House Republicans’ ongoing investigation into the Solyndra loan scandal has unearthed a wealth of e-mail evidence offering a behind-the-scenes glimpse into the Obama administration’s ill-fated decision to guarantee a half-billion-dollar loan to a struggling solar company. The House Energy and Commerce Subcommittee on Oversight and Investigations has heard testimony from top administration officials, including Energy Secretary Steven Chu. However, a number of the key players involved in the Solyndra decision have long since abandoned their posts. The American people deserve answers from all of them.
Jonathan Silver, Executive Director, Department of Energy Loans Program Office
Silver was named head of the DOE loans program in November 2009. That was after the department had finalized the initial $535 million loan guarantee, but e-mails reveal the pivotal role Silver played in subsequent decisionmaking.
A series of e-mails dating from February and March of 2010 suggest that Silver worked to win support for a second loan guarantee for Solyndra. Though the proposal was ultimately rejected, Silver at one point told Solyndra executives that a second loan could be approved as early as May 2010. E-mails between top Solyndra officials and the company’s major private investors boast of a “successful” and “encouraging” meeting with Silver during that time period, and indicate that Silver was a major advocate for Solyndra within the DOE:
[Solyndra CEO] Chris Gronet had a good call with Jonathan Silver of the DOE today. Apparently our application has been caught up with several other groups who were also wanting a second bite at the DOE loan guaranty apple. This started a policy discussion as to whether a company should be able to get a second loan. Jonathan Silver championed the cause that they should and he has just this week apparently won that battle. He would not say that we are the first one that will be considered but he all but did.
Interestingly, top Solyndra officials, as well as investors such as Steve Mitchell, seem to have come to the conclusion that Silver was an especially politically minded individual. Mitchell is the managing director at Argonaut Ventures, the investment arm of the George Kaiser Family Foundation, run by the Oklahoma billionaire and major Obama fundraiser of that name. In an e-mail to Kaiser, Mitchell wrote: “The DOE really thinks politically before it thinks economically.” One Solyndra official concurred after meeting with Silver in February 2010, describing him as “acutely sensitive to the political ramification of any [Loans Program Office] action. . . . Rather than challenge the merits of our application, he moved on to think through the political implications of a second loan guarantee.”
The second loan guarantee was never approved, but additional e-mails indicate that in July 2010 Silver was still seeking out additional ways to help Solyndra become profitable — for example, by petitioning the General Services Administration to steer government contracts Solyndra’s way. As part of the 2009 stimulus package, the GSA received $5.5 billion to update government facilities with “green” technology such as solar panels, and at the time of Silver’s inquiries had more than 250 such projects in the works. “You and your team are doing amazing things!” Silver wrote to one GSA official. “I am copying Chris Gronet here. Chris is the CEO of Solyndra and I know your two teams will have a lot to discuss.” He then helped to arrange an in-person meeting between the two.
Silver was also involved in perhaps the most particularly blatant episode of political interference with respect to the Solyndra loan. On Oct. 25, 2010, Solyndra’s newly appointed CEO, Brian Harrison, informed Silver that because of the company’s financial troubles, he was planning to announce a round of layoffs before the end of the month. Silver forwarded Harrison’s e-mail to Rod O’Connor (Secretary Chu’s chief of staff), Carol Browner (White House climate czar), and Ron Klain (Vice President Biden’s chief of staff), with the message, “We should discuss in the morning.” Days later, Steve Mitchell wrote in an e-mail that the DOE had pushed “very hard” to convince the company to delay its announcement until November 3, one day after the 2010 midterm elections. In a subsequent e-mail, he noted that the layoff announcement had been postponed “till after elections at DOE request.”
Unlike the others on this list, Silver left the DOE after the Solyndra scandal came to light, shortly following his testimony before the House subcommittee in September of this year. When Silver announced he would be leaving the DOE, Secretary Chu expressed his “absolute confidence” in Silver and said that the loans program under his leadership “has demonstrated considerable success.” Silver has said he plans to accept a position at Third Way, a liberal think tank.
Rod O’Connor, Secretary Chu’s Chief of Staff
As mentioned above, O’Connor was in the loop regarding Solyndra’s plans to announce job cuts before the midterm elections, and, one suspects, knows something about the administration’s decision to pressure company executives to delay that announcement.
During his testimony before the committee in November 2011, Secretary Chu insisted he had “just learned” about this, and claimed that “no pressure” was exerted by the DOE to convince Solyndra to postpone the layoffs. “That was not discussed with me, and I would have not approved it,” he said. As I wrote following the hearing, Chu appears to be pleading incompetence in response to the many troubling questions raised by the GOP’s investigation.
Or perhaps in this particular case, he is merely pleading incompetence on O’Connor’s behalf. If Chu is to be believed, O’Connor neglected to inform his boss that the DOE’s flagship “green” enterprise, a recipient of a half-billion-dollar taxpayer-guaranteed loan, was planning to announce major layoffs just days before a critical election, or at the very least never had an earnest discussion with him about it. Which doesn’t reflect very well on either of them.
O’Connor was also one of a handful of senior administration officials who were aware that Solyndra was in serious financial trouble ahead of President Obama’s scheduled appearance at the company on May 26, 2010. E-mails reveal that O’Connor was contacted by senior White House adviser Valerie Jarrett and Vice President Biden’s chief of staff, Ron Klain, just days before the president’s visit. Jarrett and Klain wanted to discuss a “going concern” letter issued by Solyndra’s auditor, PricewaterhouseCoopers, which, translated from the accounting jargon, essentially means “abandon all hope ye who enter here.”
“Wanted to share some concerns about the President’s visit to Solyndra,” Jarrett wrote Klain two days on May 24, 2010. “As you know, a Going Concern letter is not good.” Klain asked O’Connor to “look at this ASAP and get back to me.” O’Connor did his best to allay these concerns. “Bottom line is that we believe the company is okay in the medium term, but will need some help of one kind or another down the road,” he wrote.
The President’s event at Solyndra went ahead as planned, but just days later, the company was forced to cancel a planned initial public offering, yet another sign that the company was not “okay,” even in the medium term, as O’Connor claimed. Meanwhile, his boss continued to tout the company as a DOE success story.
O’Connor left his post as Chu’s top aide in March 2011 to pursue a “new opportunity in his wife’s native home of London,” apparently at a sports and entertainment company.
Scott Harris, DOE General Counsel
Harris, the DOE’s top lawyer since July 2009, left the department in March 2011 “in order to spend more time at home before my daughter heads to college.” His departure came following the DOE’s formal approval of a loan restructuring for Solyndra that gave private investors (such as the Kaiser Family Foundation) priority over taxpayers with respect to the first $75 million recovered in the event of the company’s bankruptcy.
As Republican investigators have noted, the subordination of taxpayer investment in that restructuring agreement was not only unprecedented, but almost certainly in violation of federal statute. The Energy Policy Act of 2005, which created the DOE loans program, stipulates that loan guarantees provided by the federal government “shall be subject to the condition that the obligation is not subordinate to other financing.” In other words, the taxpayer is first in line.
But Susan Richardson, chief counsel of the DOE loans-program office, argued in a January 2011 memo that because it is written in the present tense (“the obligation is not subordinate to other financing”), the rule “applies only to the initial loan agreement, and need not apply to any subsequent restructuring.”
As DOE general counsel, Harris evidently concurred with Richardson’s reasoning, adding his signature to a Feb. 18, 2011, memo urging Secretary Chu to approve the restructuring. He did so without consulting the Department of Justice, the Treasury Department, or the Office of Management and Budget, as the DOE’s own regulation states the department must do “before any ‘deviation’ is granted from the financial terms of the Loan Guarantee Agreement.”
Gary Burner, chief financial officer of the Federal Financing Bank (an arm of Treasury), recently testified that in his 28 years working at the Treasury Department, he never witnessed a federal agreement that gave private investors priority over taxpayers. “It would have been wise for [the DOE] to go to the DOJ,” Burner said. Months after the restructuring had been approved, one senior Treasury official complained that “in February [2011], we requested in writing that DOE seek the Department of Justice’s approval of any proposed restructuring. To our knowledge, that has never happened.”
OMB staffers were similarly skeptical of the DOE’s legal reasoning. “I think they have stretched this definition beyond its limits,” one wrote in reference to the subordination statute. “I’m not comfortable with calling DOE’s analysis reasonable,” wrote another.
But Harris signed off anyway. As his fingerprints are all over one of the most controversial aspect of the Solyndra scandal, he certainly picked a convenient time to jump ship.
Matt Rogers, DOE Stimulus Adviser
Rogers joined the department in February 2009, shortly after the American Recovery and Reinvestment Act (the stimulus package) was enacted. His job was to assist the DOE in managing and disbursing the $36 billion in new funding it had been allocated. Rogers testified in March 2009 that one of his primary objectives was “to accelerate the process significantly and deliver the first loans in a matter of months.” Other documents show that Rogers met with DOE staff to identify ways to reduce the “cycle-time for decision-making.”
Indeed, on Jan. 26, 2009, a mere six days after Obama was sworn in, a DOE staff member wrote in an e-mail: “We are approaching the beginning of the approval process for Solyndra again.” Just weeks earlier, under the Bush administration, the DOE credit committee had ruled that approval would be “premature,” citing a number of unresolved concerns.
This new emphasis on speed did not sit well with the OMB, whose task it was to evaluate the viability of the DOE loans. E-mails reveal that OMB staff felt pressured to approve the Solyndra loan despite their concerns over the company’s application. “This deal is NOT ready for prime time,” one OMB analyst wrote to a senior White House official on March 10, 2009. The administration announced a conditional commitment for the Solyndra loan just nine days later.
In late August 2009, OMB staffers complained that the White House and DOE were trying to “jam us” on the loan decision, in part because of they were hoping to have the loan formally approved ahead of Vice President Biden’s planned visit to Solyndra on September 4, where he would he would tout the company as “exactly what the Recovery Act is all about.” In fact, documents show that White House and DOE staff scheduled the event prior to submitting Solyndra’s application to OMB for formal review, in anticipation that the loan would be approved. In his role as stimulus adviser, Rogers was critical point of contact between the White House and the DOE. At one point, an aide to then–White House chief of staff Rahm Emanuel e-mailed Rogers to discuss the “potential announcement value” of the Solyndra loan.
OMB staffers were none too thrilled. In an Aug. 27, 2010, e-mail, one wrote: “Given the time pressure we are under to sign-off on Solyndra, we don’t have time to change the model.” Four days later, a DOE official e-mailed an OMB staff member citing the vice president’s September appearance, and asked if there was “anything we can help speed along on the OMB side.” In response, the OMB staff member suggested that, given the high stakes, the announcement ought to be postponed: “This is the first loan guarantee and we should have full review with all hands on deck to make sure we get it right.” Despite these concerns, Biden’s appearance went ahead as planned, and the loan approval was formally announced on Sept. 9, 2009.
Before joining the DOE, Rogers was a senior partner at the consulting firm McKinsey and Co. At DOE, he worked closely with another McKinsey alum, Steve Spinner, who joined the DOE in April 2009 as the “chief strategic operations officer” of the loan program (Rogers was effectively his boss). Spinner, a major Obama fundraiser in 2008, signed an ethics agreement pledging not to “participate in any discussion” concerning Solyndra, as his wife was a partner at the law firm representing the company. But documents indicate Spinner was actively involved in discussions surrounding Solyndra. On June 15, 2009, he e-mailed Rogers a “Solyndra checklist of all of the 60–70 items that need to be done for closing.” The company’s rollout, Spinner suggested, should be a “big event,” with “golden shovels, bulldozers, hardhats, etc.”
When Philip Klein of the Washington Examiner asked Secretary Chu if he had any contact with Spinner regarding the Solyndra loan, Chu initially said no, citing the ethics agreement. But when pressed, the secretary revised his story: “I’ve had contact with him, very brief contact with him,” Chu said. “I recall he was in the room a few times when I was talking with Matt Rogers.”
Rogers left the DOE in September 2010 and has resumed his work with McKinsey and Co. At Secretary Chu’s request, Rogers currently serves on the Secretary of Energy Advisory Board.
By leaving the administration when they did, these individuals made it unlikely that they will ever be held accountable for their roles in the Solyndra scandal. But that shouldn’t excuse them from having to explain themselves to the American people.
— Andrew Stiles is the Franklin Center’s 2011 Thomas L. Rhodes Journalism Fellow.