The Center for Public Integrity

The Energy Department kept Treasury Department officials in the dark until late in the government's review of the $535 million loan to now-bankrupt solar panel maker Solyndra, triggering a rushed consultation that may have left concerns unresolved, a new audit released Wednesday found.

The audit by the Treasury Department’s inspector general found that Treasury officials had raised serious concerns about the terms of the loan, but there was no documentation of whether they were addressed. The report’s findings of hurried reviews and ignored warning signs echo previous iWatch News reporting on Solyndra.

The loan, originally touted as a model of President Obama’s green energy program, has become a political weapon. “The Treasury report echoes what our investigation has shown over and over; Solyndra was a bad bet from the beginning that was rushed out the door while every red flag was ignored,” Republican Reps. Fred Upton and Cliff Stearns said in a statement Wednesday.

Though the Energy Department arranged the loan, it was actually processed by the Federal Financing Bank, a government lending institution under Treasury’s control. The newly released audit found that Treasury was not involved in the process until the loan negotiations were largely complete.

Treasury officials raised concerns about the terms of the loan, including the fact that it included a 100 percent guarantee, rather than a partial guarantee, auditors found. After a conference call with Energy Department officials, one Treasury official wrote, in an email uncovered by auditors, “we pressed on certain issues … but the train really has left the station on this deal.”

The Department of Energy was fully aware of the risks in backing Solyndra Inc., a start-up company that pocketed a half-billion dollar DOE loan but never turned a penny in profit before shutting its doors, concludes a former FBI agent hired to examine the company’s books.

The expert’s report, filed this week in Solyndra’s voluminous bankruptcy case in California, could embolden critics who say the government ignored financial red flags in supporting the solar panel maker with President Obama’s maiden green energy loan in 2009.

The $535 million loan, which bankrolled a vast new manufacturing plant in Fremont, Calif., was part of a broad government mission to kick-start the clean energy movement: Solyndra’s unique solar panels would cover commercial rooftops across the country, aiding the environment and boosting the economy.

Yet the company collapsed under a sea of debt and a business plan that, amid dramatic shifts in the global solar market, caused it to sell far fewer panels at far higher costs than envisioned. From 2009-11, it cost Solyndra $3.92 more per watt to make its panels than to sell them, the bankruptcy report shows.

Solyndra filed for bankruptcy Sept.6, 2011. Two days later, it faced a raid by agents from the FBI and the Energy Department inspector general. With those clouds looming, the company’s board hired R. Todd Neilson — the former federal agent and veteran trustee in bankruptcy cases — as chief restructuring officer.

Solyndra’s board wanted a CRO to not only manage its bankruptcy case, but to explore whether the company committed misdeeds on its road to collapse. “In light of the Federal criminal investigation and ongoing Congressional investigation … the Subcommittee agreed that the CRO would act in an independent capacity in determining if any improprieties had occurred with respect to the Debtors’ finances,” Neilson’s report said.

A key investor in the failed solar power company Solyndra, who was also a political donor to Barack Obama, strategized with his top executives about whether and how they should use their contacts inside the White House to help their failing business venture, according to emails surfaced by Congressional investigators Wednesday, ABC News reports.

"The White House has offered to help in the past and we do have a contact within the White House that we are working with," an adviser to billionaire Oklahoma oilman George Kaiser writes in an October 6, 2010 email. "I think the company is hoping we have some unnatural relationship that can open bigger doors — I've cautioned them that no one really has those relationships anymore."

Kaiser replies to Steve Mitchell, a senior executive at Kaiser's venture capital firm, that he should "pursue your contacts with the WH to follow up" but advises him not to directly ask, "Can you help with this?"

The release of the emails came as part of an escalating battle between Republicans in Congress and the White House over a subpoena for all of the internal communications about the $535 million government loan to Solyndra, a California solar panel manufacturer that went bankrupt. The White House has resisted the demand for documents, calling it a fishing expedition and an overreach for documents that have historically been protected. Congress has set Thursday as the deadline for the White House to comply with its demand for documents.

Within hours of the release of the internal emails between Kaiser and his advisers, Congressional investigators and administration officials were already disputing their significance.

Firing a legal salvo directly at the White House, a House committee voted along party lines Thursday to subpoena President Barack Obama’s inner circle for its deliberations over the administration’s failed $535 million investment in a California solar panel maker that was backed by a political fundraiser for the president.

The subpoena, which has not yet been issued, would  direct the chiefs of staff of the president and vice president to turn over internal correspondence on the Department of Energy’s loan guarantee to Solyndra Inc.

After securing its half-billion dollar taxpayer financing in 2009, the fledgling firm this year shut its doors, fired 1,100 workers and filed for bankruptcy.

Its collapse gave a black eye to the Energy Department, which has issued billions of dollars in federal support to clean technology firms, and has attracted investigations from the FBI, inspectors general for the Energy and Treasury departments and two House committees.

Energy officials raced to support Solyndra in the face of abundant red flags the company was a risky bet.

New internal emails obtained by iWatch News and ABC News show that Energy officials downplayed concerns even from Solyndra’s own auditor, who last year raised “substantial doubt about its ability to continue as a going concern.”

The House Energy and Commerce Committee’s 14-9 vote fell along party lines, with Republicans demanding the release of the deliberations while Democratic leaders contended the subpoena impedes on executive privilege, a limited legal privacy protection afforded to presidential actions typically in the realm of national security.

The Recovery Act infused $35 billion and grand expectations to the Department of Energy – but the reality has been far more sober, the department’s inspector general said in a hearing before the House Committee on Oversight and Government Reform Wednesday.

That reality: Few shovel ready projects and some 100 ongoing investigations.

Gregory Friedman, Energy’s Inspector General, said the DOE programs benefiting from the Recovery Act required so much additional planning, training and other organizational measures it was unrealistic to expect they would create jobs almost instantaneously.

“The concept of ‘shovel ready’ projects became a Recovery Act symbol of expeditiously stimulating the economy and creating jobs,” Friedman said in his testimony, which was released prior to the hearing. “In reality, few actual ‘shovel ready’ projects existed.”

Friedman said his office has more than 100 criminal investigations ongoing, the latest wave of scrutiny for a department already under fire for the failed $535 million investment in the now-bankrupt solar panel manufacturer Solyndra. Questions about Solyndra are likely to escalate amid a San Jose Mercury News report Wednesday that some company executives pocketed bonuses from $37,000 to $60,000 in the months before Solyndra’s collapse and dismissal of 1,100 workers.

The fallout from the government’s failed $535 million bet in solar panel maker Solyndra expanded on Friday, with the Obama administration seeking an independent audit of Energy Department loans even as the Republican-led House Energy committee threatened a subpoena of the president.

White House officials said the audit would focus on the health of existing loans in the Energy Department’s multi-billion dollar portfolio of investments in clean tech firms.

Solyndra, the first recipient of Energy Department backing, collapsed in bankruptcy and is now the subject of multiple investigations. The Energy Department and White House backed the half billion dollar investment in Solyndra, government emails show, even as budget and Treasury officials were raising red flags.

“Today we are directing that an independent analysis be conducted of the current state of the Department of Energy loan portfolio, focusing on future loan monitoring and management,” White House chief of staff Bill Daley told the Associated Press. “While we continue to take steps to make sure the United States remains competitive in the 21^st century energy economy, we must also ensure that we are strong stewards of taxpayer dollars.”

The audit will be conducted by former Treasury official Herb Allison, who stepped down in September 2010 after overseeing the Troubled Asset Relief Program. A former investment banker, Allison has served on the boards of financial and educational institutions and contributed to both Republicans and Democrats over the years, according to federal contribution records in the CQ MoneyLine database. He was national finance chairman for John McCain’s 2000 campaign.