The U.S. Department of Energy backed hundreds of millions of dollars in loans for discredited solar power start-ups whose corporate debt was already sullied with “junk” ratings by Standard & Poor’s and Fitch Ratings, two of the world’s leading credit agencies, a federal government investigation has shown.
Despite the finding, Energy Secretary Steven Chu vigorously defended the ethics of his agency in a hearing last week held by House Oversight Committee Chairman Rep. Darrell Issa.
Details are emerging this week about the Energy Department’s practices that indicate the agency spent a disproportionate amount of funding on these tainted solar power projects.
Congressional aides interviewed personnel at Fitch and S&P, and officials inside Obama’s Energy Department, as part of their investigation.
A company called Solopower was cited in a “dire” warning by S&P, which accurately forecast that the firm would “fail to meet its debt obligations.” Nonetheless, it received $170 million in federal funding guarantees, investigators told The Daily Caller.
Another company, Abound Solar, was approved for a $400 million loan guarantee by Obama officials, investigators said. Fitch Ratings, however, had earlier assigned a “junk credit” rating to Abound. Fitch deemed the firm “highly speculative” and “lagging in technology” behind its competitors.
It was also rated less creditworthy than Solyndra, another infamous administration solar power investment, which caused scandal for the White House last year when it declared bankruptcy.
“The markets were expressing a sense of caution on these firms,” Jeffrey Solsby, a senior aide to Issa, told TheDC. “The administration did not have this same sense of caution.”
Earlier this month, About Solar announced that it would stop producing solar power panels and lay off 180 employees. Before the disclosure, the company had already spent $70 million of its awarded federal funds.
Federal investigators detailed other dramatic abuses at the green energy firms:
Bright Source Energy, which received a $1.6 billion federal loan guarantee to build a solar power plant, has spent some $56 million on a “desert tortoise relocation program.” And Beacon Power, which received Energy Department funding, went bankrupt — but not before paying three executives more than $250,000 in “bonuses” in March 2010.
Foreign firms also received loan guarantees from the federal government as part of the program. One such overseas company was Spain’s Abengoa, another corporation with a poor credit rating, which rounded out the energy department’s junk bond portfolio.
Federal investigators told TheDC that an audit of these loans and loan guarantees indicated that the administration “ignored” clear warning signs of a “likely loss” of taxpayer dollars. Investigators also said the administration exercised “improper influence” in the approval of loan guarantees to favored companies “through manipulation of analysis — defrauding taxpayers and misappropriating assets.”
Even more damning allegations, which suggest that former Obama administration officials and campaign bundlers received a sizable share of those federal funds, are now surfacing.
Christine Lakatos, a researcher and conservative writer who has followed the emerging scandals for several years at the blog Green Corruption, told TheDC the administration is engaging in “crony capitalism with ‘green’ dollars.”
Lakatos claimed the scandal goes deeper than Rep. Issa and his investigators have detected. She said companies linked to contribution “bundlers” from President Obama’s 2008 campaign received about 80 percent of the “green energy” loans made by the Energy Department during the last three years.