Also Thursday, 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 or engaged in accounting fraud. The official spoke on the condition of anonymity because of the sensitivity of the probe.
On the political front, Chu’s admission came as some members of Congress were asking whether Chu went too far in trying to help the company before it went into bankruptcy, leaving taxpayers on the hook for the loan.
Chu, a Nobel laureate and physicist who came to the administration from academia, arrived in Washington with a mandate to push billions of dollars in stimulus funds into clean-energy companies and projects. With keen White House interest, Chu rode herd over an $80 billion showcase initiative that was supposed to spur a new “green” industry and economic growth.
Solyndra was the first company approved for a loan guarantee under the Obama administration; its application originated several years earlier during George W. Bush’s presidency. Early on, there were concerns about Solyndra’s finances, but the company was still endorsed by President Obama and received high-profile support from Chu. Both visited the firm at different press events. Chu flew to California to announce the loan approval at the groundbreaking for a $750 million factory that was built mostly with funds from the loan.
In announcing the Solyndra deal in March 2009, Chu boasted of the “speed at which the department can operate,” according to an agency news release.
“Secretary Chu initially set a target to have the first conditional commitments out by May . . . but today’s announcement significantly outpaces that aggressive timeline,” the release said.
In April 2010, the company’s auditors raised doubts about whether the company could continue as a “going concern” because of cash-flow problems. The following month, Obama visited the company to praise it as an “engine of growth.”
In late autumn of 2010, company executives confided to the Energy Department that they were running out of cash and could not make a required payment to a cash-reserve account. The company was supposed to begin making the first of $5 million payments to create a $30 million cash reserve on Dec. 1.
Solyndra officially defaulted on its loan that day. Chu approved a softening of the loan requirements so that the company could continue receiving loan installments.
“Ultimately, the choice was between imminent liquidation or giving the company and its workers a fighting chance to succeed,” LaVera said in the statement, first reported by Politico.
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