Officials Knew The Solyndra Deal Was Possibly Illegal

An email trail shows Energy Department officials were warned, but went ahead anyway

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Officials at the Department of Energy were warned that they could be violating the law if they restructured a loan guarantee for the solar panel maker Solyndra so that investors would be repaid before taxpayers. They went ahead anyway, The Washington Post reports, after getting a look at the email correspondence that preceded the Solyndra deal's approval.

The documents offer new evidence of wide disagreement between officials at the Energy Department and officials at the Treasury Department and Office of Management and Budget, where questions were raised about the carefulness of the loan vetting process used to select Solyndra and the special help it was given as its finances deteriorated. Energy Department officials continued to make loan payments to the company even after it had defaulted on the terms of its loan.

That revelation follows on the news that a former Obama fundraiser and Energy Department official, Steve Spinner, pushed for the Solyndra loan even though his wife's law firm worked for the company and he had said he would recuse himself. The Post points to a disagreement among agencies, one that was seemingly won by the Energy Department, about whether the structure of the loan was justifiable.

The e-mails show that Mary Miller, an assistant Treasury secretary, wrote to Jeffrey D. Zients, deputy OMB director, expressing concern. She said that the deal could violate federal law because it put investors’ interests ahead of taxpayers’ and that she had advised that it should be reviewed by the Justice Department.

“To our knowledge that never happened,” Miller wrote in a Aug. 17, 2011, memo to the OMB.

In February, the restructuring was approved by Energy Secretary Steven Chu.

Email traffic reflected growing political concern as the company began to founder, TIME reports:

As recently as August of this year, as Solyndra teetered on default, the import of the company’s failure was not lost on White House officials. On August 26, Heather Zichal, a deputy assistant to the President on energy policy, e-mailed a colleague at the Office of Management and Budget, asking if he would be on an upcoming conference call about Solyndra.

“Y. What’s the deal?” the colleague wrote back.

“*#~@storm,” replied Zichal.

This article is from the archive of our partner The Wire.