BY DAVID R. BAKER
SAN FRANCISCO CHRONICLE
The accusations started flying as soon as Solyndra shut its doors.
The solar startup based in Fremont shook Silicon Valley and Washington on Aug. 31 when it fired most of its staff and closed the gleaming new factory it had built with a $528 million federal loan.
Within hours, congressional critics accused the Department of Energy of rushing Solyndra’s loan, which had been part of President Obama’s economic stimulus package. Republicans suggested Solyndra got the money because its biggest investor had raised campaign funds for Obama.
Solyndra’s bankruptcy prompted investigations by a congressional subcommittee and the Department of Justice. Thousands of e-mails from the government, the company and its investors have been made public.
Four months later, the most sensational allegations — particularly those of cronyism — remain unproven, though the public documents do provide support for some of the accusations.
Allegation: Solyndra won the loan because of political ties.
Solyndra’s largest investor was Argonaut Ventures, which operates on behalf of the George Kaiser Family Foundation. Kaiser, an Oklahoma oil man, was a campaign contribution bundler for Obama in 2008.
Solyndra’s loan came from a Department of Energy program established under President Bush in 2005. Solyndra applied for the money in 2006. The program had not yet issued loans by the time Bush left office, but Energy Department officials were actively considering several applications. They viewed Solyndra as the likely recipient of the first loan, the program’s former executive director told congressional investigators. Before Obama took office in 2009, the former director said, the program’s staff had set a timeline for issuing a conditional loan guarantee.
Several Energy Department officials interviewed by congressional investigators said they were unaware of Kaiser’s link to Solyndra until they read about it in the media, according to a Nov. 16 memo by Democrats on the House Energy and Commerce Committee, whose oversight subcommittee has been investigating Solyndra.
Kaiser visited the White House in March 2009, before Solyndra’s loan was approved, and met with Pete Rouse, who was senior adviser to the president at the time, as well as officials involved in economic policy and energy issues. Kaiser told congressional investigators that they discussed energy policy and early childhood education — one of his charitable pursuits — but not Solyndra.
The company received conditional approval for the loan on March 20, 2009, and final approval that September.
Allegation: Solyndra received preferential treatment after the initial loan guarantee because of political ties.
Solyndra’s fortunes started falling in 2010 as the company found its innovative, tube-shaped solar modules undercut by far cheaper panels made in China. As its financial picture darkened, Solyndra sought help from the Energy Department to modify the terms of its loan. The company also wanted to persuade the Department of Defense to buy its modules.
Some within the company wanted the White House’s assistance with both departments. Steve Mitchell, managing director of Argonaut and a member of Solyndra’s board, suggested having Kaiser contact Obama’s chief of staff. But Kaiser rebuffed the idea in an e-mail. “I would see an appeal as only a last resort, and even then, questionable,” he wrote on Oct. 6.
The director of the George Kaiser Family Foundation chimed in, asking why Solyndra’s lobbyists couldn’t handle the job themselves. Mitchell finally conceded.
“I think the company is hoping that we have some unnatural relationship that can open bigger doors,” Mitchell wrote. “I’ve cautioned them that no one really has those relationships anymore.”
Later that month, Kaiser sat next to Obama at a fundraising dinner in Las Vegas. In an e-mail the next day, Kaiser told the director of his family foundation that they talked about early childhood education, as well as how Chinese government subsidies for solar firms were hurting American solar manufacturers.
“I never mentioned Solyndra directly,” he wrote.
Allegation: Politics caused the Energy Department to rush Solyndra’s loan.
E-mails from early 2009 show that as the Energy Department moved closer to giving Solyndra conditional approval, the White House pressed for faster action. White House staff wanted Obama to announce Solyndra’s conditional loan guarantee during a planned trip to California in March.
“If you guys think this is a bad idea, I need to unwind the WW (West Wing) QUICKLY,” Ronald Klain, then chief of staff for Vice President Joe Biden, wrote in a March 7 e-mail to officials at the Office of Management and Budget, which was reviewing the deal’s terms.
E-mails among the budget office staff show they felt rushed. “This deal is NOT ready for prime time,” one staff member wrote on March 10.
The same pattern repeated itself later that year, as the Solyndra loan neared final approval.
White House staff members wanted Biden and Energy Secretary Steven Chu to announce the loan at a Sept. 4 groundbreaking ceremony for the company’s new Fremont factory. The latest unemployment numbers were due to be released that day, and the administration wanted to tout its efforts to create green jobs. Once again, the Office of Management and Budget raced to finish its review.
“I would prefer that this announcement be postponed,” one staff member wrote in an Aug. 31 e-mail, just days before the planned groundbreaking. “This is the first loan guarantee and we should have full review with all hands on deck to make sure we get it right.”
The groundbreaking ceremony and the announcement of the loan went ahead as planned. Budget office officials would later tell congressional investigators that their analyses probably would not have changed if they had been given more time.
Allegation: The Energy Department broke the law when it restructured Solyndra’s loan agreement.
As Solyndra’s fiscal health deteriorated, the company’s two largest investors agreed to give it a $75 million loan — with a catch. Should the loan fail to save Solyndra from bankruptcy, the investors wanted to be repaid first, before the federal government got any of its money back. In February, the Energy Department agreed.
The department’s decision appeared to clash with the 2005 law that created the loan program. Part of that law states, “The obligation shall be subject to the condition that the obligation is not subordinate to other financing.” Officials at the Treasury Department and the Office of Management and Budget questioned whether the loan restructuring violated the statute.
Energy Department officials discussed the issue at length. Susan Richardson, chief counsel for the loan program, wrote a legal opinion dated Feb. 15, arguing that the law’s prohibition on subordinating the government loan applied only to the initial loan guarantee, not to any further rounds of financing.