FBI Raid on Solyndra May Herald Escalation of Watchdog Probe

An FBI raid on Solyndra Inc., a solar-panel maker that failed after receiving a $535 million loan guarantee from the U.S. Energy Department, may signal the escalation of a probe into the Obama administration’s clean- energy program.

Agents for Energy Department Inspector General Gregory Friedman, who has called the department’s clean-energy loan program lacking in “transparency and accountability,” joined in the search yesterday at the Fremont, California, headquarters of Solyndra, which filed for bankruptcy protection on Sept. 6.

Republicans critical of the program stepped up their attacks following the raid, and two House Democrats questioned the integrity of the company, indicating a potential political crisis for the president. A foundation headed by an Obama campaign contributor was a principal investor in Solyndra.

“The FBI raid further underscores that Solyndra was a bad bet from the beginning and put taxpayers at unnecessary risk,” Representative Fred Upton, a Michigan Republican who heads the House Energy and Commerce Committee, said yesterday in a statement. “President Obama’s signature green jobs program went from a darling of the administration, to bankruptcy, to now the subject of an FBI raid in a matter of days.”

Friedman, a watchdog within the Energy Department, said in a March report that a lack of adequate documentation for loans “leaves the department open to criticism that it may have exposed the taxpayers to unacceptable risks associated with these borrowers.”

Obama Contributor

The Energy Department gave Solyndra the most federal backing awarded a solar manufacturer. The George Kaiser Family Foundation, a charitable organization based in Tulsa, Oklahoma, and backed by donations from billionaire George Kaiser, holds about 35.7 percent of Solyndra, according to a company filing with the Securities and Exchange Commission. Kaiser made 16 visits to the president’s aides since 2009, according to White House visitor logs.

The Federal Bureau of Investigation executed a search warrant at Solyndra, bureau spokeswoman Julie Sohn said in an interview. Sohn said she couldn’t provide details about the investigation. Solyndra, which shut its factory and fired 1,100 people, said in its filing for bankruptcy protection that it had liabilities of $783.8 million.

‘Misleading Claims’

Investigations by the panel over six months were frustrated by “misleading claims on Solyndra’s viability by administration officials, company executives and congressional Democrats,” Upton said in the statement with Representative Cliff Stearns, a Florida Republican who heads the committee’s oversight panel.

Dave Miller, a Solyndra spokesman, and Debra Grassgreen, the company’s bankruptcy attorney with Pachulski Stang Ziehl & Jones LLP, didn’t immediately return calls seeking comment on the raid. White House spokesman Eric Schultz declined to comment on the raid, referring questions on law enforcement to the Justice Department and on loans to the Energy Department, which also declined to comment.

Selection of companies to receive U.S. backing are “merit- based decisions made by career staffers at the Department of Energy, and the process for this particular loan guarantee began under President George W. Bush,” Schultz said in an e-mailed statement on Sept. 1.

“Every project that receives financing through the Energy Department goes through a rigorous financial, legal and technical review process,” Schultz said.

Republicans had questioned the loan guarantee to Solyndra even before the inspector general’s report in March, which criticized Obama’s loan program for poor documentation and record-keeping without singling out specific decisions.

‘Smelled a Rat’

“We smelled a rat from the onset,” Stearns and Upton said in a statement on Aug. 31, when the company announced its intention to file for Chapter 11 bankruptcy reorganization.

Democratic Representatives Henry Waxman of California and Diana DeGette of Colorado said yesterday that Solyndra Chief Executive Officer Brian Harrison assured them in a meeting less than two months ago that the company was in a “strong financial position.”

“He did not convey to us the perilous condition of the company, and the committee should know why,” Waxman and DeGette wrote in a letter yesterday to Stearns.

“At that time, he said the company was projected to double its revenues in 2011, there was ‘strong demand in the United States’ for its shipments, and the company was expected to double the megawatts of panel production shipped this year,” according to the letter. “These assurances appear to contrast starkly with his company’s decision to file for bankruptcy.”

The Energy and Commerce committee yesterday asked Harrison to testify at a Sept. 14 hearing on Solyndra in Washington.

Obama Contributor

In a Sept. 1 letter requesting all documents on White House communications with Solyndra, its board and investors, Upton and Stearns said “a major investor in Solyndra, George Kaiser, was a bundler for President Obama’s 2008 campaign.”

Kaiser raised, or bundled, $50,000 to $100,000 for Obama’s 2008 campaign, according to a list that had been posted on Obama’s 2008 campaign website. He gave $2,300 personally, according to the Federal Election Commission.

White House Visits

White House visitor logs show that Kaiser had 16 meetings with Obama aides, 11 of them in 2009. His first recorded visit to the White House was March 12, 2009, when he met separately with Austan Goolsbee, a senior economic adviser to Obama, Pete Rouse, a senior adviser to the president, and Heather Higginbottom, deputy director of the Domestic Policy Council. The next day he met with Jason Furman, a member of Obama’s National Economic Council.

That month, the Energy Department awarded Solyndra the $535 million loan guarantee to commercialize its cylindrical solar panels.

In June, Kaiser met with senior Obama adviser Valerie Jarrett, policy adviser David Pope and Chief of Staff Rahm Emanuel. His most recent meeting covered by the White House logs was on April 11 of this year, with Rouse.

Christian Gronet, the chairman of Solyndra, met with Greg Nelson, from the White House office of public engagement on Sept. 22, 2009. The visits cited in the White House logs were reported yesterday on the Daily Caller website.

The George Kaiser Family Foundation said in an e-mailed statement on Sept. 1 that George Kaiser “is not an investor in Solyndra and did not participate in any discussions with the U.S. government regarding the loan.” The foundation said it “invests in a globally diversified portfolio across many different asset classes.”

Solyndra has said it failed because it couldn’t compete with larger rivals in other countries as prices for solar panels plunged and demand slowed.

The company borrowed $527.8 million from the U.S. Federal Financing Bank, a unit of the U.S. Treasury Department that’s its biggest lender.

In January, the Energy Department agreed to let $385 million in taxpayer support for Solyndra take a back seat to funds from new investors in an effort to keep the company operating.

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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