Treasury opens new front in Solyndra investigation

Inspector general "going to look at everything" Federal Financing Bank did when loaning money to now-bankrupt solar startup

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Outside Solyndra's Fremont, Calif. headquarters.

Paul Sakuma/AP

The Treasury Department’s inspector general has opened a new front in the investigation of the government loan to Solyndra, the now bankrupt company that had been touted as a model of President Obama’s ambitious green energy program, the Center for Public Integrity and ABC News have learned.
 
The new probe involves the $535 million loan, arranged by the Energy Department, but actually processed by the Federal Financing Bank, a government lending institution that falls under Treasury’s control. Already, the FBI and the Energy Department’s inspector general have executed search warrants at Solyndra’s headquarters and questioned company executives.
 
“We’re going to look at everything the FFB had to do with its role in this thing,” Rich Delmar, a spokesman for the Treasury Department’s inspector general, told ABC News and iWatch News.
 
Word of the broadening probe came as the head of the Energy Department’s loan program came before congress at a contentious hearing on Capitol Hill Wednesday.

Earlier this month,  iWatch News  and ABC News disclosed that Solyndra received an interest rate of 1 to 2 percent -- lower than those affixed to other Energy Department green energy projects. The low rate was set even as an outside agency, Fitch Rating, scored Solyndra as a B+ -- "speculative" -- investment. Energy Department officials said the bank set the rate, based on formulas including the payout length, and that Solyndra did not receive special treatment.

And Wednesday, Republicans on a House committee investigating the Solyndra financing contended the government's refinancing of the loan earlier this year may have broken the law by putting investors first in line to be repaid. That move, they said, appears to violate an Energy Policy Act of 2005 provision that says the government loan guarantees cannot be “subordinate to other financing.”

 

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