Solyndra May Have Lied to Get Loan Guarantee, Watchdog Says

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Solyndra LLC executives may have intentionally misled the Energy Department as they sought $535 million in federal loan guarantees, the agency’s inspector general concluded after a four-year investigation.

“The investigative record suggests that the actions of certain Solyndra officials were, at best, reckless and irresponsible or, at worst, an orchestrated effort to knowingly and intentionally deceive or mislead the department,” Gregory Friedman, the Energy Department’s inspector general, wrote in an Aug. 24 report released Wednesday.

The department’s review of the Solyndra application was “less than fully effective,” according to the report.

Solyndra collapsed two years after it received its first U.S. loan in 2009. Its September 2011 bankruptcy led to an investigation by congressional Republicans and withering criticism of the loan guarantee program, which had been funded by the 2009 economic stimulus program. It’s failure became an issue in the 2012 presidential campaign.

The Justice Department also investigated the handling of the Solyndra loan, but the inspector general was notified early this year that no criminal charges would be filed, according to the report.

The watchdog’s findings are “consistent with the facts” already known, Energy Department spokesman Eben Burnham-Snyder said in a statement. He pointed to the conclusion that Solyndra officials’ actions “were at the heart” of the case and undermined the agency’s ability to monitor the process.

Rigorous Reviews

The department has made improvements to the loan guarantee program to make reviews more rigorous, Burnham-Snyder said.

The investigation by the Republican-led Congress largely focused on whether Solyndra investor and Democratic donor George Kaiser influenced the department’s decision. Republicans weren’t able to show a link, but lawmakers said Energy Department officials missed “red flags” showing the company was in trouble as they lent it more money.

The allegations of political pressure weren’t a focus of the inspector general. But employees told auditors that they felt “tremendous pressure” to process the loan guarantees, based on the “significant interest in the program” by department leadership, the White House, Congress and the applicants themselves, the report states.

Not ‘Forthcoming’

As early as November 2008, Solyndra officials were being “less than forthcoming,” the audit found. They cited four sales contracts valued at about $1.4 billion, but one customer accounting for about $325 million of the total told the company it didn’t intend to buy more panels unless Solyndra lowered its costs, according to the audit report.

Solyndra executives also knew they had understated the costs of its panels in its application for the loan guarantee. But the company didn’t pass on that information before the loan was approved.

The report also lists opportunities missed by department. In June 2009, Solyndra notified a consultant working for the department that one sales contract had fallen through.

Auditors found no evidence that the consultant told the department, even though it might have indicated prospective business “was not nearly as robust as that portrayed by Solyndra’s executives.”

Friedman said the episode likely cost taxpayers more than $500 million and a “loss of confidence in the loan guarantee program.”

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