Staff finds contradictions in company’s finances
Tuesday, September 13, 2011
WASHINGTON (AP) — Even as the executives of a solar energy company assured members of Congress that their finances were improving, a different story was being prepared behind the scenes, according to a congressional memo issued Monday.
The solar panel manufacturer, California-based Solyndra Inc., received a $528 million federal loan. Last week it filed for bankruptcy. The FBI subsequently raided the company’s headquarters and interviewed company executives at their homes.
A House subcommittee is examining the downfall of Solyndra, the first company to get a loan guarantee through the government’s economic stimulus program. In preparation for a hearing on Wednesday, aides issued a memorandum for lawmakers that detailed Solyndra’s history and its considerable financial problems after the Energy Department had agreed to the loan guarantee.
The guarantee essentially tells lenders that the government will cover the company’s debt obligation in the event it defaults. In Solyndra’s case, the loan came from the federal government itself.
Solyndra executives met with several lawmakers and their staff members the week of July 18, the memo said. The company had experienced a series of financial setbacks during the previous year, including cancellation of a stock offering. During the July meetings, company officials “claimed that Solyndra’s financial condition was improving, and that the company’s revenues were growing, according to the memo.
However, a Labor Department loan officer recently told congressional staff that the company, during that same time frame, was preparing to restate some of its projected financial statements to reflect lower revenues as a result of falling prices for solar panels.
Solyndra had private investors as well. They were uncomfortable providing additional financing unless the company and federal government restructured the terms of the federal loan a second time. Ultimately, the Energy Department determined that a second restructuring was not feasible. It informed the company on Aug. 30.
The company’s board of directors announced one day later that it would file for bankruptcy.
Agents with the FBI and the Energy Department’s Office of Inspector General subsequently executed search warrants at the company’s headquarters and at the home of certain Solyndra executives. Officials with the two agencies have declined to say what the investigation is focused on, but company officials said they believed it had to do with the federal loan.
Congressional investigators have also issued subpoenas for documents from the White House Office of Management and Budget concerning Solyndra. In particular, they’re seeking communications between the White House and Solyndra and its investors to determine whether politics played a role in the approval of the loan.
The hearing Wednesday will focus on several aspects of the loan, including whether federal officials conducted a proper review of Solyndra’s loan guarantee application. Members of the House Subcommittee on Oversight and Investigations will also examine whether officials should have anticipated many of the problems that led to Solyndra’s bankruptcy.
President Barack Obama visited Solyndra last year, saying the company represented the future of American renewable energy innovation and noting that it expected to hire 1,000 workers.
Solyndra’s technology relied on a tube that could soak up sunlight from many different angles, producing energy more efficiently and using less space. The company’s panels were also light and easy to install, which was meant to save up-front costs. But over the past few years, other companies caught up and provided similar products at a lower cost.
Company executives have been invited to testify at Wednesday’s hearing.
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