Solyndra Went on a Spending Spree After Getting Loan
http://www.thefiscaltimes.com/Articles/2011/09/22/WP-Solyndra-went-on-a-spending-spree-after-getting-loan.aspx#page1
By September 22, 2011--------------------------------------------------------------------------------
Former employees of Solyndra, the shuttered solar company that exhausted half a billion dollars of taxpayer money, said they saw questionable spending by management almost as soon as a federal agency approved a $535 million government-backed loan for the start-up.
A new factory built with public money boasted a gleaming conference room with glass walls that, with the flip of a switch, turned a smoky gray to conceal the room’s occupants. Hastily purchased state-of-the-art equipment ended up being sold for pennies on the dollar, still in its plastic wrap, employees said.
As the $344 million factory went up just down the road from the company’s leased plant in Fremont, Calif., workers watched as pallets of unsold solar panels stacked up in storage. Many wondered: Was the factory needed?
“After we got the loan guarantee, they were just spending money left and right,” said former Solyndra engineer Lindsey Eastburn. “Because we were doing well, nobody cared. Because of that infusion of money, it made people sloppy.”
Solyndra’s ability to secure federal backing also made the company eager for more assistance, interviews and records show. Company executives ramped up their Washington lobbying efforts, hiring a former Senate aide to work with the White House and the Energy Department. Within a week of getting a loan guarantee commitment from the Energy Department, Solyndra applied for another, worth $400 million. It never won final approval.
On Friday, company executives are scheduled to appear before a House committee investigating how Solyndra obtained its loan and whether the Obama White House rushed its approval for political reasons. Chief Executive Officer Brian Harrison and Chief Financial Officer Bill Stover were supposed to face a grilling about the company’s spending and collapse, but they announced Tuesday that they would assert their Fifth Amendment rights because of a criminal probe of the company by the Justice Department.
A key question for lawmakers is whether Solyndra executives misled Congress about the financial state of the company as late as July, when questions about the loan surfaced on Capitol Hill. Solyndra filed for Chapter 11 bankruptcy on Aug. 31, laying off 1,100 workers and leaving taxpayers on the hook for repayment of the guaranteed loan made through the Federal Financing Bank.
Solyndra was once touted by President Obama as the flagship of his administration’s effort to spur the clean-energy industry. The Washington Post reported earlier this month that e-mails showed that White House officials pushed federal reviewers for a decision on the Solyndra loan as they sought to schedule a press announcement with the company and Vice President Biden.
An Energy Department spokesman said the agency was unaware that Solyndra sales projections, part of the justification for the new factory, had been too rosy. Spokesman Damien LaVera declined to comment on the employees’ accounts of company spending.
Solyndra, founded by enterpreneur Chris Gronet in 2004, pushed the Obama administration to support its niche solar technology — efficient cylindrical solar panels that were relatively expensive to make but cheaper and easier to install on the roofs of “big box” stores and other commercial buildings. The new administration awarded the company its first loan guarantee under the stimulus program.
The leading investors in Solyndra were two investment funds with ties to George B. Kaiser, a major campaign fundraising “bundler” for Obama.
The White House had scheduled a press event around the time of Solyndra’s factory groundbreaking on Sept. 4, 2009. Federal reviewers gave their final nod to the deal on Sept. 2.
With the loan guarantee in hand, Solyndra built a second, seven-acre factory with 19 loading docks. As part of the expansion, Gronet and fellow managers hoped to cut costs by speeding up the automated assembly. To do so, they bought a custom-made assembly tool from VDL, a Dutch company. The company had never built that kind of equipment, but it promised the assembly tool would arrive in the summer of 2010. By that time, Gronet had been pushed out as chief executive. Workers told The Post in interviews that they were shocked that summer when Harrison, newly installed as CEO, told them that sales projections used to justify the new factory to federal agencies had been far too optimistic.
“Obviously their forecasts weren’t correct,” said Peter M. Kohlstadt, a research engineer. “We just didn’t have the sales we thought we had.”
Employees said that in 2010 they noticed that solar panel inventories were growing — raising questions about why they weren’t being sold. The new assembly equipment arrived late and had technical problems. VDL officials did not respond to a request for comment.
In a July 13 letter to the House Energy and Commerce Committee, then probing his company’s loan, Harrison insisted that the company’s future was bright.
“Solyndra’s revenues grew from $6 million in 2008 to $100 million in 2009 to $140 million in 2010,” Harrison wrote. “For 2011, revenues are projected to nearly double again.”
Bankruptcy filings show the company was at the time desperately looking for bridge financing to keep its doors open. It shut down six weeks later.
Although Harrison stressed in a Post interview earlier this year that he focused on business, not “the political aspect of what happens in Washington,” public records show that since 2008, Solyndra has spent more than $1 million on lobbying inside the Beltway.
Lobbying expenditures of $160,000 a year in 2008 and 2009 accelerated as Solyndra’s financial and political troubles mounted. By 2010, such spending had grown to $550,000. So far this year, Solyndra has reported spending $220,000, but that number will grow as more reports filter in.
Sakera Alima, who began working at Solyndra as a financial analyst in the fall of 2010, said she was warned by a mentor that the company wasn’t doing well financially.
“She said, ‘I’ve been working here the past three years and I feel like any day now I might not have my job,’ ” Alima recalled. “I knew it was a risk.”
Kohlstadt said employees arrived at work to find the company closed, and they lost vacation pay and benefits without notice.
Kohlstadt said Solyndra’s collapse leaves him doubly affected.
“I’m being hit twice: As a taxpayer, $500 million, where did it go?” he said. “I’m hit a second time: I’m not getting money that is owed to me and the government hasn’t done anything to look out for us.”
