Republicans hope to shed more light on the Solyndra loan scandal tomorrow, when the House Energy and Commerce Subcommittee on Oversight and Investigations will hear testimony from two White House officials involved in the now infamous $535 million loan guarantee to the now-defunct solar-panel manufacturer once hailed by President Obama as a “true engine of economic growth . . . leading the way toward a brighter more prosperous future.”
In particular, the committee will seek to determine the extent to which Solyndra’s financial ties to major Democratic fundraiser George Kaiser may have played a role in the company’s receiving federally backed funds. According to a memo circulated by committee Republicans, the hearing will also examine the following questions:
‐Did the Department of Energy (DOE) and the Office of Management and Budget (OMB) conduct a proper review of the Solyndra application?
‐Should the DOE and the OMB have anticipated some of the financial problems that Solyndra experienced, which resulted in bankruptcy?
‐Did the DOE and the OMB take adequate steps to protect taxpayers when it negotiated the terms and conditions of the Solyndra guarantee and its restructuring?
To that end, the committee will hear testimony from Jeffrey Zients, deputy director of the Office of Management and Budget, and Jonathan Silver, director of the loans program at the Department of Energy. Solyndra’s chief executive, Brian Harrison, and chief financial officer, W. G. Stover Jr., were invited to testify at Wednesday’s hearing but will be no-shows. According to a committee spokesman, both have committed to appear voluntarily next week. Since laying off its 1,100-employee work force and filing for bankruptcy on September 6, the company has been the the target of FBI raids on its manufacturing facility in Fremont, Calif., as well as on the homes of several of the company’s top executives, including Harrison.
The House committee, led by chairman Fred Upton (R., Mich.) and Rep. Cliff Stearns (R., Fla.), who chairs the oversight subcommittee, has been investigating Solyndra since February 2010, shortly before a PricewaterhouseCoopers audit found that the company’s lackluster financial situation raised “substantial doubts about its ability to continue” and forced Solyndra to cancel a $300 million initial public offering. Later that year, in light of the company’s financial troubles, DOE and two of Solyndra’s top investors entered negotiations to restructure the loan guarantee.
But the GOP’s interest in the company and its relationship with the White House date back well before that, to the initial stages of the loan’s authorization starting in 2008. “We smelled a rat from the start,” Upton said. “As the highly celebrated first stimulus loan guarantee awarded by the DOE, the $535 million loan for Solyndra was suspect from Day One.” The hearing should provide a glimpse into the administration’s decision-making process from the very moment President Obama took office.
A brief rundown:
The American Reinvestment and Recovery Act of 2009 (a.k.a. the “stimulus package”) allocated $6 billion for loan guarantees for companies invested in “green” technology, and Solyndra was the first company to receive a DOE loan paid for with stimulus money.
Since then, the DOE has issued 17 loan guarantees totaling $7.84 billion. On top of that, the department has commitments worth an additional $10.4 billion. The stimulus bill stipulated that to be eligible for funding, projects must begin construction no later than Sept. 30, 2011, meaning the DOE has about two weeks to pull the trigger on those loans. Republicans worry that, despite the Solyndra debacle, the administration will push ahead with the allocation of the remaining funds before the end of the month. Steve Isakowitz, chief financial officer at the DOE, said the department intended to close on all of the pending loans before that deadline. “With taxpayers potentially on the hook for this half-billion dollar bust, it’s time to sound the alarm about the remaining $10 billion in loan guarantees set to expire September 30,” Upton and Stearns said in a statement. “Let’s learn the lessons of Solyndra before another dollar goes out the door.”
Solyndra’s loan was ultimately approved in 2009 despite plenty of red flags raised during the application process. In January 2009, DOE staff presented to Solyndra’s application to the OMB for a $535 million loan to finance a new manufacturing facility. A credit committee reviewed Solyndra’s loan application, and noted a number of concerns, including the “immature” nature of the solar-panel technology and the fact that the company’s current pricing scheme was more expensive than projected market prices. In particular, the committee expressed concern about the lack of an independent analysis “addressing long term prospects for this company beyond the sales agreements already in place” and raised questions as to the “nature and strength of the parent guarantee for the completion of the project.” As a result, the committee concluded at the time that approving the Solyndra loan would be “premature.”
Billionaire investor and long-time Democratic donor George Kaiser denies investing personally in Solyndra and says he did not participate in any talks regarding the loan process. However, Kaiser’s foundation, the George Kaiser Family Foundation, through one of its investments arms, Argonaut Ventures, was a primary investor in the company, at one point owning a 39 percent stake. Following Solyndra’s financial troubles in 2010, Argonaut Ventures was involved in the restructuring of the company’s loan agreement with the DOE. Not only that, but Kaiser made multiple visits to the White House in the months before the loan guarantee was formally approved.
A committee aide tells NRO that Republicans will introduce “enlightening” documents at the hearing Wednesday, obtained by subpoena after “significant delay” from the administration. “This story isn’t going away anytime soon,” the aide says.
— Andrew Stiles is the Franklin Center’s 2011 Thomas L. Rhodes Journalism Fellow.