Solyndra's Legal Woes: Breaking The Law?

The bankruptcy of California-based solar panel manufacturer Solyndra in 2011 sparked an 18-month investigation into whether the company had broken the law. Solyndra had received a $535 million loan from the Obama administration in 2009, but filed for Chapter 11 bankruptcy protection two years later, laying off almost 100% of its employees. The FBI raided Solyndra, and federal agents visited the homes of CEO Brian Harrison and founder Chris Gronet to examine computer files and documents. Despite the scandal, no evidence of wrongdoing or undue political influence was ever found.

Did the Energy Department fail to examine Solyndra before approving the loan?

The Department of Energy did examine Solyndra before approving the loan. The company was founded in 2005 and began deploying demonstration systems globally in 2006. In 2009, the Obama administration co-signed $535 million in loans to Solyndra, making it the first recipient of a loan guarantee under President Barack Obama's economic stimulus program, the American Recovery and Reinvestment Act of 2009. The loan was approved after the Department of Energy conducted due diligence, which included market surveys. The loan was also approved by the Office of Management and Budget (OMB).

However, there were concerns about the company's financial health. In 2010, Solyndra's auditors warned that the company was going to have problems staying afloat. In 2011, the company filed for bankruptcy.

Some have argued that the Department of Energy broke the law by restructuring the loan to subordinate taxpayers to private investors. However, the Department of Energy's general counsel determined that the subordination was legal.

Did the Obama administration apply undue pressure for the loan guarantee?

Solyndra was a manufacturer of cylindrical panels of copper indium gallium selenide (CIGS) thin-film solar cells based in Fremont, California. In 2009, the Obama administration co-signed $535 million in loans to Solyndra, which was the first recipient of a loan guarantee under President Barack Obama's economic stimulus program, the American Recovery and Reinvestment Act of 2009.

The Republican-controlled House investigated whether the Obama administration ignored red flags about Solyndra's financial condition when it offered a $535 million loan guarantee to the start-up company. Emails revealed that, as early as August 2009, an aide to then-White House Chief of Staff Rahm Emanuel had asked a Department of Energy official if he could discuss any concerns among the investment community about Solyndra, but the official dismissed the idea that Solyndra had financial problems.

The Obama administration also had concerns about the legality of the Department of Energy's loan restructuring plan and warned OMB director Jeffrey D. Zients that the plan should be cleared with the Department of Justice first, which the Department of Energy had not done.

Ultimately, none of the investigations of Solyndra found any evidence of wrongdoing or undue political influence.

Did Solyndra misrepresent its finances to the government?

Solyndra was a manufacturer of cylindrical panels of copper indium gallium selenide (CIGS) thin-film solar cells. In 2009, the Obama administration co-signed $535 million in loans to the company. Solyndra was the first company to get federal loan guarantees under a program created in 2005 and expanded by President Barack Obama's 2009 economic stimulus package.

In 2011, a US Department of the Treasury official confirmed that the criminal probe of Solyndra was focused on whether the company and its officers misrepresented the firm's finances to the government in seeking the loan or engaged in accounting fraud. Emails showed that the Obama administration had concerns about the legality of the Department of Energy's loan restructuring plan and warned OMB director Jeffrey D. Zients that the plan should be cleared with the Department of Justice first, which the Department of Energy had not done.

A four-year investigation by the Energy Department's inspector general concluded that Solyndra officials "were at best, reckless and irresponsible or, at worst, [engaged in] an orchestrated effort to knowingly and intentionally deceive and mislead the department". The report also said that department employees felt tremendous pressure to process loan guarantee applications.

The inspector general's report said that Solyndra's failure to disclose significant material changes in its contractual relationships distorted the view of the Energy Department and its consultants. Solyndra was required to hire an outside firm, Fitch Ratings Inc., to prepare a credit assessment of the project. A Fitch official told investigators that he had asked Solyndra if any contract customers had received price concessions and was told no. Additionally, the company's largest customer informed Solyndra that it would not buy more panels in 2009 because the price was too high. If Fitch had been aware of the price concessions, it would have assigned Solyndra a lower credit rating.

Despite these findings, the Justice Department decided not to pursue criminal prosecution of any Solyndra officials. Ultimately, none of the investigations of Solyndra found any evidence of wrongdoing or undue political influence.

Did Solyndra engage in accounting fraud?

Solyndra was a manufacturer of cylindrical panels of copper indium gallium selenide (CIGS) thin-film solar cells, based in Fremont, California. In 2009, the Obama administration co-signed $535 million in loans to the company.

Solyndra was heavily promoted as a leader in the sustainable energy sector for its unusual technology. However, it was unable to compete with conventional solar panel manufacturers of crystalline silicon. The company filed for bankruptcy on September 1, 2011, and was investigated for its financial practices.

A US Department of the Treasury official confirmed that the criminal probe of Solyndra was focused on whether the company and its officers misrepresented the firm's finances to the government in seeking the loan or engaged in accounting fraud. Emails showed that the Obama administration had concerns about the legality of the Department of Energy's loan restructuring plan.

Ultimately, none of the investigations of Solyndra found any evidence of wrongdoing or undue political influence. The bankruptcy court approved the hiring of a chief restructuring officer, and the company's bankruptcy plan was approved, allowing it to repay creditors and end its bankruptcy.

Did the Obama administration fail to properly evaluate Solyndra's business proposals?

In 2009, the Obama administration co-signed $535 million in loans to Solyndra, a manufacturer of cylindrical panels of copper indium gallium selenide (CIGS) thin-film solar cells. Solyndra was heavily promoted as a leader in the sustainable energy sector for its unusual technology. However, it was unable to compete with conventional solar panel manufacturers of crystalline silicon.

The New York Times stated that the Obama administration should be held accountable for failing to properly evaluate Solyndra's business proposals. Frank Rusco, from the Government Accountability Office, found that approval for the loan was given before officials had finished the legal evaluations of the company. The Washington Post also reported that the Obama administration allowed Solyndra to continue receiving money from taxpayers even after it had defaulted on its loan.

Emails revealed that as early as August 2009, an aide to then-White House Chief of Staff Rahm Emanuel had asked a Department of Energy official if he could discuss any concerns about Solyndra among the investment community. However, the official dismissed the idea that Solyndra had financial problems.

In addition, it was discovered that Solyndra had spent a significant amount of its revenue on lobbying for Obama, and several top executives and shareholders of Solyndra had made financial contributions to the Obama administration.

Despite these controversies, no investigations found evidence of wrongdoing or undue political influence by the Obama administration in the Solyndra case.

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