Reuters
http://www.reuters.com/article/2011/09/23/us-solyndra-idUSTRE78M75U20110923
Page Not Found: Solyndra Executives gave 'bright' forecasts as it ran out of cash
Fri Sep 23, 2011
YaBB Administrator
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.
Additional:
VIDEO: CEO makes Masonic Handsignals prior to 'testimony'
Further Reading:
