Thursday, September 29, 2011

Gee...ya think?

The headline says it all:

FBI Said to Be Probing Solyndra for Possible Fraud

In a story from Seth Stern and Jim Snyder at Bloomberg, we see the beginnings of the federal government's case against executives from the company that is becoming increasingly synonymous with government waste, incompetence, politicization, wishful thinking and - perhaps - outright fraud.

That company is Solyndra.

Following is Stern and Snyder's story moving on today's wire:
The FBI is investigating Solyndra LLC for possible accounting fraud and the accuracy of financial representations made to the government, according to an agency official.

The FBI is examining possible misrepresentations in financial statements, according to the FBI official, who requested anonymity because the investigation is continuing.

Solyndra, which made cylindrical-shaped solar panels, filed for bankruptcy protection on Sept. 6 and fired about 1,100 workers with little notice, about two years after winning a $535 million U.S. loan guarantee from the Energy Department.

The company’s offices in Fremont, California, were raided by Federal Bureau of Investigation agents on Sept. 8. The Justice Department hasn’t said why Solyndra is being probed.

“The company is not aware of any wrongdoing by Solyndra officers, directors or employees” related to the Energy Department loan guarantees or other actions and “is cooperating fully” with the U.S. Attorney in San Francisco, according to a Sept. 20 statement from Solyndra. David Miller, a company spokesman, didn’t immediately return a phone call and an e-mail seeking comment today.

Solyndra’s collapse has prompted congressional scrutiny of President Barack Obama’s administration, which issued final approval of the loan that also won support from officials in the administration of George W. Bush.

White House Pressure

Republicans on the House Energy and Commerce Committee, which has investigated the loan since February, have said the administration pressured federal loan officers to expedite the review of Solyndra’s application so it could be promoted as a stimulus success story.

The company was the first to receive a guarantee under the stimulus act and was the largest award given to a solar manufacturer under the program.

Democrats, who dispute claims politics played a role, joined Republicans in criticizing Solyndra Chief Executive Officer Brian Harrison for what they said were misrepresentations of the company’s finances in meetings with lawmakers.

“When Mr. Harrison was in my office in July, he said that Solyndra’s future was bright, with sales and production booming,” Representative Henry Waxman of California, top Democrat on the Energy committee, said at a Sept. 23 hearing on where Harrison was a witness. “I’d like to know why he told me that in July, and then filed for bankruptcy one month later.”

Harrison, Stover

Harrison and Chief Financial Officer Bill Stover invoked their Fifth Amendment rights against self-incrimination and refused to answer questions at the hearing.

Harrison joined Solyndra in July 2010, after Solyndra had received its loan guarantee and its auditor had warned its financial difficulties were deep enough to raise questions about how long it could survive.

Companies seeking guarantees were required to estimate project costs, list private investors and provide a model detailing cash flows for the life of the project, according to the 2006 Energy Department solicitation for loan guarantees.

Solyndra submitted an application in 2006 and added details in October 2007 after the company was identified by the Bush administration as a potential candidate for a guarantee.

It is unlawful for applicants for federal loan guarantees to make untrue, misleading or incomplete statements, according to James F. Bowe Jr., an energy regulatory lawyer with Dewey & LeBoeuf in Washington, who isn’t involved in the Solyndra case.

IPO Withdrawn

The company withdrew a planned initial public offering in June 2010, citing adverse market conditions. A month earlier, Obama toured the new manufacturing factory that U.S. aid helped to build and said Solyndra was a testament to “American ingenuity and dynamism.”

By December, the company was almost out of cash and sought to restructure the loan agreement with the Energy Department. The department at the time knew the company had failed to set aside $5 million in the first of six payments into a reserve fund, Damien LaVera, an agency spokesman, said in an e-mail. The new deal eliminated the payments, he said.

The agreement made the government’s debt subordinate to $75 million in private investment in a last-ditch effort to save the company, Energy Department officials have said.

Harrison replaced Solyndra founder Chris Gronet as chief executive. Gronet remained chairman until Aug. 19, when the company announced his departure, 12 days before it halted operations on Aug. 31.

Gronet, a former executive at Applied Materials Inc. (AMAT), expressed anger when action on the loan guarantee was postponed in January 2009, Energy Department e-mails show.

“I was appalled to learn on Friday that our application is being delayed yet again,” Gronet wrote in an e-mail to Steve Isakowitz, the Energy Department’s chief financial officer, in the early morning hours on Jan. 12, 2009.

He later spurned an apology from David Frantz, director of the loan program under Bush, according to an e-mail sent later that day.

“I find the response completely unacceptable,” Gronet wrote. “An apology from David is not enough.”

Don't make too much about all these bits of breaking Solyndra news - at least not yet. We're early in the process and there is sure to be much, much more coming over the transom before this show closes.

But it also is worth noting that the feds - and the news media - have bitten into this...big time. And the feeling (and the word from sources) is that these "pit bulls" aren't going to let go until they finish their respective jobs investigating and - perhaps - prosecuting those behind this growing scandal.

Stay tuned...

Wednesday, September 28, 2011

So that's where (some of) the money went!

Big money, few results...

"The glass-and-metal building that Solyndra LLC began erecting alongside Interstate 880 in Fremont, California, in September 2009 was something the Silicon Valley area hadn’t seen in years: a new factory. It wasn’t just any factory. When it was completed at an estimated cost of $733 million, including proceeds from a $535 million U.S. loan guarantee, it covered 300,000 square feet, the equivalent of five football fields. It had robots that whistled Disney tunes, spa-like showers with liquid-crystal displays of the water temperature, and glass-walled conference rooms."

“The new building is like the Taj Mahal,” John Pierce, 54, a San Jose resident who worked as a facilities manager at Solyndra, said in an interview.

The building, designed to make far more solar panels than Solyndra got orders for, is now shuttered, and U.S. taxpayers may be stuck with it. Solyndra filed for bankruptcy protection on Sept. 6, leaving in its wake investigations by Congress and the Federal Bureau of Investigation and a Republican-fueled political embarrassment for the Obama administration, which issued the loan guarantee. About 1,100 workers lost their jobs.

Amid the still-unfolding postmortems, the factory stands as emblematic of money misspent and the Field of Dreams ethos that seemed to drive the venture, said Ramesh Misra, a solar-industry analyst in Los Angeles for Brigantine Advisors. “When you don’t have the demand, you can’t go into something with the attitude, ‘Build it and they will come,’” Misra said. “You have to make sure the customers are already there when you build it.”

He is skeptical of the company’s statement, in a press release on the groundbreaking for the plant, that it had a backlog of $2 billion in orders for its cylindrical solar modules for commercial rooftops, which it touted as cheaper to install and more efficient than competing flat panels. “Backlog” is a term sometimes used loosely in the industry and may not represent firm orders at all, he said.

Solyndra was the dream of founder Chris Gronet, who received a Ph.D. in semiconductor processing at Stanford University and had spent 11 years as an executive at Applied Materials Inc. (AMAT) He adopted as the company’s motto, “What we do here will someday change the world.” Gronet didn’t return a phone call seeking comment.

U.S. Energy Secretary Steven Chu and then-California Governor Arnold Schwarzenegger attended the 2009 groundbreaking for the plant. At the event, Chu said the U.S. solar-energy industry was losing out to countries like China and the loan guarantee, the first awarded by the department under President Barack Obama’s 2009 economic stimulus plan, would ensure the company’s orders would be filled by U.S. workers.

Even as Chu, Gronet and Schwarzenegger were thrusting their shovels into the dirt, market forces were working against Solyndra. The price of polysilicon, the main ingredient in competing traditional solar panels, had plunged. By the time the plant opened last January, the price would be down about 40 percent from when Solyndra got the loan guarantee. Chinese companies were ramping up production of their ever-cheaper competing flat panels.

Solyndra executives rushed construction in a race to fill orders, putting some work on a 24-hour, seven-day schedule. The factory was up and ready for equipment installation in 10 months. The project employed more than 3,000 union construction workers, according to a Solyndra background sheet.

‘First Class’

“They were anticipating large production,” Juancho Suntay, 51, a former Solyndra equipment maintenance technician, said in an interview. “That’s why they wanted to have a state- of-the-art factory.”

The plant features 19 loading docks, four electric car charging stations in the parking lot and landscaping of wild grass and a rock garden. An automated rail system moved parts through the assembly process.

Robots that resembled “a big freezer with wheels” maneuvered around the factory transporting panels from one machine to another, said George Garma, 49, a former Solyndra equipment maintenance technician from Fremont. The Disney tunes alerted workers to the robots’ presence.

“It was first class,” David Chan, 51, who was an information-technology contractor for Solyndra, said in an interview. “I’ve been in the business for 25 years and have seen some elaborate buildings. I’ve never seen a facility like it.”

Costly Real Estate

The plant caught the attention of competitors. “Everybody I know in the solar industry would remark on it and say ‘Boy, that’s a really, really big factory,’” said Barry Cinnamon, chief executive officer at Westinghouse Solar Inc., a Campbell, California-based solar-panel company that manufactures in China.

“That’s a lot of money that went into that factory,” Cinnamon said in an interview. “It’s one of those neck-snapping things every time you drove down the highway.”

Commercial real-estate agents in the region wondered why a new factory was being built in the Silicon Valley region, the epicenter of some of the priciest real estate in the country, where most new construction consists of office space.

“There hasn’t been a factory or warehouse building built in Silicon Valley in well over 10 years,” Jeff Fredericks, managing partner at Colliers International in San Jose, said in an e-mail.

The asking rate for industrial properties in Silicon Valley is the fourth-most expensive in the U.S., according to Jack DePuy, Bay Area research manager at CB Richard Ellis in Foster City, California.

Machinery Breakdowns

About 11.4 percent, or 950,801 square feet, of industrial space was vacant in Fremont in September 2009, according to data from Colliers.

“There was available space that we talked about with them,” Bob Wasserman, Fremont’s mayor, said in an interview. “It was their decision that they needed a new building. Was that a good decision? It didn’t turn out to be.”

John Olenchalk, senior vice president at Kidder Mathews, a commercial real-estate firm in Redwood City, said Solyndra executives considered existing space, including a former Sun Microsystems Inc. facility in nearby Newark that had 218,000 square feet of production space. The company wanted more space and to be near its existing operations, he said.

Solyndra used the new plant for the first phase of panel production. An older facility nearby finished and assembled the panels, former employees said. Problems developed at the old plant, when machinery wouldn’t work properly and needed constant repair, workers said.

“Everybody was talking about it,” said Edward Santos, 44, a former warehouse worker in Solyndra’s logistics department.

Advantage Lost

“A significant percentage of the product we built went into a dumpster because it was defective,” said Craig Ewing, 55, a former maintenance technician. “It seemed like the company accepted that,” he said.

Even if the old plant hadn’t had problems, by the time the company opened the new facility it was clear that Solyndra had lost whatever cost advantage it might have had, said Michael Butler, chairman and CEO of Cascadia Capital LLC, a Seattle- based investment-banking firm that advises renewable-energy companies.

“I’m sure there was a lot of panic at that point, because I’m sure that everyone saw the writing on the wall,” Butler said.

Workers noticed inventory piling up. “The drivers would tell us that the warehouses are getting full,” Santos said. “Sometimes, they’d stay there one or two days before the material was unloaded.”

About two weeks before the company closed, Solyndra CEO Brian Harrison gave an upbeat speech at the new factory, said Romie Sumera, 58, a former equipment-maintenance technician. Solyndra was getting leads on new orders from companies including Wal-Mart Stores Inc., Harrison told them.

Stay tuned for even more (damaging) disclosures...

Saturday, September 24, 2011

Getting the people's work done... fairway at a time.

From White House Dossier:

President Obama this afternoon went golfing with Bill Clinton and White House Chief of Staff Bill Daley, a rare case of Obama engaging in his favorite form of relaxation with serious, high-level partners. The president generally golfs with young staffers in what amounts to a boys afternoon on the links. But today’s outing likely involves work, as the politically hobbled president plays with the Democrats’ master politician. Daley knows both men well, having served as Clinton’s Secretary of Commerce. Also along is Clinton aide Doug Band.

The foursome is playing the Andrews Air Force base course. The press pool was given a brief glimpse of the group.

From the report:

At 2:21 pm, pool taken out to green and stopped roughly 200 ft from hole. First striking image: Clinton’s head of white hair and bright red golf shirt. Got there as they were finishing up. Within a minute, the foursome loaded into carts – POTUS w Clinton and Daley with Band – and drove off.

It’s Obama’s 24th time golfing this year and the 82nd outing of his presidency.

Hey, look at it this way -- more time on the greens means less time in the Oval Office...and that might mean less damage.

I know, wishful thinking...

Friday, September 23, 2011

Don't know much about history...

"The Little 'Intercontinental' Train That Could"...

If you haven't already heard about it, the president -- while in the midst of a failed campaign stunt -- made another speech gaffe.

Here's how the LA Times covered it:

"We’re the country that built the Intercontinental Railroad" -- Barack Obama.

That's what the president of the United States flat-out said Thursday during what was supposed to be a photo op to sell his jobs plan next to an allegedly deteriorating highway bridge.

A railroad between continents? A railroad from, say, New York City all the way across the Atlantic to France? Now, THAT would be a bridge!

It's yet another humorous gaffe by the Harvard graduate, overlooked by most media for whatever reason. Like Obama saying Abraham-Come-Lately Lincoln was the founder of the Republican Party. Or Navy 'corpseman.' Or the Austrian language. Fifty-seven states. The president of Canada. Etc.

If you talk as much as this guy likes to talk instead of governing, if you believe you are a Real Good Talker as much as this guy does, you're gonna blow a few lines. But this many?

What's interesting about this particular gaffe, is that it's not the first time the president said the exact same thing. Here, check out this interview he gave earlier this year (below):

Maybe they don't teach American history at Harvard...

Take it from the expert...

Question: Who said, "the last thing you want do is to raise taxes in the middle of a recession. Because that would just suck up -- take more demand out of the economy and put businesses in a further hole..." ?

Answer: Watch/listen to the video below.

(h/t: Instapundit)

Wednesday, September 21, 2011

Give us all your money!

Solyndra/Democratic money man: George Kaiser


Uttering the name of the now-bankrupt solar energy equipment manufacturer/Stimulus beneficiary, conjures all sorts thoughts/imagery/throwing up in your mouth a little.

Now that more than half-a-billion simoleons has been thrown away on the it-would-never-work green company, Congress, the FBI, the State of California, and the Departments of Treasury and Energy are hot on the trail of false promises, cons, dodges and -- perhaps -- misappropriation of public funds and/or outright theft.

Among those in investigators' cross hairs: Oklahoma billionaire, Obama/Democratic fundraiser and big Solyndra backer George Kaiser -- see photo at top. (For the record, the very wealthy man from Tulsa claims to have invested nothing in the company...but his foundation had more than a third interest in the failure.)

Since the scandal broke, Kaiser has worked to keep his distance from the brewing crisis, but his connections to the company and interactions with the White House (attending 16 of the company's 20 meetings with administration officials) have belied his denials of trying to influence a $535 billion federal loan (from the Stimulus) to Solyndra.

Below is an interesting clip from one of Kaiser's speeches. (Brief transcript follows...) In it, he shares his views on "getting the money."

“There’s never been more money shoved out of the government’s door in world history, and probably never will be again, than in the last few months and in the next 18 months,” he says. “And our selfish parochial goal is to get as much as it for Tulsa and Oklahoma as we possibly can.”

George Kaiser cites his “multiple trips to Washington” and his ability to secure meetings with “all the key players in the West Wing of the White House.” He also touts his “almost unique advantage,” through his foundation, of being able to match public dollars with private funding. That way, Kaiser says, the Obama administration will know “we’ll watch over it because we don’t want to be embarrassed with the way our money is spent and so we won’t make you be embarrassed with the way your money is spent either.”