A Silicon Valley investor and senior administration officials warned the White House to reconsider having President Obama visit a solar start-up company because of its mounting financial problems, saying he might be embarrassed later.
“A number of us are concerned that the president is visiting Solyndra,” California investor and Obama fundraiser Steve Westly wrote to Obama senior adviser Valerie Jarrett in May 2010. “Many of us believe the company’s cost structure will make it difficult for them to survive long term. . . . I just want to help protect the president from anything that could result in negative or unfair press.”
The memo was among several copies of e-mails released Monday morning by Democrats on the House Energy and Commerce Committee, which is investigating a government loan to the now-bankrupt company.
Obama’s Energy Department had provided Solyndra with a $535 million government-backed loan in 2009 and wanted to highlight the investment to show taxpayers how their stimulus dollars had been put to work. Westly said that if Obama proceeded with the visit, he should be careful about touting the company’s future.
“If it’s too late to change/postpone the meeting, the president should be careful about unrealistic/optimistic forecasts that could haunt him in the next 18 months if Solyndra hits the wall, files for bankruptcy, etc.”
Westly’s concern, which proved to be prescient, was that the company’s outside auditors had warned the previous month that Solyndra was burning through cash rapidly and that they had doubts the company could remain a “going concern.” The solar-panel manufacturer closed its doors Aug. 31, then filed for bankruptcy protection and laid off 1,100 workers. Its closure has left taxpayers obligated to repay the half-billion-dollar loan.
But Obama did visit Solyndra in May 2010, touting it in a national news conference as an “engine of economic growth” and a model of his administration’s $80 billion stimulus-funded investment in clean-energy technologies and companies.
President Obama told George Stephanopolous in a live ABC News/Yahoo interview Monday afternoon that he doesn’t regret supporting or visiting Solyndra and is glad the administration backed a portfolio of clean-energy companies.
“Now there are going to be some failures,” he said. “Hindsight is always 20/20,” the president added about being warned about Solyndra’s financial problems. “It went through the normal review process and people thought this was a good bet.”
Republican lawmakers leading the probe have alleged that the administration rushed approval of the loan for Solyndra and favored the company in other ways because its leading investor was tied to a major Obama fundraiser, George Kaiser. Democrats releasing the e-mails Monday noted that the messages show plenty of disagreement but do not provide evidence of political favoritism to Kaiser and his investment funds.
A White House spokesman said Monday afternoon that he would respond with a comment shortly.
What was once a showcase of the Obama administration’s clean-energy initiative is now a political crisis for the White House. Federal investigators have launched a criminal probe into whether Solyndra misled the government and engaged in accounting fraud.
The e-mails also signal major concerns within the administration that the Department of Energy’s $38 billion program to back clean-energy projects had significant flaws.
“D.O.E.’s ‘system’ for monitoring loans is quite problematic (barely any review of materials submitted, no synthesis for program management, inherent conflicts in origination team members monitoring the deals they structured, etc) and does not seem to be a program priority,” one Office of Management and Budget official wrote in spring 2010.
In one striking exchange, one of the smaller investors in Solyndra, Brad Jones of Redpoint Ventures, warned National Economic Council Director Larry Summers in December 2009 that the Energy Department didn’t seem “well-equipped to decide which companies should get the money and how much.” He noted that a solar company he had invested in, an apparent reference to Solyndra, received a loan of more than half a billion dollars, despite having no profits and revenue of less than $100 million.
“While that is good for us, I can’t imagine it’s a good way for the government to use taxpayer money,” Jones wrote in his e-mail.
Summers agreed: “I relate well to your view that gov is a crappy vc [venture capitalist] and if u were closer to it you’d feel more strongly.”
Another OMB official wrote to a White House staffer about the president’s visit to Solyndra: “I am increasingly worried that this visit could prove embarrassing to the Administration in the not too distant future, given 1) what we just heard today from DOE that Solyndra is delaying their IPO at least until the end of the year, and 2) what the auditors said about Solyndra making it through the year absent new financing.”
But inside the Energy Department, which had pushed to give Solyndra the government-backed loan, officials counseled the White House not to worry.
Matt Rogers, senior adviser to Energy Secretary Steven Chu on the stimulus funding, responded that these kinds of warnings were typical in the Silicon Valley start-up world.
Rogers wrote that “the ‘going concern’ letter is standard for companies pre-IPO,” and he predicted that “the company should be strong going into the fall with their new facilities on line.”