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Chu: Solyndra loan based on merits, not politics
By MATTHEW DALY Originally published Thursday, November 17, 2011 at 7:39 AM
An unapologetic Energy Secretary Steven Chu defended a half-billion-dollar federal loan to a solar-panel manufacturer that went belly up, even as he told a House committee Thursday he was unaware of dozens of key details that led to the debacle over Solyndra Inc.
Under hours of hostile questioning from Republicans on the House Energy and Commerce Committee, Chu declined several opportunities to say he was sorry, but acknowledged that in hindsight the deal was “extremely unfortunate” and “regrettable.”
“Certainly knowing what I know now, we’d say `no,'” Chu said during a daylong hearing before the energy panel’s subcommittee on investigations. “But you don’t make decisions fast-forwarding two years in the future and then go back. I wish I could do that.”
Rep. Cliff Stearns, R-Fla., chairman of the subcommittee, said after the hearing that Chu should be fired.
“I just think he has failed the test. The fact that he’s unaware of so many things makes me think that he’s not the best person for the position,” Stearns said.
Chu insisted that politics played no role in his department’s decision to loan Solyndra Inc., $528 million before it went bankrupt and laid off 1,100 workers.
Testifying under oath on a widening controversy, Chu took responsibility for the disastrous 2009 loan, but said he was unaware of many details about the loan or financial problems that Solyndra faced – including predictions by Energy Department staff two years ago that the company was likely to face severe cash-flow problems.
Chu repeatedly said he didn’t know until recently of problems with Solyndra or suggestions of political interference on the company’s behalf by the White House or Energy Department officials.
“I am aware of it now,” he said at least five times.
Chu refused to apologize for the loan debacle, calling it “extremely unfortunate” but based on factors beyond his control. He blamed the company’s demise on “totally unexpected” market changes – including an influx of cheap imports from China and the collapse of the European market for solar panels – that led to a steep decline in the price of Solyndra’s product.
Solyndra, of Fremont, Calif., was the first renewable-energy company to receive a loan guarantee under the 2009 stimulus law, and the Obama administration frequently touted it as a model for its clean energy program. Chu attended a 2009 groundbreaking when the loan was announced, and President Barack Obama visited the company’s headquarters last year.
Since then, the company’s implosion and revelations that the administration hurried a review of the loan in time for the groundbreaking has become an embarrassment for Chu and Obama and a rallying cry for GOP critics of the administration’s green energy program.
Contradicting assertions by several committee Republicans, Chu said no one from the White House ever contacted him to make a political decision on the loan.
“I want to be clear: Over the course of Solyndra’s loan guarantee, I did not make any decision based on political considerations,” he said.
Still, Chu acknowledged mistakes and said that if he had the chance to do it again, he would not have approved the $528 million loan.
Chu also said he doesn’t expect taxpayers will recover much of the money lost in the transaction.
Again and again, Chu expressed ignorance of issues related to the loan or the Obama administration’s handling of it. For instance, Chu said he did not know until this week that some unidentified DOE officials had urged Solyndra to delay an early round of layoffs until after 2010 midterm elections.
“I was not part of that decision, and I certainly would not have been in favor of that decision,” he said.
Rep. John Sullivan, R-Okla., asked Chu how closely he was involved in the loan process.
He has to approve the loans and be briefed on them, Chu replied, “and I ask questions about the loans as they come up.”
Chu also denied he was influenced by a major Obama campaign donor, George Kaiser, an Oklahoma billionaire who invested $400 million in the solar company through an investment vehicle connected to a family foundation. Kaiser has said he played no part in helping Solyndra win the 2009 loan, but emails released last week show he discussed Solyndra with the White House on at least one occasion. Kaiser also directed business associates on how to approach the White House and Energy Department to help Solyndra deal with its financial problems.
Chu told lawmakers he did not know who Kaiser was when the loan was approved. He says he is aware of Kaiser now, in the wake of media reports about Kaiser’s investment in Solyndra.
Rep. Joe Barton, R-Texas, said he found that hard to believe, since Kaiser was an Obama financial “bundler” who visited the White House frequently in 2009, while the Solyndra loan was being considered.
“Everybody and their dog at DOE knew who he was and what he was involved in,” Barton said of Kaiser. “We have on the record that he was around the White House at least 16 times in the time period the Solyndra loan program was being reviewed.”
Rep. Fred Upton, R-Mich., chairman of the energy panel, said he was astonished at how many red flags about Solyndra – including many from the Energy Department itself – were either ignored or minimized by the Obama administration.
“At every opportunity, Solyndra and DOE officials, including Secretary Chu, publicly assured the American people that Solyndra was on track and would eventually thrive, right up until the time that Solyndra declared bankruptcy,” Upton said.
Rep. Martin Griffith, R-Va., said he had a hard time believing that Chu, a Nobel Prize-winning physicist, was as out of the loop as he claimed.
“I know you didn’t leave your brains at the door,” he told Chu.
Chu said his decision to approve the loan was based on the analysis of experienced professionals and on the strength of the information they had available to them at the time.
Chu also took responsibility for a later decision to approve a restructuring of Solyndra’s debt that allowed Kaiser and another investor to move ahead of taxpayers for repayment in case of default.
The Energy Department faced a difficult decision in late 2010 and early this year, Chu said: Force Solyndra 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 said it was worth noting that U.S. taxpayers remain first in line for repayment of the initial loan and noted that private groups invested nearly $1 billion in Solyndra.
Rep. Steve Scalise, R-La., was unimpressed.
“I’ve heard a lot of talk about politics, I’ve seen a lot of emails from within the administration about politics,” he told Chu. “I don’t see any chain of emails looking out for the taxpayer money. That’s what stinks the most about this.”
Democrats accused Republicans of hypocrisy on the loan guarantee program, noting that Upton and other Republicans have sought support for projects in their districts even while slamming Chu and Solyndra. Upton and other Michigan lawmakers tried to get federal support in 2009 for United Solar Ovonic, a struggling manufacturer in their state.
United Solar did not receive a loan and its parent company, Energy Conversion Devices Inc., said last week it was suspending manufacturing and laying off 500 workers.
Associated Press writer Alicia A. Caldwell contributed to this report.
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