- The Washington Times - Thursday, November 17, 2011

Energy Secretary Steven Chu denied playing politics in his handling of the failed half-billion-dollar loan to solar-panel maker Solyndra LLC, while defending a decision that put private investors in front of taxpayers in recouping money from the bankrupt company.

Mr. Chu gave his long-awaited testimony days after newly released emails showed that the Department of Energy sought to delay bad news about Solyndra until after the 2010 midterm elections.

“I did not make any decisions based on political considerations,” Mr. Chu testified before the House Energy and Commerce Committee’s investigations panel Thursday.

Mr. Chu, a scientist known for winning the Nobel Prize before joining the Obama administration, found himself subject to sharp questioning from Republicans who say his department ignored clear signs of Solyndra’s shaky finances and broke the law when it restructured a loan deal earlier this year.

“The number of red flags about Solyndra that were raised along the way — many from within DOE — and either ignored or minimized by senior officials is astonishing,” said committee Chairman Fred Upton, Michigan Republican.

Questions about political influence surfaced anew this week when a Republican staff memo showed that an official at one of the major investors in Solyndra said the Energy Department “did push very hard for us to hold our announcement of the consolidation to employees and vendors to Nov. 3 — oddly they didn’t give a reason for that date.” The date was one day after the midterm elections.

Rep. Steve Scalise, Louisiana Republican, called the delay “disgusting” and told Mr. Chu to find out who pushed for the layoff announcement and, the lawmaker added, to make “heads roll.”

Mr. Chu said he didn’t know anything about a move to delay Solyndra’s layoff announcement and pledged to find out who was involved.

“It’s not the way I do business,” Mr. Chu said. “I would not have approved it.”

Mr. Chu said the department never considered politics in handling Solyndra, nor did he take into account the role of George Kaiser, who controls an investment firm with a major stake in Solyndra and who was a 2008 fundraiser for the presidential campaign of Barack Obama.

“Absolutely, it was made only on the merits,” Mr. Chu said of the Solyndra loan.

The House panel has been investigating Solyndra since February, but the probe intensified after the company filed for bankruptcy in September — two years after the Energy Department awarded the company a $535 million loan-guarantee package through the federal stimulus program.

Restructuring deal

During much of the questioning Thursday, Mr. Chu defended a restructuring of the Solyndra loan this year that allowed private investors to be paid back before taxpayers if the company went broke.

Under the restructuring, 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.

In prepared remarks, Mr. Chu said the department faced a difficult decision. He said the $75 million was needed to keep the company afloat so Solyndra could finish building its solar plant.

“Immediate bankruptcy meant a 100 percent certainty of default, with an unfinished plant as collateral,” he said. “Restructuring improved the chance of recovering taxpayer money by giving the company a fighting chance at success, with a completed plant as collateral.”

Republicans say the so-called subordination deal was a clear violation of the law. Energy Department law states that government loans “shall be subject to the condition that the obligation is not subordinate to other financing.”

By allowing private investors to recoup their $75 million before taxpayers, the Energy Department violated that law, Republicans charged repeatedly during the hearing. But Mr. Chu said department officials and outside lawyers deemed it proper.

“Our general counsel advised me it was legal,” Mr. Chu said, calling the restructuring a “difficult choice for us to make.”

In what he called a “straight-up Texas question,” Rep. Joe Barton, Texas Republican, asked whether Mr. Chu would agree to restructure the loan if he knew then what he knows now.

Mr. Chu said it would be a “last-ditch” move.

Mr. Barton said the “elephant in the room” in the hearing on the Solyndra collapse was the involvement of Mr. Kaiser, the Oklahoma businessman who raised money for Mr. Obama’s 2008 campaign and who controls Argonaut Private Equity, the major investor in Solyndra.

Argonaut and Madrone Capital, which has ties to the Walton family of Wal-Mart, provided the $75 million to try to keep Solyndra operating earlier this year after the Energy Department agreed to the restructuring deal.

Mr. Chu said he did not discuss Solyndra’s loan with Mr. Kaiser. He said the restructuring idea came from the Energy Department’s loan office and he later approved it. The department’s loans chief at the time, Jonathan Silver, resigned after Solyndra’s bankruptcy.

Republicans also pointed out that the Treasury Department told the Energy Department to get a legal opinion from the Justice Department on the restructuring. However, that never happened, and Republicans repeatedly questioned Mr. Chu on why.

Mr. Chu said the Energy Department obtained outside legal opinion instead. He said the department would need to reach out to Justice only if there were changes in the terms of the loan, such as the amount to be repaid or the interest rate.

Asked at a different point in the hearing whether anybody should apologize for the Solyndra collapse, Mr. Chu didn’t offer an apology. But he did say the department would not have backed loans to the company if officials knew then what they know now.

“Certainly, knowing what I know now, we’d say no,” he said.

Still, he disputed charges that the Energy Department badly mishandled the Solyndra loan.

“Was there incompetence? Was there any influence of a political nature? And I would have to say no,” Mr. Chu testified, blaming Solyndra’s collapse on the fallout of the solar market and big subsidies by the Chinese in solar-energy initiatives.

Partisan divide

Mr. Chu is the highest-profile administration figure to testify on Solyndra so far. Twice, Republicans chided him for answering questions by saying he had never heard of the particular details or by saying he wasn’t aware of those details.

Rep. Cliff Stearns, Florida Republican and chairman of the investigations subcommittee, cited what he called a pattern of answers by the secretary in which he said he was not aware of information.

“You seem to have an unawareness,” Mr. Stearns said.

Rep. Marsha Blackburn, Tennessee Republican, told Mr. Chu, “It leaves me to believe maybe you had some staff that was keeping you out of the loop on some decisions.”

The hearing exposed a partisan divide on the failed Solyndra deal. Republicans charged the government was acting as a venture capitalist, making risky bets with taxpayer money. They said the Energy Department’s efforts to keep afloat Solyndra, a flagship of Mr. Obama’s stimulus program, broke the law, resulting in little chance of taxpayers recouping their money.

Meanwhile, Democrats said the Republican-led congressional probe has been charged with politics. Rep. Henry A. Waxman of California, the committee’s ranking Democrat, said he didn’t condone the delay of the layoff announcement but called it “really small potatoes.”

“We lost the money, it’s unfortunate, but there is no scandal there,” he said, telling Republicans to “stop dancing on Solyndra’s grave.”

For as much Solyndra’s bankruptcy has attracted widespread attention, the company’s loan guarantee was highly publicized from the start. Vice President Joseph R. Biden and Mr. Chu took part in a 2009 groundbreaking ceremony, and Mr. Obama toured the company last year even as some in the administration warned against the visit because of questions over Solyndra’s finances.

Mr. Barton said he has been asked repeatedly whether Mr. Chu ought to resign. He said Mr. Chu should stay and wondered whether the secretary was being “set up” to be the “fall guy.”

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