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Federal agents search Solyndra headquarters

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Federal agents search Solyndra headquarters

FBI, Energy's inspector general probe failed solar firm with ties to Obama

  • Federal agents executed a search warrant Thursday at Solyndra's headquarters in Fremont, Calif.
    SolyndraFederal agents executed a search warrant Thursday at Solyndra's headquarters in Fremont, Calif.

Federal agents executed a surprise search of the California headquarters of failed solar firm Solyndra Inc. on Thursday morning, focusing attention anew on a corporate beneficiary of President Obama's stimulus program to create new clean energy jobs. The company has been a subject of an ongoing  series of stories by the Center for Public Integrity's  iWatch News  in collaboration with ABC News.

The search is a joint operation involving the FBI and the Energy Department's inspector general, suggesting the focus of the investigation involves, at least in part, a $535 million government loan to Solyndra. Karen Sulier, a spokeswoman for the IG's office, is taking part in the probe. “We confirm the involvement of the Office of Inspector General’s special agents in today’s activities at Solyndra,” Sulier told iWatch News.

Prosecutors and law enforcement authorities declined to discuss the raid. “We have no comment,” said Jack Gillund, a spokesman for the U.S. Attorney’s Office’s Northern District in California.

“The FBI is here this morning executing a search warrant,” Solyndra spokesman David Miller told  iWatch News. Asked what records the agency was seeking, Miller said: “I can’t talk about that. I don’t know.”

He said the search took the company by surprise. “We’ll cooperate with them and given them whatever they are looking for, but certainly it was a surprise,” Miller said. “I came to work this morning and they were here and I’ve been sorting it out.”

About the inspector general's involvement, Miller said, “I don’t know if that’s true. I’ve only dealt with the FBI agents who were here on site.”

The San Jose  Mercury News  and other west coast media described agents leaving and entering the company's Solyndra headquarters in clothing with the FBI's insignia. 

The company, which counted among its investors a major fundraiser for President Obama, just filed for bankruptcy. It had received a half-billion dollar government loan following a fast-track approval process and involving an interest rate lower than other green projects benefitting from Energy Department help.

The benefit, part of the administration's job-creating stimulus, failed to prevent the company from shuttering its doors and laying off 1,100 people, excluding a skeletal crew that includes Miller.

Members of Congress have been scrutinizing the loan, as well.

In Washington, the collapse of the politically-connected solar energy firm Solyndra has unleashed a barrage of fresh questions from House and Senate investigators, who want to know why the Obama Administration agreed to invest $535 million in the now-bankrupt company, and what can be done to recover those funds.

The House Energy and Commerce Committee’s investigative panel announced it will hold hearings next Wednesday on the government’s Solyndra loan.

Separately, the Center for Public Integrity's  iWatch News and ABC News learned that Senate investigators have begun seeking answers from the administration about the Energy Department loan. That development is significant, as the Senate is Democrat-controlled, and its interest signals that questions about the deal now extend to both parties in Congress. Earlier this year, the Republican-controlled House committee voted, along party lines, to  subpoena the White House Office of Budget and Management  for records on the financing.

"How did this company, without maybe the best economic plan, all of a sudden get to the head of the line?" said committee chairman Rep. Fred Upton, R.-Michigan. "We want to know who made this decision ... and we're not going to stop until we get those answers.”

The California firm  shut its doors abruptly last week , firing 1,100 workers, and this week filed for bankruptcy. The company’s failure came after officials in the Energy Department had spent two years touting the company’s promise, and fast-tracked Solyndra through the normally cumbersome process of securing hundreds of millions in federal funds. All that help caught the attention of federal auditors, who questioned why the Energy Department granted it conditional loan approval even before completing the legal and marketing reviews that were typically required.

On Wednesday,  iWatch News  and ABC News reported that the federal loan to Solyndra came through the Treasury Department's Federal Financing Bank, and was approved with a quarterly interest rate  lower than that of any other federally-backed green energy project  —a rate of 1.025 percent. (iWatch News  and ABC News first reported on the Solyndra loan and the company’s political connections in March.)

Energy Department officials said the rates for all of its green energy loans were set by the bank using a formula, and Solyndra's favorable terms were not the result of special treatment. "All borrowers under the [government loan guarantee] program receive the same treatment," Energy Department spokesman Damien LaVera wrote to iWatch News  and ABC News in response to questions.

Congressional investigators, though, have said they are still unclear why Solyndra was the first loan approved, why it received the most favorable lending terms, and why the administration gave the company so much attention – even sending President Obama to the company’s California headquarters to tour the plant and tout its potential.

While Energy Department officials steadfastly vouched for Solyndra—even after an earlier round of layoffs raised eyebrows—others questioned the viability of the company. 

One of the private investors in Solyndra was George B. Kaiser, an Oklahoma oil billionaire. Kaiser was a bundler of campaign donations for Obama's 2008 race. Kaiser's Argonaut Ventures and its affiliates have been the single largest shareholder of Solyndra, according to SEC filings and other records. The company holds 39 percent of Solyndra's parent company, bankruptcy records filed Tuesday show.

Under terms of the bankruptcy filing, investors including Argonaut — which led a $75 million round of financing for Solyndra earlier this year — will stand in line before the federal government and other creditors to recoup its losses. Energy officials confirmed this arrangement, saying that after private investors including Kaiser recover $75 million, the U.S. government would have a chance to seek $150 million of its investment.

Kaiser has declined interview requests for months from  iWatch News  and ABC News. His Tulsa-based George Kaiser Family Foundation, which in 2009 cited a $342 million investment value in Solyndra, issued a statement after Solyndra's collapse saying the solar firm faced "serious challenges in the marketplace, especially the drastic decline in solar panel prices during the past two years caused in part by subsidies provided by the government of China to Chinese solar panel manufacturers." 

Reprinted by permission of The Center for Public Integrity.

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