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Solyndra: Incompetence or Corruption?
Posted By Arnold Ahlert On October 11, 2011 @ 12:05 am In Daily Mailer,FrontPage | 3 Comments
The current controversy surrounding the bankruptcy of Solyndra, the Obama administration’s green energy albatross, may be reaching critical mass. In yet another late Friday release of information, a time-honored strategy designed to minimize media coverage of unpleasant truths, the White House has sent Congressional investigators another 2000 pages of emails. Emails which implicate officials at the highest levels of seniority within the administration.
These emails are not only about the original $535 million dollar taxpayer-funded loan made to the beleaguered company, but the subsequent attempt to restructure it as well. That restructuring was a deal which allowed private investors, who came in with $75 million later in the process, to be repaid before taxpayers were reimbursed, if the company went belly up.
Emails demonstrate the deal was so dubious, Energy Department officials were notified that it might be a violation of the law, and ought to be cleared by the Department of Justice before proceeding. May Miller, an assistant Treasury secretary, wrote to deputy OMB director Jeffrey D. Zients expressing that concern. A follow-up memo by Miller on August 17th, 2011 to the OMB revealed that “To our knowledge that [clearance] never happened.”
Department of Energy (DOE) spokesman Damien LaVera claimed agency officials listened to the advice proffered by Treasury who, along with the Office of Management and Budget (OMB), had raised serious concerns about both the loan vetting process used to select Solyndra, and the special treatment it continued to get when its deteriorating financial condition became more evident. But the advice was ignored. “Ultimately, DOE’s determination that the restructuring was legal was made by career lawyers in the loan program based on a careful analysis of the statute,” LaVera contended.
That sentiment was echoed by the president himself last Thursday when he praised agency officials for using their “best judgment” in granting the loan. “There were going to be some companies that did not work out; Solyndra was one of them,” the president said. “But the process by which the decision was made was on the merits. It was straightforward. And of course there were going to be debates internally when you’re dealing with something as complicated as this.”
That the process was straightforward is a remarkable assertion. Steve Spinner, who worked for the DOE’s loan department repeatedly hectored department officials to approve the package. “How [expletive] hard is this? What is he waiting for?” Spinner wrote in an Aug, 28, 2009 email to a DOE official. “I have the OVP (Office of the Vice President) and WH (the White House) breathing down my neck on this. They are getting itchy to get involved.” On the same day, Spinner emails to the same official and told him to “walk over there and force him to give you the answer,” referring to the specific DOE official who was evaluating Solyndra’s loan.
The problem? Spinner’s wife, Allison Berry Spinner, is a partner at Wilson Sonsini Goodrich & Rosati, a firm in Palo Alto, California. They represented Solyndra on the DOE loan, and Federal records show the firm received at least $2.4 million in legal fees for their efforts. The above email seemingly refutes Mr. Spinner’s assertion that he had recused himself due to the obvious conflict of interest.
Another possible conflict of interest? Mr. Spinner raised at least $500,000 for the president’s election campaign in 2008.
Yet Energy spokesman LaVera continued to assert everything was above board. “Because his wife agreed not to participate in or receive any financial compensation from her law firm’s work on behalf of any loan program applicant, Mr. Spinner was authorized to oversee and monitor the progress of applications, ensure that the program met its deadlines and milestones, and coordinate possible public announcements,” LaVera explained in an email Friday. Another senior administration official refused to comment when asked if Spinner violated his recusal agreement.
Spinner was hardly alone with respect to pressuring DOE. An email from a senior advisor to former White House Chief of Staff and current Mayor of Chicago Rahm Emmanuel regarding the loan guarantees indicated Emmanuel’s interest in the project. An August 17th, 2009 email from aide Aditya Kumar noted that Vice President Joe Biden’s Chief of Staff Ron Klain had said that either president Obama wanted to attend the opening of the Solyndra plant, or that Emmanuel wanted him to do it. “Ron said this morning that the POTUS [President of the United States] definitely wants to do this (or Rahm wants the Potus to do this)?” it read.
Yet in September, when questioned in Chicago by WLS Radio host Bill Cameron, Emmanuel denied any knowledge of the Solyndra affair. “Bill, ya know, I’m focusing on a major announcement today for the city of Chicago,” Emmanuel told Cameron. “I don’t actually remember that or know about it. So, what I’m dealing is with what I’m dealing with here today.” When Cameron pressed Emmanuel about due diligence on the deal, Emmanuel deflected the question. “I’m talking about healthcare today,” he responded.
Also in late September, another piece of the puzzle fell into place. On the 29th, Energy Secretary Steven Chu acknowledged that it was his decision to allow Solyndra to restructure its loan and keep getting taxpayer funding, despite the fact that the company was already in default on the $535 million. DOE authorized the Federal Financing Bank to give two additional cash installments to Solyndra in December of 2010 and January of 2011. He did this despite several troubling realities. As far back as 2009, the company had lost $373 million, a number which ballooned to $558 million less than a year later, when auditor PriceWaterhouse issued a “going concern” report on Solyndra’s apparent deterioration. In autumn of 2010, company executives told the DOE they were running out of cash and could not make a required payment to a cash-reserve account, and on December 1, 2010 the company officially defaulted on the loan.
So why did Chu persist? Spokesman LaVera released a statement saying that restructuring the deal gave Solyndra “the best possible chance to succeed in a very competitive marketplace and put the company in a better position to repay the loan.”
Yet once again, released emails show a different picture. Two days before the Friday email dump it was revealed that the administration had actually considered making an additional taxpayer-funded loan of $469 million to the company in April and May of 2010. An email characterized by the Washington Post as “gallows humor” revealed the doubts expressed by an unnamed official at OMB. “Possible to close and default on one [government loan] before closing on a second??? Could be a new record,” it read.
Still earlier emails reveal that Senior Advisor to the President Valerie Jarrett, and former Economic Council Director Lawrence H. Summers took part in discussions about Solyndra. Jarrett was contacted by VP Chief of Staff Klain, who expressed concern about the company with regard to the president’s planned visit on May 25, 2010, noting that “we clearly need to make sure that they are stable and solid.”
But Ms. Jarrett was also contacted by Steve Westly, Managing Partner of the Westly Group who expressed concern the visit could hurt the president. “Could you perhaps check with DOE to make sure they’re comfortable with the company? I just want to help protect the president from anything that could result in negative or unfair press,” he wrote. Jarrett checked back with Klain, who checked with DOE and got a thumbs up. He got back to Jarrett. “Sounds like there are some risk factors here–but that’s true of any innovative company that POTUS would visit. It looks like it is OK to me, but if you feel otherwise, let me know.” Ms. Jarrett responded. “I’m comfortable if you’re comfortable,” she wrote.
Summers emails reflected an ongoing exchange with Brad Jones of Redpoint Ventures, an investment firm whose investments included Solyndra. Jones expressed his general concerns about government investment in clean energy per se. “The allocation of spending to clean energy is haphazard; the government is just not well equipped to decide which companies should get the money and how much…One of our solar companies with revenues of less than $100 million (and not yet profitable) received a government loan of $580 million; while that is good for us, I can’t imagine it’s a good way for the government to use taxpayer money,” Jones wrote. Summers replied. “I relate well to your view that gov is a crappy vc [venture capitalist] and if u were closer to it you’d feel more strongly. But suppose we think there are all kinds of externalities to renewable investments. What should we do?”’
The Jarrett and Summers email exchanges were part of a report released by the Subcommittee on Oversight and Investigations Democratic Staff to Democratic Members of the Subcommittee on Oversight and Investigations. The report concluded that the documents produced “do not contain evidence that government decisions relating to Solyndra were influenced by considerations relating to campaign donations,” further noting “there was internal disagreement within the Administration about Solyndra’s viability and the effectiveness of the loan guarantee program throughout the process. According to the documents, the decisions relating to Solyndra were made on the merits after vigorous debate and with awareness of the risks involved.”
Republican investigators on the Committee weren’t buying it. “The paper trail released by the White House portrays a disturbingly close relationship between President Obama’s West Wing inner circle, campaign donors and wealthy investors that spawned the Solyndra mess,” said Reps. Fred Upton (R-MI) and Cliff Stearns (R-FL) in a joint statement. One of those donors is George Kaiser who like Steven Spinner, raised considerable amounts of money for the presidents’s political campaign. The George Kaiser Family Foundation released a statement denying any investment in Solyndra by Kaiser himself, further noting that the Tulsa-based billionaire “did not participate in any discussions with the U.S. Government regarding the loan.”
Which assessment of this debacle rings truer will eventually be determined. But it is worth remembering that the top two executives at Solyndra, CEO Brian Harrison, and senior VP and CFO Wilbur G. Stover, both asserted their Fifth Amendment rights against self-incrimination when questioned by the Committee, and that the FBI has confiscated company files in what they have characterized as a “criminal investigation.” It is also telling that Democrats, whether they realize it or not, have apparently chosen to portray the Obama administration as incompetent–unless one is inclined to believe the decision to fund a company that had never made a profit was based on merit–because it’s abetter option than having it viewed as politically corrupt.
If this were the only potential scandal in which the Obama administration was embroiled, one might be inclined to give it the benefit of the doubt. But it isn’t. Two dead border patrol agents and approximately two hundred dead Mexicans killed with guns “walked” by the ATF into the hands of Mexican drug cartel members–and the ongoing stonewall of that investigation–demonstrate that corruption, rather than incompetence, is a better bet when it comes to making judgments about this administration.
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