“The Department of Energy was fully aware of the risks in backing Solyndra Inc., a start-up company that pocketed a half-billion dollar DOE loan but never turned a penny in profit before shutting its doors, concludes a former FBI agent hired to examine the company’s books.
The expert’s report, filed this week in Solyndra’s voluminous bankruptcy case in California, could embolden critics who say the government ignored financial red flags in supporting the solar panel maker with President Obama’s maiden green energy loan in 2009.
The $535 million loan, which bankrolled a vast new manufacturing plant in Fremont, Calif., was part of a broad government mission to kick-start the clean energy movement: Solyndra’s unique solar panels would cover commercial rooftops across the country, aiding the environment and boosting the economy.
Yet the company collapsed under a sea of debt and a business plan that, amid dramatic shifts in the global solar market, caused it to sell far fewer panels at far higher costs than envisioned. From 2009-11, it cost Solyndra $3.92 more per watt to make its panels than to sell them, the bankruptcy report shows.
Solyndra filed for bankruptcy Sept.6, 2011. Two days later, it faced a raid by agents from the FBI and the Energy Department inspector general. With those clouds looming, the company’s board hired R. Todd Neilson — the former federal agent and veteran trustee in bankruptcy cases — as chief restructuring officer.
Solyndra’s board wanted a CRO to not only manage its bankruptcy case, but to explore whether the company committed misdeeds on its road to collapse. “In light of the Federal criminal investigation and ongoing Congressional investigation … the Subcommittee agreed that the CRO would act in an independent capacity in determining if any improprieties had occurred with respect to the Debtors’ finances,” Neilson’s report said.
After examining tens of thousands of pages of records, Neilson concluded that Solyndra did not improperly divert funds. “The construction costs were correctly recorded in the accounting records and no material funds were diverted from their original intended use,” he wrote.
All funds drawn from the DOE loan, he found, “were spent in accordance with the relevant loan documents.”
And, Neilson made clear, the DOE was fully informed of Solyndra’s finances when it initially backed the company in 2009 — and restructured its loan in 2011, seven months before the bankruptcy and raid.
“The CRO has reviewed the vast level of communications and the underlying records between the DOE and Solyndra,” he wrote. “It is the opinion of the CRO that the DOE had sufficient information to understand the risks and challenges associated with the guarantee obtained from DOE and make an informed decision as to the ongoing financial condition of Solyndra throughout the loan guarantee time frame.”
In fact, records show, the Energy Department supported the Solyndra financing in the early days of the Obama administration in the face of criticism from officials within several wings of government — the Office of Management and Budget, the U.S. Treasury and DOE. “This deal is NOT ready for prime time,” one OMB employee wrote March 10, 2009, government emails show. Ten days later, energy officials announced Solyndra was in line to be the first company to secure a green energy loan guarantee….”
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