the years.
Meanwhile, Solyndra’s top two executives were expected to help provide some answers at a congressional hearing Friday. But after initially agreeing to voluntarily testify, the executives now plan to refuse to answer any questions by invoking the Fifth Amendment.
Solyndra’s collapse was swift. The bankruptcy was filed about two years after Mr. Chu and Vice President Joseph R. Biden announced approval of the loan guarantees. “This announcement today is part of the unprecedented investment this administration is making in renewable energy and exactly what the Recovery Act is all about,” Mr. Biden said at the time.
Mr. Obama, during a subsequent tour of the company, said the firm would hire 1,000 workers and make enough panels over the life of a plant it was building that it would be like replacing eight coal-fired power plants.
© Copyright 2013 The Washington Times, LLC. Click here for reprint permission.
About the Author
Jim McElhatton is an investigative reporter for The Washington Times. He can be reached at firstname.lastname@example.org.
- Independent counsel eyed in Fast and Furious
- House seeks Fast and Furious gun-walking documents
- Details emerge on bureaucrat who pretended to be CIA operative
- Stung by defeat: SEC hires trial consultants
- Solaria? Solyndra? Feds bailed on promising solar company, lawsuit says
Latest Blog Entries
By John R. Bolton
The president fiddles at his domestic altar while the world burns
- PRUDEN: The scam that will not die
- BOLTON: Nero in the White House
- Robert E. Lee and 'Stonewall' Jackson tributes face Army War College removal
- Wasted: Tom Coburn's 'Wastebook targets 70 days in bed, Facebook
- Embassy Row: India strikes back over diplomat's arrest
- Zadzooks: The Joker sixth scale figure review (Sideshow Collectibles)
- U.S. pilot scares off Iranians with 'Top Gun'-worthy stunt: 'You really ought to go home'
- Colorado revolt: 55 of 62 sheriffs refuse to enforce new gun laws
- Army to cut up to 4,000 captains and majors
- U.S. downplays Saudi prince's criticism of Obama's Middle East policies
Independent voices from the The Washington Times Communities
Television commentary, reviews, news and nonstop DVR catch-up by Lisa King Dolloff and friends.
Wall Street news for retail investors who want to know what's going on.
Top 10 handguns in the U.S.
Extraordinary day at Redskins Park
White House pets gone wild!
Let it snow