Page Not Found: Solyndra Executives gave 'bright' forecasts as it ran out of cash
Fri Sep 23, 2011
By Mark Hosenball and Roberta Rampton
WASHINGTON (Reuters) - Just before solar panel maker Solyndra scrambled in August to get more cash from private investors and better loan terms from federal bureaucrats, top company officials went on a political road show.
Brian Harrison, Solyndra's CEO who on Friday refused to answer questions posed by a House panel, met in July with congressional Republicans who were skeptical about how much money the Obama administration had sunk into the company's factory. He also met Democrats eager to support clean energy.
"Things were on the upswing, that's what they told me," said Diana DeGette, a Democratic member of the House of Representatives.
"I don't understand how they could paint such a rosy picture to us and then five weeks later be in bankruptcy court," DeGette told reporters.
The CEO's assertions were part of a long pattern of Solyndra putting on a positive face for the public as it struggled to keep its business alive. The rosy scenarios Harrison presented now face intense scrutiny from lawmakers, the FBI and other investigators.
The Solyndra saga also has become a political headache for President Barack Obama, whose administration had showcased the company as an example of how renewable energy programs could create jobs.
Flanked by lawyers and surrounded by clicking cameras during a House panel hearing, Harrison and W.G. Stover, the company's chief financial officer, invoked their right against self-incrimination provided by the Fifth Amendment to the U.S. Constitution.
Republicans asked if they had provided accurate information, about meetings at the White House, and whether they talked about their poor financial situation with Argonaut Private Equity, a private fund owned by Obama fundraiser George Kaiser.
Twenty times, the executives read out a prepared statement declining to answer the questions.
"In our meeting, you lied to me about the financial health of your company," said John Sullivan, a Republican congressman, recalling a July 21 visit from Harrison.
Cliff Stearns, the Republican lawmaker leading the committee's probe, said in July Harrison "looked me in the eye and assured me that everything was just fine, and the company was on track to be cash-flow positive."
In 2005, Congress created a program to spur the renewable energy industry. The Obama administration added funding to the program under its economic stimulus plan.
Details of the FBI probe of Solyndra have not been revealed. Internal watchdogs for the Energy and Treasury departments are also looking at what went wrong.
Congressional investigators want to know if the California-based company was misleading the government and hiding severe financial stresses it faced when its costly technology was undercut by cheap overseas panels.
Concerned about a House Energy and Commerce Committee investigation that had begun in February, the solar company's lawyer in mid-July e-mailed Republican investigators with what he called an "upbeat letter" with "current data on Solyndra's positive economic and job situation." The company's lawyer in the e-mail chided investigators for continuing "to perpetuate an incorrect picture of Solyndra's condition."
Solyndra's Harrison then met lawmakers and congressional investigators face-to-face, bragging that the company had shipped record numbers of innovative panels around the world from a factory built with an Energy Department loan guarantee, competing with China in a made-in-America success story.
"Solyndra's revenues grew from $6 million in 2008 to $100 million in 2009 to $140 million in 2010. For 2011, revenues are projected to nearly double again," Harrison said in a July letter to the House Energy and Commerce Committee.
'YOU LIED TO ME'
On Friday, Harrison visited Capitol Hill again, under different circumstances.
The first company to secure a loan guarantee from the program was Solyndra, a Fremont, California-based start-up that had patents for solar tubes it said could be cheaper and more efficient than traditional silicon solar panels.
Solyndra told reporters in 2008 that it had raised more than $600 million in venture capital and had $1.2 billion of multiyear contracts.
The company secured $535 million from a U.S. Treasury Department lending program in 2009, secured by a guarantee from the Energy Department finalized in September, to help it build a factory to ramp up production.
As soon as Solyndra sealed the deal, it applied for a second loan guarantee of $469 million, and filed for an initial public offering in December to attract more money to pay for its factories and for general working capital.
In April 2010, a month before a visit to its factory by Obama, Solyndra's auditor questioned its prospects, noting large operating losses, negative cash flows and other issues.
A month after Obama's visit, the company withdrew its IPO, saying it had raised $175 million from private investors.
But the market for solar panels had changed. The Energy Department, which launched a website to defend its investment in Solyndra, blames Chinese subsidies for flooding the world with cheap solar panels.
By February 2011, the company announced it had raised another $75 million from investors including Argonaut and Madrone Capital, affiliated with the Walton family, which founded Wal-mart Stores Inc.
Left out of the press release was that the investment came on the condition that the backers recover their money ahead of claims by the government, should things turn sour.
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