Solyndra loan controversy

The Solyndra loan controversy is a political controversy involving U.S. President Barack Obama's administration's authorization of a $535 million loan guarantee to Solyndra Corporation in 2009 as part of a program to spur alternative energy growth. Solyndra and the White House had originally estimated that this government guarantee of Solyndra's financing would help to create 4,000 new jobs.
Critics claimed that the Obama administration had unduly influenced awarding the loan guarantee.
Background before the loan approval
In May 2005, Chris Gronet founded Gronet Technologies and changed its name to Solyndra eight months later. It was founded to provide an alternative to silicon-based solar panels amidst a worldwide shortage. On July 29, 2005 the United States Congress passed the Energy Policy Act of 2005, a bill intended to address a variety of developing energy problems in the United States. The bill was signed into law by George W. Bush on August 8, 2005. Amongst other things, the bill authorized the Department of Energy to offer loan guarantees to help finance promising energy projects. Advertising of this program in August 2006 resulted in the Department of Energy receiving 134 preliminary applications for the program, including one from the Fremont, California-based Solyndra Corporation in order to build a new manufacturing facility "Fab 2" for its unique solar panel technology.
In October 2007, the Department of Energy had completed vetting of the applications and had narrowed the number it was still considering to 16, one of which was the application from Solyndra. The remaining 16 were invited to submit full applications for the program, and Solyndra did so in May 2008. On January 9, 2009, the Department of Energy's credit committee decided unanimously that although the project "appears to have merit, there are several areas where the information presented did not thoroughly support a finding that the project is ready to be approved at this time." The committee "without prejudice" remanded the project "for further development of information."

After President Obama took office, analysts in the Energy Department and in the Office of Management and Budget questioned the loan, as one Energy official wrote in an e-mail of "a major outstanding issue": cash flow predictions showed that the Fab 2 subsidiary (the entity receiving the loan guarantee) would be low on cash in September 2011, possibly needing help from the parent company until the cash flow recovered in subsequent months.
Loan approval
In March 2009, after a successful milestone in the approval process, the White House wanted to announce the loan guarantee. One White House budget analyst nixed the announcement in a March 10, 2009 e-mail, writing "This deal is NOT ready for prime time" and listing remaining milestones.
On March 20, 2009, the Department of Energy committee that had remanded the loan application in January made a "conditional commitment" to Solyndra's proposed $535 million loan guarantee, with final approval scheduled for September. The White House and Solyndra had estimated that the loan would help to create 4,000 new jobs. According to the Washington Post, the Obama administration tried to rush federal reviewers to approve the loan so Vice President Joe Biden could announce it at a September 2009 groundbreaking for the company’s factory.
The White House scheduled a press event for September 4 and federal reviewers gave final approval on September 2. After securing the loan guarantee, the Federal Financing Bank, a part of the Department of the Treasury, loaned Solyndra the money on September 4, 2009. Solyndra used the loaned funds to build a new manufacturing facility, Fab 2, in Fremont, California. Construction began in September 2009 and was completed in June 2010. In May 2010, the company was promoted by President Obama in his visit as a model for government investment in green technology. It was also visited by Energy Secretary Steven Chu.
In February, 2011, Solyndra restructured its loans with government approval, in an attempt to keep the company afloat. Two funds (Argonaut Ventures LLP and Madrone Partners LP) invested an additional $69 million as part of the restructuring, and Solyndra's debt to the government was subordinated to this new investment. Assistant Treasury Secretary Mary Miller wrote emails at the time stating that this subordination might be illegal, and should be cleared with the Justice Department first, but Energy Department officials proceeded based on an internal legal opinion by the loan program's lawyers.
Bankruptcy
On August 31, 2011 Solyndra announced it was filing for Chapter 11 bankruptcy protection, laying off approximately 1100 employees, and shutting down all operations and manufacturing. Approximately 100 employees were kept on, for periods ranging from a week or two to several months or more. These employees were involved in filing the bankruptcy paperwork, continuing to ship product to fulfill existing orders, plant security, and related winding-up tasks.
After the bankruptcy, the New York Times reported that government auditors and industry analysts had faulted the Obama administration for failing to properly evaluate the company's business proposals, as well as for failing to take note of troubling signs which were already evident. In addition, Frank Rusco, a program director at the Government Accountability Office, had found that the preliminary loan approval had been granted before officials had completed the legally mandated evaluations of the company.
In addition, according to the Washington Post, the Obama administration continued to allow Solyndra to receive taxpayer money even after it had defaulted on its $535 million loan. Department of Energy spokesman Damien LaVera said, “Ultimately, the choice was between imminent liquidation or giving the company and its workers a fighting chance to succeed.”
Investigation
The House Energy and Commerce Committee has been investigating the Solyndra loan. A law enforcement official confirmed that the criminal probe of Solyndra is focused on whether the company and its officers misrepresented the firm’s finances to the government in seeking the loan.
The Energy Department's chief lending officer testifed before the Energy and Commerce Committee: "y the time the Obama administration took office in late January 2009, the loan programs' staff had already established a goal of, and timeline for, issuing the company a conditional loan guarantee commitment in March 2009."
The Washington Post reported that Solyndra had used some of the loan money to purchase new equipment which it never used, and then sold that new equipment, still in its plastic wrap, for pennies on the dollar. Former Solyndra engineer Lindsey Eastburn told the Washington Post, "After we got the loan guarantee, they were just spending money left and right... Because we were doing well, nobody cared. Because of that infusion of money, it made people sloppy."
Relationships with the Obama administration
After Solyndra's bankruptcy, it was revealed that the company had spent a large sum of money on lobbying and that Solyndra executives had many meetings with White House officials.
The New York Times quoted Shyam Mehta, a senior analyst at GTM Research, as saying "There was just too much misplaced zeal at the Department of Energy for this company." Among 143 companies that had expressed an interest in getting a loan guarantee, Solyndra was the first one to get approval and received the largest loan. The George Kaiser Family Foundation, held about 36.7 percent of Solyndra. Kaiser’s focus on Solyndra was striking, because he had no official role at the company and had no personal investment in the corporation. Kaiser made 16 visits to the president’s aides since 2009, according to White House visitor logs
In December 2011, The Washington Post published an in-depth examination of Solyndra and the Obama green technology program. The Post concluded that though politics was much discussed, it did not play a key role in the decision making process. The Post concluded that officials sometimes disregarded warnings that the financial concerns of the companies in question could damage the credibility of the program. It also showed that administration officials were quite concerned about potential political repercussions of Solyndra's financial difficulties and influenced Solyndra to delay layoffs until after the 2010 election. However, neither the Post report nor a batch of e-mails released by the Energy and Commerce Committee in November, 2011, document that politics influenced the original decision to grant Solyndra a loan. On October 13, 2011, Harrison resigned and Solyndra asked a Federal court to allow a bankruptcy expert to take control of the company.
In May 2012, the Obama Department of Commerce imposed steep tariffs on Chinese made solar panels, claiming their manufactures received massive amounts of help from the Chinese government and dumped large quantities of cheap panels on US markets, crippling US manufactures.

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