WASHINGTON (Reuters) - The Obama Administration missed signs of financial trouble at solar panel maker Solyndra as it rushed to award the now-bankrupt company a loan of nearly $535 million in time for a groundbreaking event with the White House, Republican lawmakers said on Wednesday.
Solyndra LLC’s bankruptcy and ensuing criminal investigation into the California-based company has sparked outrage over administration efforts to spark a clean energy industry and create jobs through stimulus spending.
Republicans who investigated the loan released documents at a House hearing, saying they found political pressure may have caused officials “to miss or disregard numerous shortcomings regarding Solyndra’s financial viability.”
E-mails and documents “raise troubling questions” about whether the Office of Management and Budget rushed to complete its loan review in time for a September 2009 groundbreaking at Solyndra scheduled with Vice President Joe Biden and others, congressional investigators said in the report.
“These documents raise questions as to whether the Solyndra loan guarantee was pushed to approval before it was ready in order for the administration to highlight the stimulus, and whether additional time might have resulted in stronger mitigation of the risks presented by the deal,” it said.
Jonathan Silver, who heads the energy department’s loan guarantee program, said the loan was not rushed and was based on “several years of due diligence.” He told the House Energy and Commerce’s oversight and investigations panel the loan was granted based on merits, not political pressure or favoritism.
Silver told lawmakers the administration has no intention of “walking away” from other renewable energy projects.
“While we are all disappointed in the outcome, securing America’s leadership in this vital new industry requires that we support innovation and deployment,” he said.
“I can’t imagine a scenario in which we would willingly as a country walk away from what would be undoubtedly one of the largest if not the largest industries in the world over the next several decades,” said Silver.
Republicans charged the DOE may have violated a 2005 federal law when it restructured Solyndra’s loan guarantee last year. Under terms of the restructuring, an emergency $75 million private loan provided to Solyndra at the time is first in line to be repaid, ahead of the government’s federal loans.
When questioned about the decision to restructure the loan Silver and Jeffrey Zients, deputy director at OMB, defended the move. It was “a reasonable decision” at that time, said Zients.
“ONE BAD BET?”
Republicans questioned competency of the loan program and ability of the department to effectively distribute another $10 billion in loan guarantees to green technology companies before a September 30 deadline.
”Was Solyndra just one bad bet by an administration rushing to claim credit for the loan guarantee or is it the tip of the iceberg?“ asked Fred Upton, the chairman of the House Energy and Commerce Committee.”
“If the administration was so wrong about Solyndra after nine months of due diligence how can it possibly exercise the proper controls when doling out another $10 billion in the next couple of weeks?” he asked.
During a visit to its manufacturing facility last year, President Barack Obama praised the company for its technology, making Solyndra a centerpiece of efforts to stimulate the economy and create green jobs.
The California solar-panel maker, citing international competitions, filed for Chapter 11 bankruptcy protection last week. FBI agents searched the company’s offices two days later, in a possible probe of the federal loan guarantees.
The U.S. Department of Energy created the loan program for green energy projects under the Bush Administration in 2005, but the first loan guarantee wasn’t extended until four years later when the loan office received stimulus funding.
The solar-power panel maker received a $535 million federal loan guarantee in 2009, the first awarded under the program to support innovative green technologies.
Representative Cliff Stearns, who heads the oversight and investigations panel, told reporters lawmakers are reviewing information and trying to obtain more details from the administration and others showing the relationship between the White House, the Energy Department, Solyndra and investors in the company and whether there were any signs of influence.
Ultimately, he said people should be fired.
“You’re going to have to go to the top people and say why did this happen,” said Stearns. “You can’t lose this kind of money and have the FBI indicate there’s criminal activity and not have somebody fired.”
Solyndra’s top executives were invited to testify before the subcommittee on Wednesday, but they will now appear next Friday. Stearns indicated Energy Secretary Steven Chu also may be asked to testify.
Solyndra is the third U.S. solar firm to declare bankruptcy in recent weeks. Tumbling prices on solar panels worldwide have hit profits at industry heavyweights such as China’s Suntech Power Holdings Co Ltd and U.S.-based First Solar Inc this year. Small, up-and-coming solar companies have found it increasingly difficult to stay afloat.
Additional reporting by Nichola Groom in Los Angeles; Editing by Russell Blinch, Alden Bentley and David Gregorio