August 24, 2015
Special Report: The Department of Energy’s Loan Guarantee to Solyndra, Inc.
This Special Report outlines the results of a 4-year investigation into concerns that Solyndra, Inc., (Solyndra) may have provided the Department of Energy with false and misleading information during the application process for a $535 million loan guarantee.
In September 2009, the Department approved the loan guarantee to Solyndra for the construction of a photovoltaic manufacturing facility in Fremont, California, referred to as Fab 2. In the ensuing 2 years, the Department disbursed over $500 million to Solyndra. In September 2011, the company initiated the layoff of 1,100 employees, ceased operations and manufacturing, and filed for bankruptcy protection.
In this report we outline the key aspects of our case. As with any 4-year investigation, it would be impossible to succinctly summarize all the evidence we collected and analyzed, and to capture all of the nuances and subtleties of the events that transpired. We are issuing this public report for two primary reasons. First, we believe there is a compelling public interest in this matter given the loss to U.S. taxpayers in excess of $500 million, a loss of confidence in the loan guarantee program, and the significant controversy that surrounded the Solyndra matter. Second, we have concluded that it is important that there be heightened awareness of key shortcomings in the Solyndra loan guarantee process and, in this context, that the Department be provided with certain lessons learned as it proceeds to exercise its authority to grant an additional $40 billion in loan guarantees.
Our investigation confirmed that during the loan guarantee application process and while drawing down loan proceeds, Solyndra provided the Department with statements, assertions, and certifications that were inaccurate and misleading, misrepresented known facts, and, in some instances, omitted information that was highly relevant to key decisions in the process to award and execute the $535 million loan guarantee. 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 deceive and mislead the Department.
We also found that the Department’s due diligence efforts were less than fully effective. At various points during the loan guarantee process, Solyndra officials provided certain information to the Department that, had it been considered more closely, would have cast doubt on the accuracy of certain of Solyndra’s prior representations. In these instances, the Department missed opportunities to detect and resolve indicators that portions of the data provided by Solyndra were unreliable. In the end, however, the actions of the Solyndra officials were at the heart of this matter, and they effectively undermined the Department’s efforts to manage the loan guarantee process. In so doing, they placed more than $500 million in U.S. taxpayers’ funds in jeopardy.
Topic: Management & Administration