A four-year investigation into defunct solar firm Solyndra a former CIGS and thin film manufacturer that went bankrupt in August 2011 has concluded this week that the company misled the government in order to secure $535 million in loan guarantees.
According to the probe, a report of which was released by the U.S. Energy Departments inspector general Wednesday, leading officials at the company misrepresented facts and omitted key information as Solyndra looked to become the first company to secure federal loan guarantees under the stimulus package that was created in 2005 under George W. Bush and extended by the Obama administration in 2009.
Shortly after receiving the loan, Solyndra went bankrupt costing the U.S. taxpayer an estimated $500 million, and drawing criticism from Republicans and other skeptics of the stimulus program.
The inspector generals report this week was also critical of the Energy Department, claiming its due diligence work to be "less than fully effective", and critical of a culture that pressured employees to grant loan-guarantee applications.
However, the bulk of the blame lies squarely at the feet of Solyndra officials, the report concludes, stating: "In our view, 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 deceived and mislead the department."
Example of failings
Solyndra secured the $535 million in funding after the expansion in 2009 of the stimulus package, with Obama personally visiting the companys manufacturing plant in 2010 to herald Solyndra as a thriving example of the efficacy of the stimulus bill.
By September the following year, however, the fab lay idle, with more than 1,100 staff laid off and bankruptcy protection proceedings working their way through court.
In response to the probes findings, Miles Ehrlich the representative of former Solyndra CEO Chris Gronet remarked that Solyndra failed not because of fraud of misrepresentation, but rather was a victim of the dumping practices of Chinas state-backed solar firms.
"Solyndra executives were completely truthful and accurate in their representations during this loan process, and the DOE was never misled about Solyndras business or prospects," read a statement issued by Ehrlichs law office.
At the beginning of the year, and following a series of interviews and witness examinations by the FBI, the Justice Department confirmed that it would not be bringing criminal proceedings to any of Solyndras former officials.
The report did reveal that the DOE relied at times on third-party evaluations during its Solyndra analysis. One particular case involving engineering firm R.W. Beck Inc. is cited in the report. The firm issued a solar panel market analysis based on company representations that stated it had $1.4 billion in revenue under contract up to 2012, adding that Solyndras "firm" sales contracts supported this financial model.
However, by the time Becks final report came to pass, Solyndra had offered price concessions to all four of its customers. "Solyndras failure to directly disclose these significant material changes in its contractual relationships distorted the view the department and its consultants had of the market for Solyndras products," said the inspector general.
A representative from credit ratings agency Fitch was employed by Solyndra for a credit assessment and, upon asking the company whether any customers had received price concessions, was told firmly that they had not. Had Fitch been aware of such practices, the firm told investigators, it would have downgraded Solyndras credit rating.
"The red flags about Solyndra’s financial condition and the turbulence in the solar market were there for DOE to see when it reviewed Solyndra’s application in 2009. DOE staff and (Office of Management and Budget) staff noted these concerns at the time the loan guarantee was under consideration," the congressional report concluded.