Did DoE mislead investors, Congress on Solyndra?

posted at 12:10 pm on November 11, 2011 by Ed Morrissey

I picked on the Washington Post’s reporting earlier today, so let’s give them some credit for digging into the Solyndra mess and finding a disturbing new twist.  As the solar-tech company began to collapse, the Department of Energy had ample warning of the unfolding disaster.  Did they take steps to protect taxpayer funds?  Not only is the answer to that a resounding no, but even armed with this knowledge, Energy officials were making very misleading public statements about Solyndra’s financial situation:

At a number of points in its troubled history, the solar company Solyndra faced dire financial problems that threatened its survival. Yet at each crisis, Energy Secretary Steven Chu and officials at his agency failed to take steps that critics say could have limited taxpayer losses when the company collapsed last summer.

Instead, Energy Department officials monitoring the solar panel manufacturer and its $535 million federal loan stepped in with financial assistance, or worked to dispel concerns raised by industry analysts and other Obama administration staffers, according to previously confidential documents analyzed by The Washington Post.

As Joe Stephens and Carol Leonnig report, this went beyond just remaining silent while Solyndra executives misled Congress this summer on their impending collapse.  DoE officials went out and made statements testifying to the health of Solyndra even while the DoE knew they were about to go under:

By Aug. 9, with Solyndra weeks away from a bankruptcy filing, OMB career staff mocked supportive comments offered by Jonathan Silver, then the head of Energy’s loan program. Silver had been quoted in an article saying that Solyndra was “significantly misunderstood” and experiencing the normal “bumps in the road” for a startup company.

“Wow . . . I wonder if he was unaware of the true situation at Solyndra, or if he was trying to salvage something by showing DOE confidence,” an OMB staffer wrote in one e-mail.

If Silver was ignorant of Solyndra’s dire straits, it would only have been if he hadn’t consulted his own staff — and if so, then Silver had no business commenting on the situation at all.  If Silver had been consulting his staff on the situation, then he was deliberately misleading not just internal auditors but the whole investment community.  The only way Solyndra was going to get rescued was through rescue investment, which by that time Silver knew through personal experience from more than a year earlier.

In July 2010, Silver assured the OMB that Solyndra was “on time and on budget.”  Less than a week later, Solyndra changed CEOs, and three months later, Solyndra told DoE that it needed emergency funding to keep operating.  Two months after that, they missed a scheduled $5 million security payment, which violated the conditions of the loan.  That’s when DoE arranged for George Kaiser and other investors to put in another $75 million — and agreed to break the law by subordinating taxpayer investment to the new tranche from Kaiser and his team.

Did Silver and Chu learn their lesson and stop blowing sunshine up the public’s skirt?  Not at all.  By April 2011, Chu told the media that Solyndra’s sales were “growing” and that he was “confident” in their long-term prospects.  Meanwhile, Silver told the media in April that Solyndra was “going in the right direction” and that they had doubled their revenues in each of the last two years.  Unfortunately, the DoE already knew that was false.  Sales had remained flat, and Solyndra products were selling at a loss anyway.  A White House memo uncovered by Stephens and Leonnig shows that the administration was aware that Solyndra had “0 percent sales growth since [the fall of] 2009.”o

In other words, Silver and Chu lied about Solyndra’s finances.  They certainly had a political motivation to make Solyndra look good, as the political fallout following the collapse has proven already.  But they also had another motive, tied to that political desperation, which was to find new investors to extend Solyndra’s liquidity to avoid the collapse.  By becoming Solyndra cheerleaders in the media, Chu and Silver engaged in a pattern of deception that would have led people to invest in a firm they knew was rapidly approaching collapse.

If company executives in less-politically-connected firms issued those kinds of false statements about their fiscal health, they might well face criminal prosecution.  Maybe it’s time to look at whether Chu and Silver should be facing the wrong end of a grand jury probe in Solyndra.

Update: I meant that Solyndra’s products were selling at a loss.  I’ve made that more clear.

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Rep Henry Waxman quote from sometime in 1990′s: “So what?”

listens2glenn on November 11, 2011 at 12:18 PM

What you have there is simply the beginning of the narrative that has Obama throwing DoE and Chu to the wolves / under the bus so as to keep it from getting pinned ‘higher up’.

Midas on November 11, 2011 at 12:18 PM

This is a perfect example of what one of my old bosses called “getting them to bite the apple”
Once they commit to your narrative, the become co-conspirators in order to protect their decision from scrutiny form the outside or above.

J_Crater on November 11, 2011 at 12:22 PM

So when do the indictments start flying?

Akzed on November 11, 2011 at 12:22 PM

Isn’t such deception about the financial status of a company when shopping for investments illegal? WTF was the Obama Admin doing such things? It’s like they are above the law or something. Go figure.

Dandapani on November 11, 2011 at 12:24 PM

So when do the indictments start flying?

Akzed on November 11, 2011 at 12:22 PM

Janurary, 2013.

VegasRick on November 11, 2011 at 12:24 PM

What did Nixon do? Covered up someone taking a peek at the DNC strategy and other documents.

That’s not even a rounding error compared to what is occurring in the White House today.

Woodward and Bernstein are not available for comment.

BobMbx on November 11, 2011 at 12:24 PM

Do something congress and stat!

For the love of pete

cmsinaz on November 11, 2011 at 12:25 PM

So when do the indictments start flying?

Akzed on November 11, 2011 at 12:22 PM

Janurary, 2013.

VegasRick on November 11, 2011 at 12:24 PM

“From your lips to God’s ear…”, so to speak.

Midas on November 11, 2011 at 12:26 PM

Janurary, 2013. VegasRick on November 11, 2011 at 12:24 PM

I normally view the musings of some about elections being canceled as paranoia, even though I might have engaged in it myself betimes, but it might become a strategy for keeping Obooba and literally dozens of his cohorts outa prison.

Akzed on November 11, 2011 at 12:27 PM

If company executives in less-politically-connected firms issued those kinds of false statements about their fiscal health, they might well face criminal prosecution. Maybe it’s time to look at whether Chu and Silver should be facing the wrong end of a grand jury probe in Solyndra.

No different than Enron. Period.

TXUS on November 11, 2011 at 12:28 PM

No different than Enron. Period.

TXUS on November 11, 2011 at 12:28 PM

Isn’t it?

I don’t remember there being evidence that the Bush administration – at several levels – proactively engaged in lying to Congress and the public about the involvement, broke the law in putting taxpayer investment subordinate to a private politically-tied investor, etc.

Did that happen?

This seems significantly different from where I’m sitting.

Midas on November 11, 2011 at 12:32 PM

Washington Post title:

Solyndra: Energy Department failed to sound alarm as solar company sank

The irony is of course, that if this was during the Bush Administration, the Post’ headline would be exactly this: “Bush Administration Failed”, but alas, the writers and editors here must preserve Obama’s credibility for the sake of their agenda—which is re-electing the President.

Rovin on November 11, 2011 at 12:36 PM

There are myriad SEC laws regarding the sale of stocks based on false information that have been violated. Maybe Bernie Madoff or Allan Stanford might care to opine here.

hip shot on November 11, 2011 at 12:37 PM

Yet at each crisis, Energy Secretary Steven Chu and officials at his agency failed to take steps that critics say could have limited taxpayer losses when the company collapsed last summer.

Wow, talk about downplaying your own scoop.

They actively lied and deceived the public with the intent of increasing taxpayer losses.

forest on November 11, 2011 at 12:38 PM

Isn’t this fraud on the part of Silver and Chu?

lied about Solyndra’s finances

Don’t we have currently enforced law that they have subverted and ignored?

and agreed to break the law by subordinating taxpayer investment

Why have they not been prosecuted?

jackal40 on November 11, 2011 at 12:49 PM

Chu Chu is a techie, not a business person, so he wouldn’t, I suspect appreciate what was happening at Solyndra personally by looking at the numbers or commentary.

I guess all that matters is image, and if DOE is trying to bury a turd this obvious, it cannot be again that Obama didn’t tell them what to do.

There doesn’t seem to be a bottom for how low Obama and cadre will stoop, or a limit to the stupidity they have assigned to those outside their bubble.

Part of this has to be incompetence. Part hubris. Insularity. But intention has to be part of the issue. Even a blind hog finds an acorn now and again. Obama and cadre’s batting average for unconstructive decisions and ideas is too consistent to write off as “incompetence”. Nobody can do “incompetence” that well.

Harry Schell on November 11, 2011 at 1:01 PM

Rep Henry Waxman continues:

“Even if everything you say is true . . . I still keep coming back to . . . So what?”

I don’t really know that that is going to be their open strategy.

But I do believe that is their mental attitude.

listens2glenn on November 11, 2011 at 1:02 PM

Very Slightly O/T:

Canada now talking to China about their oil sands reserves, as the Obama administration destroys another economic boon for this nation, while he solidifies his voting base with his environmental lobby. Thanks for putting your political interest ahead of your country’s needs Mr. Obama………Job One!

Rovin on November 11, 2011 at 1:13 PM

That’s when DoE arranged for George Kaiser and other investors to put in another $75 million — and agreed to break the law by subordinating taxpayer investment to the new tranche from Kaiser and his team.

Wait, what?

That’s so Unlike the Obama administration.

Chip on November 11, 2011 at 1:14 PM

By becoming Solyndra cheerleaders in the media, Chu and Silver engaged in a pattern of deception that would have led people to invest in a firm they knew was rapidly approaching collapse.

Those two should be FROG MARCHED into federal prison.

GarandFan on November 11, 2011 at 1:15 PM

Canada now talking to China about their oil sands reserves, as the Obama administration destroys another economic boon for this nation, while he solidifies his voting base with his environmental lobby. Thanks for putting your political interest ahead of your country’s needs Mr. Obama………Job One!

Rovin on November 11, 2011 at 1:13 PM

China has already been involved in the Oil Sands for a number of years. Also the planned new oil pipeline to the West Coast is being financed by the Chinese as they will be buying the product. My brother has been heavily involved in that project for at least 5 years and it will probably be 10 more years to completion.

Ogabe on November 11, 2011 at 1:25 PM

No different than Enron. Period.

TXUS on November 11, 2011 at 12:28 PM

.
That’s completely and utterly incorrect. You don’t know what you’re talking about and I do. Provide linkable evidence if you can prove the Bush administration knew anything about off-Balance Sheet SPE accounting which facilitating the Enron malfeasance.
.
Otherwise, shut up.

ExpressoBold on November 11, 2011 at 1:39 PM

Midas on November 11, 2011 at 12:32 PM

The basic similarity is misleading investors this time we the people are the investors.
Basically this is what killed ENRON and what Ken Lay was found guilty of misleading investors when he knew the company was done!

Lay dumped large amounts of his Enron stock in September and October 2001 as its price fell, while encouraging employees to buy more stock, telling them the company would rebound. Lay liquidated more than $300 million in Enron stock from 1998 to 2001, mostly in stock options. As the scandal unfolded

DSchoen on November 11, 2011 at 2:32 PM

But…Green Energy…must….not…fail…..

elowe on November 11, 2011 at 2:35 PM

Indict Indict Indict

petefrt on November 11, 2011 at 2:42 PM

If a public corporation did what Chu/Silver Biden & Obama did on Solyndra, the democraps would be demanding they be frogmarched in orange jumpsuits. Is the DOE immune from securities’ fraud/wire fraud prosecution? Is DOE immune from RICO prosecution? Is there a pattern of racketeering activity going on at DOE?

eaglewingz08 on November 11, 2011 at 3:45 PM

Misleading investors is a very serious crime -ask Martha Stewart, and Bernie Madoff, and now we must ask, is there a jail large enough for that many in the administration?

Don L on November 11, 2011 at 4:13 PM

Thanks for putting your political interest ahead of your country’s needs Mr. Obama………Job One!

Rovin on November 11, 2011 at 1:13 PM

Goodness -don’t forget to blame your neighbor too, the one with the rainbow road on his bumper sticker.

Don L on November 11, 2011 at 4:15 PM

Chu acted as a cheerleader and advocate for Obama’s baby green project, Solyndra, possibly at Obama administration bidding. He should have been putting his finance people’s feet to the fire, demanding proper due diligence on Solyndra’s business plan and prospects. He failed miserably and so did Obama. What’s their answer: basically “Well you win some and you lose some.” The taxpayers lost 500 plus million dollars of borrowed money. We need absolutely no more of these green boondogles. Chu and Obama must go.

stefano1 on November 11, 2011 at 4:52 PM