In testimony before the House Energy and Commerce Subcommittee on Oversight and Investigations on Thursday, Energy Secretary Steve Chu took full responsibility for all decisions regarding the $535 million loan guarantee awarded to failed solar company Solyndra. “As the secretary of energy, the final decisions on Solyndra were mine,” he said, “and I made them with the best interest of the taxpayer in mind.”
But despite taking ownership of the debacle, Chu refused to take any of the blame. He did not apologize or acknowledge any wrongdoing on his behalf, or on that of the Department of Energy in general. When asked by Energy and Commerce chairman Fred Upton (R., Mich.) if someone should apologize for putting taxpayers on the hook for half a billion dollars, Chu simply said “it is extremely unfortunate what has happened to Solyndra.”
To this date, evidence uncovered by the committee, mostly in the form of e-mails, strongly indicates that: 1) Solyndra’s financial condition was always very dubious, making it an extremely risky bet from the get-go, and 2) political considerations played a substantial role in the decision-making process throughout the DOE’s involvement with the company.
But rather than acknowledge that there is at least some merit to these claims, Chu instead opted to plead incompetence. For example, Chu told the committee that he was unaware of predictions by DOE staffers in 2009, before the Solyndra loan was finalized, that the company was likely to face severe cash flow problems in the future.
“The issue of working capital remains unresolved,” wrote one DOE staff member on Aug. 19, 2009, just days before the loan was officially announced. “[Solyndra] seems to agree that the model runs out of cash in Sept. 2011.” The company would officially declare bankruptcy on Sept. 6, 2011. Chu said that he only recently became aware to the fact that such concerns were raised, and argued that staffer “wasn’t predicting bankruptcy of the company.”
Chu repeatedly blame Solyndra’s demise on the “unanticipated” deterioration of the solar panel market over the past several years, spurred by increasing competition from China, which massively subsidizes its own solar industry. There is no disputing the fact that markets conditions were not in the company’s favor to begin with, and became increasingly worse. But Chu’s claim that this was an “unanticipated” development flies in the face of the evidence. Staff at the Office of Management and Budget raised these very concerns in the days before Solyndra’s loan was approved, but were apparently ignored.
“Solyndra claims to have a pricing advantage based on performance and lower cost,” and OMB staffer wrote in an Aug. 31, 2009 e-mail. “Recent developments in the solar market, in particular, pricing pressure from China…raise concerns about how strong Solyndra’s position will be in the face of rising competition.” As a result, the staffer suggested that OMB “might want to notch the credit rating down (or viewed conversely, increase our estimate of risk).”
The staffer also requested an independent analysis from the DOE to back up the company’s claims of a “pricing advantage.” But this was never produced, as months later, on July 26, 2010, another OMB staff member e-mailed a DOE official to reiterate the request for an independent analysis. In late October 2010, when Solyndra’s financial troubles became more pronounced, one of the company’s top investors complain that Solyndra could only produce “anecdotal evidence” that the company would be able to compete in the current market.
Chu also denied that “political considerations” had any influence on the DOE’s decisions regarding Solyndra. But again, evidence obtained by the committee suggest otherwise. In perhaps the most striking example, a series of e-mails reveal that the DOE urged Solyndra executives to delay their announcement of layoffs at the company until after the 2010 midterm elections. “[DOE] did push very hard for us to hold our announcement of the consolidation to employees and vendors to Nov. 3rd,” wrote Solyndra investor Steve Mitchell. “Oddly they didn’t give a reason for that date.”
Astonishingly, Chu told the committee he had “just learned” about this, and insisted that “no pressure” was exerted by the DOE to convince Solyndra to postpone the layoffs. “That was not discussed with me and I would have not approved it,” he added.
That includes the decision to restructure Solyndra’s initial loan guarantee in a way that gave private investors priority — over taxpayers — with respect to the first $75 million recovered in the event of a bankruptcy.
When asked how much money the government (i.e. taxpayers) is now likely to recover once the company’s remaining assets are auctioned off, Chu responded: “Not very much.”