Solyndra officials had recently pronounced the company financially healthy. But at the end of 2010 they had privately confided to Energy Department officials that the company was rapidly going broke and on the verge of shutting down, according to newly released records and interviews. Solyndra’s inability to repay its debt leaves taxpayers liable for repaying the loans.
In February, the Energy Department agreed to a refinancing for Solyndra that allowed investors who put in new money to get their funds repaid first — before taxpayers — if the company defaulted on the federal loan.
Solyndra has attracted attention in Washington because the company’s largest investors include funds linked to billionaire Tulsa oil industrialist George Kaiser, a leading fundraiser for President Obama. In a statement last week, the oilman’s family foundation said he used no political influence to obtain the loan and held no conversations with government officials about Solyndra’s application.
Solyndra shuttered its offices last week. It filed for bankruptcy protection, laying off 1,100 workers at its plant in Fremont, Calif.
Federal agents conducted a day-long search at the California headquarters, removing boxes and copying computer files. They also searched the home of the company’s chief executive, Brian Harrison, according to Solyndra spokesman David Miller.
Miller said he believed the FBI was focusing on the loan guarantee, which also has been the subject of a House subcommittee investigation.
FBI spokesman Peter Lee said Thursday that the searches were part of a sealed investigation into the company by the FBI and the Energy Department’s inspector general.
The raid — and the serious investigation it revealed — surprised Solyndra, House investigators and federal officials who approved the loan guarantee in 2009.
Solyndra had been touted by Obama as a model for his administration’s effort to invest $80 billion in taxpayer funds in innovative companies and bolster a clean-technology industry in the United States.
“The future is here,” he said at a May 2010 speech at the plant.
Obama’s appearance came weeks after independent auditors had questioned the company’s ability to continue.
Democratic and Republican lawmakers said Thursday that they will demand answers from Solyndra next week at a previously scheduled hearing. Miller said Solyndra officials have still not decided whether they will appear.
House Energy and Commerce Committee
Chairman Fred Upton (R-Mich.) and Rep. Cliff Stearns (R-Fla.), chairman of that panel’s oversight and investigations subcommittee,
said Thursday that the raid underscores that the “darling” of Obama’s green-jobs program was a “bad bet from the beginning.”
“As our investigation continues, we hope to hear directly from Solyndra’s executives next week — the same executives who visited Capitol Hill as part of a PR campaign in July and misrepresented the company’s financial situation,” they said in a joint statement.
Democrats weigh in
Even a onetime defender of Obama’s clean-tech initiative criticized Solyndra on Thursday. Rep. Henry A. Waxman, (D-Calif.), along with Rep. Diana DeGette (D-Colo.), urged the two Republican committee leaders to hold Solyndra chief executive to account.
“Any thorough examination of the Solyndra loan guarantee should include the opportunity to ask Mr. Harrison about his representations,” the Democrats said in a statement. “He did not convey to us the perilous condition of the company, and the Committee should know why.”
House investigators have been examining whether the White House played a role in Solyndra ’s selection for the loan. Committee Republicans have said they found evidence that White House officials were monitoring Solyndra’s status in the application process. The Energy Department has asserted that it chose Solyndra through a competitive, non-political process.
A Government Accountability Office audit last year found that Solyndra was among a handful of companies that the agency awarded hundreds of millions in loan guarantees before completing required application reviews.
Energy Department officials confirmed Thursday that the agency was informed at the end of 2010 of Solyndra’s precarious finances. At the time, the department declined to provide additional taxpayer funds to Solyndra but agreed to help the company restructure its financing if investors put up more cash.
As part of a February deal, investors agreed to contribute an additional $75 million in new money, including Kaiser’s fund, and the Energy Department agreed that investors could get their new funding repaid first — before taxpayers — if the company defaulted on the federal loan.
“Ultimately, the choice was between imminent liquidation or giving the company and its workers a fighting chance to succeed,” Energy Department spokesman Damien LaVera said in a statement Thursday. “This restructuring gave Solyndra and its workers the best possible chance to succeed in a very competitive marketplace and put the company in a better position to repay the loan.”
In March, Energy Secretary Steven Chu said publicly that there was little chance Solyndra would default on the loan.
“We are confident they can repay the loan,” Chu told a trade publication, noting that the company’s sales had been going up and that it had obtained an additional $75 million line of credit.
This week, in bankruptcy proceedings in Delaware, Solyndra’s chief financial officer, W.B. “Bill” Stover Jr., explained how Solyndra worked furiously to raise cash in its final months — through a series of unusual business transactions.
A group of investors led by Argonaut Ventures, which is linked to Kaiser, agreed to buy up to $75 million worth of discounted solar panels and “existing and future accounts receivables” from Solyndra.
Last month, Solyndra investors and Energy Department officials discussed another possible financial restructuring to keep the company running. That plan fell through, leaving Solyndra “unable to continue operations,” Stover wrote.
Solyndra suspended operations the following day.
Staff researcher Lucy Shackelford contributed to this report.