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.
The Republicans criticized the OMB for failing to block the Department of Energy from approving the restructuring.
“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.”
Republicans portrayed the report as the most detailed portrait yet into the collapse of a company that once was viewed as a darling of Mr. Obama’s stimulus program only to turn into a big political headache after Solyndra’s bankruptcy.
Even when things looked most promising for the company, money was a constant concern for Solyndra executives and investors, according to the report.
Finances already were so dire in the spring of 2010 as Mr. Obama toured Solyndra that officials began viewing the government not just as a lender, but as a customer big enough to lift the company out of a growing financial hole, according to documents.
The company made its sales pitch directly to Mr. Obama, according to email correspondence unearthed during the congressional probe.
“Getting business from Uncle Sam is a principal element of Solyndra’s channel strategy,” one investor wrote in an email months after Mr. Obama’s May 2010 tour of the company.
The company’s founder, Chris Gronet, “spoke very openly to Obama about the need for installation of Solyndra’s rooftop solar panels on U.S. government buildings,” Tom Baruch, founder of CMEA Capital, an investor, wrote to another Solyndra official.
“I heard Obama actually promise Chris he would look into it when he got back to Washington,” the email said.
“The point is that the government has to pay for energy no matter what. The capital funding to deploy a lot of rooftop solar on government buildings (say $300 million) just falls off the table in Washington anyway.”
The report chronicles Solyndra’s rapid decline, noting that when discussions about a second government loan fell through, the company saw government contracts as a way to stay afloat.
Even when Solyndra closed on its more than $500 million loan with the government in September 2009, the company was scrambling to get more loan money, according to the report.
“The Bank of Washington continues to help us,” Mr. Gronet wrote in an email to a colleague after the loan deal.
But privately, at least one investor was concerned, writing in an email that while Solyndra won a loan of more than $500 million, it had revenues of less than $100 million and wasn’t profitable: “[W]hile that’s good for us, I can’t imagine it’s a good way for the government to use taxpayer money.”
All the while, officials both in the government and the company were publicly praising Solyndra’s prospects.
Last year, The Washington Times reported that months before Solyndra’s collapse, former Department of Energy official Jonathan Silver was insisting that the company was headed in the right direction.
“This is a company that doubled their revenues and essentially doubled them again, year over year,” he said in an April 2011 interview with SNL Renewable Energy Weekly, a trade publication.
But the congressional report paints a different picture, noting that during the same month, the former chief financial officer for the Energy Department, Steve Isakowitz, had emailed a colleague about a meeting he had with Mr. Silver about a report from Solyndra’s auditors on the company’s shaky finances.
While Mr. Silver noted the filing was “expected,” Mr. Isakowitz wrote, “he admitted his monitoring is currently inadequate so he wouldn’t know if things were indeed deteriorating.”