Energy Secretary Steven Chu insisted at a House hearing on Thursday that politics did not influence Energy Department actions on a $535 million loan guarantee to the solar-energy company Solyndra, which defaulted on the federal loan this summer after filing for bankruptcy.
"I want to be clear: Over the course of Solyndra's loan guarantee, I did not make any decision based on political considerations," Chu said in sworn testimony before the House Energy and Commerce Oversight and Investigations Subcommittee.
Chu also told lawmakers on Thursday that he was unaware that officials at his department urged Solyndra to hold off on announcing planned layoffs in 2010 until after the Nov. 2 elections, prior to which the Obama administration was touting Solyndra as a successful use of funds from the controversial stimulus package in 2009.
“I don’t know. I just learned about that,” Chu replied to Rep. Joe Barton, R-Texas, when Barton asked whether Chu knew about Solyndra's delay in announcing layoffs.
Chu was testifying for the first time to the House subcommittee that has been investigating Solyndra's failed loan.
Chu said later in the hearing: “That was not discussed with me and I would have not approved it.”
“That’s not the way I do business,” he added.
Private investors of Solyndra, including a venture-capital firm founded by George Kaiser, an Oklahoma oil billionaire who bundled campaign donations for presidential candidate Barack Obama in 2008, said in an e-mail released this week that DOE officials did urge Solyndra to hold off on a layoffs announcement until Nov. 3, 2010, a day after the midterm elections in which Republicans took control of the House.
Solyndra received a loan guarantee from the federal stimulus program in September 2009, but it went bankrupt this September—leaving taxpayers on the hook for most of the $535 million initial loan. Struggling financially, the company announced layoffs and plans to consolidate some of its businesses on Nov. 3, 2010, according to press reports at the time.
“They did push very hard for us to hold our announcement of the consolidation to employees and vendors to Nov. 3—oddly, they didn’t give us a reason for that date,” states an October 2010 e-mail exchange between advisers for Kaiser’s firm, Argonaut Private Equity.
When Barton asked him if he knew who Kaiser was, Chu replied: “I know now.”
Several months later when Solyndra was on the brink of bankruptcy, DOE decided to restructure the loan to put $75 million of new private investments from firms including Kaiser’s before the government’s interests in the event of a default.
Chu repeatedly told lawmakers in testimony on Thursday that it was a “difficult decision” to restructure Solyndra’s loan guarantee earlier this year rather than pull the plug on that federal support.
The solar manufacturer announced it was filing for Chapter 11 bankruptcy on Aug. 31, and the FBI raided its California headquarters a week later.
Chu didn’t offer an apology for his decisions when asked by House Energy and Commerce Committee Chairman Fred Upton, R-Mich., if someone should apologize for Solyndra’s demise and putting taxpayers on the hook for the loss of almost a half-billion dollars.
“It is extremely unfortunate what has happened to Solyndra,” Chu said. “When the bottom of the [solar] market folds out and the price of solar decreases by 77 percent in two years, that was totally unexpected not only by us.”
Chu reiterated that his decisions were never swayed by politics and there was no malfeasance, so he would not apologize.