Officials: No political influence in Solyndra loan

Story highlights

  • NEW: Secretary Chu says no political considerations in Solyndra decisions
  • The House Energy Committee will hold a hearing on Solyndra on Thursday
  • Solyndra went bankrupt after receiving $535 million in federal loan guarantees
  • Republicans allege favoritism for an Obama ally; Democrats deny it
Officials interviewed as part of a House committee's investigation of a federal loan guarantee to Solyndra said they were unaware of any political pressure exerted on behalf of a key investor and fundraiser for the president, according to the panel's Democratic staff.
In a memorandum released Wednesday, the day before Energy Secretary Steven Chu appears at a committee hearing on Solyndra, the Democratic staff rebutted Republican leaders' claims of favoritism by the White House for George Kaiser, a major investor in the solar energy company who raised money for candidate Barack Obama in 2008.
Chu will say at the Thursday hearing that the Department of Energy's decision in 2009 to provide Solyndra with $535 million in federal loan guarantees was thoroughly reviewed and debated throughout the approval process, according to advance text of his opening statement released Wednesday.
"As the Secretary of Energy, the final decisions on Solyndra were mine, and I made them with the best interest of the taxpayer in mind," Chu will tell the panel, according to the advance text. "I want to be clear: over the course of Solyndra's loan guarantee, I did not make any decision based on political considerations."
Solyndra, which manufactured high-tech solar energy panels, went bankrupt this year, putting more than 1,000 people out of work and leaving the federal government unlikely to recoup any of the loaned money. The White House has ordered a review of the case.
House Republicans have spearheaded an investigation into whether the company, which the Obama administration touted as part of its clean energy strategy, benefited from the political ties between Obama and Kaiser.
Chu and other administration officials have denied exerting any political influence in the Solyndra decision. They note the loan program began in the Bush administration and Solyndra's application preceded Obama's presidency.
In their memorandum Wednesday, the staff for Democrats on the House Energy and Commerce Committee said the question of political influence was asked of at least 10 officials, including high-ranking figures such as David Frantz, the director of the Loan Guarantee Program, and Matt Rogers, a senior adviser to Chu.
"During the committee's staff interviews with administration officials, the officials were asked whether they were pressured to provide assistance to Mr. Kaiser," the memorandum said. "Each official denied receiving any pressure to intervene on Mr. Kaiser's behalf. In fact, key officials stated they were unaware that Mr. Kaiser had an interest in Solyndra until they read about it in the paper."
Other officials named by the memorandum as being unaware of any political influence included Jonathan Silver, the former executive director of the Loan Guarantee Program, and Steve Isakowitz, the former chief financial officer at the Department of Energy who was appointed during the Bush administration.
The investigation has set off a sharp partisan showdown over the Solyndra case, with Republicans calling it political cronyism at taxpayer expense while Democrats say the GOP is conducting a biased witch hunt purely for political gain.
In a November 11 letter to the Republican chairs of the energy committee and the oversight subcommittee, White House Counsel Kathryn Ruemmler cited what she called the selective release of some e-mails and other documents last week intended to create a false impression that political contributors influenced the Solyndra loan decision.
"Your allegation is unfounded," Ruemmler wrote, adding that the way the documents were released presented a misleading and inaccurate account to the public.
Democrats on the committee also criticized last week's release of information by Republicans, who allege political favoritism for Solyndra and question a decision to restructure the loan guarantee last year that they say benefited private investors ahead of taxpayers.
In the advance text of his opening statement for Thursday, Chu said the 2010 restructuring of the loan guarantee was intended to provide the best chance for Solyndra to recover from financial difficulties caused in part by subsidized competition from China.
"The department faced a difficult decision: Force the company into immediate bankruptcy or restructure the loan guarantee to allow the company to accept emergency financing that would be paid back first if the company was still unable to recover," Chu will say.
"Although both options involved significant uncertainty for the value of the company, our judgment was that restructuring was the better option to recover the maximum amount of the government's loan," Chu's advance text continues. "It also meant continued employment for the company's approximately 1,000 workers. I approved restructuring of the loan guarantee to give the taxpayers the best chance at recovery."
However, when Solyndra faced further financial crisis last August, "we concluded that providing additional support to this company was not in the taxpayer's best interests," Chu will say of the company's bankruptcy.
White House Chief of Staff William Daley recently announced a 60-day independent review of the state of the Energy Department's loan portfolio. The review will include recommendations about how to improve the loan monitoring process.
The review will be headed by Herb Allison, a veteran of both the Obama and the most recent Bush administrations, who was chosen by Obama to oversee Bush's Troubled Asset Relief Program, among other efforts.