Executives with bankrupt solar company Solyndra will refuse to answer questions at a congressional hearing Friday looking into the company’s $528 million government loan, their lawyers reported Tuesday. The move, while not entirely unexpected, infuriated congressional Republicans, who have seized on Solyndra’s collapse as a potent political issue.
Solyndra received the Obama administration’s first green-tech stimulus loan, using the money to build a solar-panel factory in Fremont. Following the company’s abrupt decision to close its factory and fire most of its workers on Aug. 31, Republicans have branded the administration’s efforts to create green jobs an expensive failure.
Solyndra CEO Brian Harrison and Chief Financial Officer W.G. Stover are scheduled to appear Friday before a House subcommittee that has been investigating the loan.
But in letters sent Tuesday to the subcommittee, lawyers representing Harrison and Stover said the two will decline to answer any questions, exercising their Fifth Amendment right against self-incrimination. The FBI, they said, has opened its own investigation of Solyndra. As a result, the lawyers advised their clients to keep quiet at the hearing.
“This is not a decision arrived at lightly, but it is a decision dictated by current circumstances,” wrote attorney Walter Brown, representing Harrison. “Mr. Harrison regrets that these circumstances prevent him from offering full and complete answers to this Subcommittee.”
Members of the House Energy and Commerce Committee immediately accused Harrison and Stover of breaking their word. The Solyndra executives had agreed in writing to testify under oath before the committee’s investigative subcommittee, according to a statement from Reps. Fred Upton, R-Mich., and Cliff Stearns, R-Fla.
Upton chairs the Energy and Commerce Committee, and Stearns chairs the investigative subcommittee. They pointed out that Harrison met with members of the committee this summer and assured them that Solyndra was in no danger of going under.
“Our investigation has gotten this far without much cooperation from Solyndra, and it will continue with or without their voluntary testimony,” read the statement from Upton and Stearns. “It’s disappointing that the officials who canvassed the halls of Congress in mid-July and misled our members about the financial state of their company are now unwilling to answer direct questions, but any effort to cover up the truth will ultimately not succeed.”
Solyndra applied for the federal loan in 2006, under a program created by the Bush administration to fund innovative energy projects. The company finally received approval for the loan in 2009, after President Obama made the loan program part of his economic stimulus package.
Republicans have questioned whether Obama pressured U.S. Department of Energy bureaucrats to give Solyndra favorable treatment because the company’s largest private investor is a venture capital firm backed by a prominent Obama supporter. Democrats have countered that Solyndra’s second-largest private investor is a venture capital firm tied to the Walton family of Walmart fame, known for supporting Republican candidates.
Why company failed
Both the company and the Energy Department insist the loan was properly vetted. The company failed, they say, because it couldn’t bring its production costs down fast enough to compete against new, heavily subsidized solar factories in China.
The executives’ decision not to testify is likely to produce a spectacle for television cameras following a well-worn pattern of past congressional hearings into such corporate scandals as Enron and WorldCom.
“I hope people will remember the bigger issue here, which is green jobs are a bright spot in a very soft economy,” said Bob Deans, a spokesman for the Natural Resources Defense Council, an environmental group that is trying to mount a defense of alternative energy subsidies.
He cited a recent Brookings Institution study that counted 2.7 million U.S. jobs in the green economy, “jobs that didn’t exist 10 years ago, at a time when we’ve lost 4.5 million manufacturing jobs. So here we have almost 3 million American families for whom this is a lifeline in hard times.”
Rep. Henry Waxman, D-Los Angeles, the committee’s top Democrat, who once famously grilled tobacco company executives, demanded earlier this week that the two largest private investors who risked their own money on Solyndra – Argonaut Ventures and Madrone Partners – also be invited to testify, but Republicans denied the request.
Hot political issue
Republicans have pounced on the Solyndra bankruptcy to wage a broad attack on green-energy subsidies and the Obama administration. House Energy and Commerce Committee Republicans on Tuesday expressed concern to Energy Secretary Steven Chu that his department now is rushing pending applications for $9 billion in additional loan guarantees under the 2009 stimulus.
Many of these loans are set to go to California solar companies or companies with large projects in California, including SunPower Corp. of San Jose and First Solar Inc. The deadline for completing the loan applications is Sept. 30.
Energy Department spokesman Damien LaVera denied the charge, saying in an e-mail, “We are not rushing to complete deals.” LaVera said the agency will not close any deal prematurely and that it is “using the full amount of time Congress allocated for the program so we can ensure that we fully complete all due diligence. … Every agreement in our portfolio has undergone many months of extensive review and evaluation before a conditional commitment is signed.”