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Department of Energy pushed Solyndra to keep layoffs quiet until after midterm elections

WASHINGTON — The Obama administration urged officers of the struggling solar company Solyndra to postpone announcing planned layoffs until after the November 2010 midterm elections, newly released emails show.

Solyndra, the now-shuttered California company, had been a poster child for President Barack Obama's initiative to invest in clean energies and received the administration's first energy loan of $535 million. But a year ago, in October 2010, the solar panel manufacturer was quickly running out of money and had warned the Energy Department it would need emergency cash to avoid having to shut down.

The new emails about the layoff announcement were released Tuesday as part of a House Energy and Commerce Committee memo, provided in advance of Energy Secretary Steven Chu's scheduled testimony before the investigative committee Thursday.

Solyndra's chief executive warned the Energy Department on Oct. 25, 2010, that he intended to announce worker layoffs Oct. 28. He said he was spurred by numerous calls from reporters and potential investors about rumors the firm was in financial trouble and was planning to lay off workers and close one of its two plants.

But in an Oct. 30, 2010, email, advisers to Solyndra's primary investor, Argonaut Equity, explain that the Energy Department had strongly urged the company to put off the layoff announcement until Nov. 3. The midterm elections were held Nov. 2 and led to Republicans taking control of the House of Representatives.

"DOE continues to be cooperative and have indicated that they will fund the November draw on our loan (app. $40 million) but have not committed to December yet," a Solyndra investor adviser wrote Oct. 30. "They did push very hard for us to hold our announcement of the consolidation to employees and vendors to Nov. 3rd — oddly they didn't give a reason for that date."

Solyndra has become a rallying cry for Republicans who argue that Obama used his clean energy initiative to steer valuable loans to benefit his friends and donors. Argonaut is a private equity firm of George Kaiser, who advised his investor deputies on how to approach the White House to help Solyndra with its financial problems.

Earlier in October, Solyndra executives and investors had warned the agency that they needed emergency financing to keep the company operating after December and were working with the agency to restructure and ease the terms of its half-billion-dollar federal loan.

On Oct. 25, 2010, Solyndra chief executive Brian Harrison emailed the Energy Department's loan staff to explain that Solyndra "has received some press inquiries about rumors of problems (one of them with quite accurate information) and we have received in-bound calls from potential investors. Both of these data points indicate the story is starting to leak outside Solyndra."

Harrison went on to state that he would "like to go forward with the internal communication (to employees regarding layoffs) on Thursday, October 28."

Harrison's email was forwarded to program director, Jonathan Silver, who then alerted White House climate change czar Carol Browner and Vice President Joe Biden's point person on stimulus, Ron Klain. Browner asked for more information about the announcement, and Chu's chief of staff explained he had left a voicemail message on her cellphone.

On Nov. 3, 2010, Solyndra announced it would lay off 40 workers and 150 contractors and shut down its Fab 1 factory. The department agreed to continue giving Solyndra installments of its federal loan despite the company's failure to meet key terms of the loan, and in February restructured its loan to give investors a chance to recover $75 million in new money they put into the company before taxpayers would be repaid.

Silver resigned from the agency last month.

Department of Energy pushed Solyndra to keep layoffs quiet until after midterm elections 11/15/11 [Last modified: Tuesday, November 15, 2011 11:51pm]
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