Nov. 15 (Bloomberg) -- The U.S. Department of Energy asked Solyndra LLC to delay announcing it would fire workers until a day after last year’s elections, according to a House Republican report citing advisers for the failed solar-panel maker.
“DOE continues to be cooperative and have indicated that they will fund the November draw on our loan (app. $40 million) but have not committed to December yet,” an adviser to Argonaut Private Equity of Tulsa, Oklahoma, who wasn’t identified, wrote an associate in an e-mail. “They did push very hard for us to hold our announcement of the consolidation to employees and vendors to Nov. 3rd -- oddly they didn’t give a reason for that date.”
The e-mail was cited today in a staff memo released by Republicans on the House Energy and Commerce investigations subcommittee before a hearing Nov. 17, when Energy Secretary Steven Chu is scheduled to testify about Solyndra’s $535 million federal loan guarantee.
The House energy panel has been investigating the company’s guarantee for nine months. The Fremont, California-based company filed for bankruptcy in September.
E-mails the administration and the department have turned over to Congress have shown Solyndra’s financial troubles increasing months before the company shut down.
White House Advisers
Brian Harrison, who was Solyndra’s chief executive officer, told the department that he wanted to inform employees about job cuts on Oct. 28, 2010, according to the Republican staff memo.
Harrison’s e-mail was forwarded to Jonathan Silver, the executive director of the Energy Department’s loan guarantee program, who has since resigned. Silver forwarded Harrison’s e-mail to White House advisers Carol Browner and Ron Klain, the chief of staff to Vice President Joe Biden, according to the memo. Klain is now a columnist for Bloomberg View.
Solyndra announced on Nov. 3, 2010, that it was closing a manufacturing plant built before it received the U.S. aid and was firing workers to cut costs. The company shifted operations to Fab 2, a $733 million factory built with the help of the $535 million guarantee.
“Several e-mails produced by Argonaut to the committee reference the fact that the layoff announcement was postponed because of the November 2 elections,” according to the Republican memo.
Republicans led by Representative Cliff Stearns of Florida, chairman of the House investigations panel, have said political influence may have weighed on the decision to award Solyndra the loan guarantee, the first to an alternative energy company.
The administration and the department have said the more than 185,000 pages of documents they have turned over to the committee show the decision was based solely on the merits of Solyndra’s application.
As Solyndra’s money began to run out last year, the department and the company began to negotiate new terms for its loan. In February, Chu approved a restructuring agreement that put taxpayer debt behind $75 million in new backing from private investors.
Republicans have criticized the restructuring agreement for subordinating U.S. debt, which they said violated the 2005 energy law authorizing the loan guarantee program.
An Energy Department legal opinion that subordination was permissible was circulated in January, “long after the terms of the restructuring had been set and Solyndra’s funding continued,” according to the Republican memo.
The law affords “the secretary, in a distressed situation, broad authority to take action that will protect and maximize the interests of the United States,” according to the memo, which was written by Susan Richardson, counsel for the loan-program office, and was previously released by the committee.
The Energy Department has said the restructuring was a last-ditch effort to save the company and the best chance for the government to recoup its money.
The Republican memo also indicated the Energy Department spent much of 2010 weighing a request Solyndra made for a second U.S. loan guarantee of $469 million. Secretary Chu has said the application for a second guarantee was never in “serious contention.”
Department officials were performing a due-diligence review of the second guarantee as late as June 25 of that year, according to the Republican staff memo. That was after Solyndra’s auditor warned in March the company’s troubles ran deep enough to raise questions about it remaining a “going concern.”
A meeting of an Energy Department credit-review panel was scheduled for Sept. 16, 2010, to discuss the second guarantee, according to the memo.
In October, the department and Solyndra “mutually agreed” the second loan guarantee shouldn’t receive “further consideration,” Damien LaVera, an Energy Department spokesman, said in an e-mail last month.
The department awarded about $16 billion in guarantees to clean-energy companies through a loan program financed by Obama’s 2009 economic stimulus, including the $535 million Solyndra won.
Gregory Friedman, the department’s inspector general, said in an annual report that he was adding the loan guarantee program to his “watch list.”
“We believe that heightened and continued focus on this program is necessary,” Friedman wrote in the report dated Nov. 10 and posted today on the department’s website.
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