Within a Treasury Department audit report released on April 3, we learn – not surprisingly – the review process for government-backed Solyndra loan was rushed thanks to Department of Energy pressure, and the fact the review process itself was undefined.
The audit report is available online, and begins in part…
We initiated this audit because of the heightened media attention and congressional inquiries surrounding Solyndra’s loan and its subsequent restructuring.
So in-other-words, we would have just chalked up this huge loss of taxpayer funds to “normal day-to-day operations” around here if it weren’t for the media and Congress started to ask questions… damit.
The Treasury Department’s review of Solyndra’s $535 million federal loan guarantee was “rushed” through in about one day in March 2009, “based on an expedited review request from DOE so that a press release could be issued,” according to a Treasury inspector general report that gives further evidence of the early Obama administration’s eagerness to announce progress in funding clean energy.
The report, issued Tuesday, also quotes internal Treasury documents that portray the Energy Department as being under pressure to get the loan agreement out the door.
“DOE says that their hands are tied on this issue,” the audit quotes one Treasury email as saying, discussing one detail of the financing terms. “They are under pressure to complete a deal.”
Another internal Treasury email said that “the train really has left the station on this deal.”
The train left the station as soon as the political wing of the Obama tyranny machine held up Solyndra as one of their gold-standard, puke-green energy, must-have successful projects.
Doug Powers at Michelle Malkin’s site writes…
Judging from a Treasury Department audit, Turbo Tim applied more rigorous scrutiny to his 2001-2004 tax returns than the Department of Energy gave to Solyndra’s loan guarantee in 2009.
Here is the one-day turn-around concerning the approval, starting on page 6.
On March 17, 2009, OMB informed Treasury’s Office of Government Financial Policy (OGFP) that DOE would be issuing a press release on Solyndra. It was OMB’s understanding that the CRB approved the project and that the Secretary of DOE could sign the Term Sheet at any moment. OMB strongly urged Treasury to contact the DOE Office of the Secretary if Treasury wanted to weigh in on Solyndra’s terms and conditions. DOE later confirmed to Treasury that the Term Sheet was approved by the CRB on March 17, 2009.
An OGFP official expressed concerns to OMB in an e-mail regarding DOE’s review process as it related to the requirement that Treasury be consulted with on the terms and conditions of any guarantee before the guarantee was extended. In that email, it was also communicated that when the regulations were drafted, OGFP made it clear that Treasury wanted to be involved in the development of the terms and conditions and not be brought in at the end when the terms of the deal had already been negotiated.
On March 18, 2009, Treasury received a draft press release from DOE announcing Solyndra’s conditional commitment planned for issuance later that afternoon. The draft press release stated that “Secretary Chu offered the loan guarantee by signing a ’conditional commitment’ today, following approval yesterday by the Department of Energy’s Credit Review Board.” In response, a Treasury official contacted DOE to request additional time to review and delay the DOE Secretary’s signing of the Term Sheet and the press release. DOE originally agreed to extend Treasury’s review time to noon on March 20, 2009. However, Treasury then agreed with a DOE request to expedite the review to March 19, 2009, so that the press release could be issued on the morning of March 20, 2009.
Treasury provided comments to DOE, during a conference call on March 19, 2009, regarding Solyndra’s terms and conditions noting several concerns that included (1) the amount of equity in the project (i.e., 73/27 debt to equity ratio instead of 65/35), (2) thepreference for a partial guarantee versus 100 percent guarantee, and (3) DOE’s claims on Solyndra’s intellectual property in the event of default. We also obtained an internal Treasury e-mail where such aspects of the deal were discussed. The e-mail specifically noted that
“…this should have been 65% debt and 35% equity instead of 73% debt and 27% equity… If this had been an 80% guaranteed loan, then the implicit guaranteed loan would have been 64% rather than 73%. DOE says that their hands are tied on this issue… They are under pressure to complete a deal.”
Treasury officials told us that all comments raised were addressed by DOE. After the conference call, Treasury sent an e-mail to DOE agreeing to the issuance of the press release and signing of the Term Sheet. However, following the conference call with DOE, another internal Treasury e-mail noted that
“we pressed on certain issues such as why we aren’t providing only a partial guarantee and covering a smaller percentage of the eligible project costs, but the train really has left the station on this deal.”
When asked, Treasury officials told us that enough time was granted to perform a sufficient review of Solyndra’s terms and conditions. However, Treasury’s e-mail correspondence at the time of Solyndra’s consultation leave questions as to whether Treasury’s concerns were fully addressed. …
Do go through the report, which is not too long.