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Report: Solyndra misrepresented facts to get loan guarantee

WASHINGTON — A four-year investigation has concluded that officials of the solar company Solyndra misrepresented facts and omitted key information in their efforts to get a $535 million loan guarantee from the federal government.

The company's collapse soon after getting federal backing provided ammunition to lawmakers and other critics who portrayed it as wasteful government spending. The company's failure likely will cost taxpayers more than $500 million.

The report by the Energy Department's inspector general released Wednesday is designed to provide federal officials with lessons learned as it proceeds to grant billions of dollars in additional loan guarantees. The inspector general also found fault with the Department of Energy, describing its due diligence work as "less than fully effective." The report also said department employees felt tremendous pressure to process loan guarantee applications.

In the end, however, the inspector general said the actions of the Solyndra officials "were at the heart of this matter."

"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," the IG's report said.

A federal loan guarantee program for energy projects was established in 2005 during President George W. Bush's administration. Four years later, the Democratic-led Congress passed an economic stimulus bill that substantially expanded the program. In the ensuing two years, the department disbursed more than $500 million to Solyndra, but in September 2011, the company laid off 1,100 employees, ceased operations and filed for bankruptcy protection. President Barack Obama personally visited the plant in 2010 to cite it as an example of economic progress stemming from the Democratic-led stimulus bill.

The IG's report did not provide any response to its findings from a Solyndra representative. It also didn't identify by name any particular Solyndra leader who gave misleading information. Miles Ehrlich, counsel for the company's former CEO, Chris Gronet, disputed the findings. He said the allegations were investigated by three of the most aggressive federal prosecutors in the country, and each time, "they rejected this DOE spin as contrary to the actual facts."

"Solyndra executives were completely truthful and accurate in their representations during this loan process, and the DOE was never misled about Solyndra's business or prospects," Ehrlich said.

Ehrlich said the real cause of Solyndra's failure had nothing to do with fraud but was caused by the unexpected dumping of solar panels subsidized by China's government.

The report notes that federal prosecutors and the FBI also participated in the interviewing of witnesses and the examination of hundreds of thousands of documents. In early 2015, the Department of Justice informed the inspector general's office that it would not pursue criminal prosecution of any Solyndra officials.

The report was less detailed about the Energy Department's shortcomings in conducting due diligence. It said the department needed to consider using "new and more intrusive validation techniques." It also said consultants the department hires must be held accountable for their work.

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