A top White House adviser received clear notice that solar panel maker Solyndra Inc. faced a “severe liquidity crisis” even before a controversial restructuring allowing investors to recoup money from the now-bankrupt company before taxpayers, documents released Thursday show.
Months after President Obama’s highly publicized tour of Solyndra’s California plant, a federal program manager in December 2010 sent an email to Carol Browner, then director of the White House Office of Energy and Climate Change Policy, and others warning about the company’s troubled financial outlook.
“I’m sure you already know this,” the program manager wrote. “Negotiations are fluid. DOE has shared with us [and Treasury] that Solyndra is in the midst of a severe liquidity crisis.”
The correspondence, disclosed in a lengthy investigative report by Republicans on the House Committee on Energy and Commerce, was just one signal from inside the government that Solyndra faced serious financial trouble even as the company and federal officials hailed it as a poster child for the government’s energy loan program.
But while the Office of Management and Budget staff raised concerns about Solyndra, the office’s director, Jack Lew, now White House chief of staff, didn’t move to block the Department of Energy from approving a restructuring that ultimately would prove costly to taxpayers, according to the report.
One official even questioned whether the restructuring deal violated the Energy Policy Act of 2005 by subordinating the government’s interest in the loan. Under the restructuring, however, investors, including a firm controlled by Obama fundraiser George Kaiser, poured tens of millions of dollars into the company to keep it afloat. But the deal included a condition: Investors would recoup their money before other creditors — even the government — in the case of collapse.
“OMB emails and documents from the restructuring, as well as committee staff’s interviews with OMB staff, show that OMB failed to carry out its traditional examiner role,” the Republican report concludes.
House Speaker John A. Boehner, Ohio Republican, said in a news briefing Thursday that “Mr. Lew and the White House owe the American people an explanation about why they squandered hundreds of millions in taxpayer dollars.”
The White House and House Democrats criticized the report within hours of its release.
A White House spokesman, Eric Schultz, wrote in an email that “215,000 pages of documents, 14 committee staff briefings, five congressional hearings, 72,000 pages from Solyndra investors and committee interview with George Kaiser affirms what we said on day one: This was a merit-based decision made by the Department of Energy.”
Meanwhile, two leading Democrats on the House Energy and Commerce Committee, Reps. Henry A. Waxman of California and Diana DeGette of Colorado, issued a joint statement on what they called a “partisan, one-sided report” by Republicans.
“The Republican report released today is a political document, not an accurate portrayal of the facts uncovered by the committee in its investigation of the Solyndra loan guarantee,” the lawmakers said in a joint statement.
But Rep. Cliff Stearns, Florida Republican and chairman of the Energy and Commerce Committee’s investigations subcommittee, said the Solyndra probe uncovered what he called a “political saga starring key White House officials and big Obama donors.”
Rep. Fred Upton, Michigan Republican and chairman of the Energy and Commerce Committee, said the review found a “shocking episode where politics was put before taxpayers and integrity was sacrificed for the sake of corporate favoritism.”