Washingtonpost news updates: Energy Department failed to sound alarm as Solyndra solar company sank

Friday, January 27, 2012

Energy Department failed to sound alarm as Solyndra solar company sank

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Energy Department failed to sound alarm as Solyndra solar company sank

David Paul Morris/BLOOMBERG - An auction sign stands at the entrance Solyndra LLC building in Fremont, California. Solyndra filed for bankruptcy protection on Sept. 6, days after shutting its operation and leaving 1,100 workers jobless.

Text SizePrintE-mailReprints By Joe Stephens, Carol D. Leonnig and Carol D. Leonnig,

At a number of points in its troubled history, solar-panel manufacturer Solyndra faced dire financial problems that threatened its survival. Yet at each crisis, Energy Secretary Steven Chu and officials at his agency failed to take steps that critics say could have limited taxpayer losses when the company collapsed this summer.

Instead, Energy Department officials monitoring Solyndra and its $535 million federal loan took extraordinary steps to prop up the company, according to a Washington Post analysis of previously confidential documents.

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?Solyndra, a California solar company backed by a half-billion dollars in loan guarantees from the Obama administration, announced it was shutting its doors and laying off 1,100 employees.

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The Post review, which included thousands of pages of internal government documents, offers the clearest picture yet of the tense discussions among officials at the White House, its Office of Management and Budget and the Energy Department about Solyndra’s deteriorating finances and the political impact that would occur if the company defaulted on its loan.

On Friday, the release of a new round of White House documents added more details, showing concerns among senior advisers earlier this year that Solyndra might erupt into a political scandal requiring the replacement of Chu and his agency team. A former Obama campaign adviser wrote to presidential counselor Pete Rouse in February suggesting that Chu be replaced immediately with a manager who could better direct Energy Department funds. Rouse circulated it among other senior officials, asking for feedback.

The memo warned of GOP attacks “that are surely coming over Solyndra and other Energy Department deals that have gone to Obama donors and have underperformed.”

Chu is scheduled to testify next week before a House investigative subcommittee. Republicans are likely to grill him about his role in granting Solyndra the 2009 loan, its unsuccessful second loan application and the company’s other efforts to get federal contracts and assistance.

Republican critics have accused the administration of favoring Solyndra because its largest investors were funds linked to George Kaiser, a fundraiser for President Obama who has denied involvement in arranging the loan. E-mails released this week show that Kaiser and his associates discussed how to win additional federal assistance, and that they believed Chu was “apparently staying involved” in Solyndra’s second loan application. Energy Department officials say Chu was not involved.

White House spokesman Eric Schultz said concerns about the department’s actions are one reason the administration has asked former Fannie Mae president Herbert Allison to independently review the loan portfolio and recommend ways to ensure better monitoring.

Energy Department spokesman Damien LaVera said the agency tried to help Solyndra recover so that workers could keep their jobs and taxpayers would be repaid. He said Chu and other officials supported Solyndra based on information provided by the company.

Attempts within the department to minimize concerns about Solyndra’s performance began as early as May 2010. By then, independent auditors had questioned whether the company could continue as “a going concern” — a determination that deeply troubled industry analysts.

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