From the Fiscal Times: Solyndra Went on a Spending Spree After Getting Loan
Former employees of Solyndra, the shuttered solar company that exhausted half a billion dollars of taxpayer money, said they saw questionable spending by management almost as soon as a federal agency approved a $535 million government-backed loan for the start-up.
A new factory built with public money boasted a gleaming conference room with glass walls that, with the flip of a switch, turned a smoky gray to conceal the room’s occupants. Hastily purchased state-of-the-art equipment ended up being sold for pennies on the dollar, still in its plastic wrap, employees said.
As the $344 million factory went up just down the road from the company’s leased plant in Fremont, Calif., workers watched as pallets of unsold solar panels stacked up in storage. Many wondered: Was the factory needed?
“After we got the loan guarantee, they were just spending money left and right,” said former Solyndra engineer Lindsey Eastburn. “Because we were doing well, nobody cared. Because of that infusion of money, it made people sloppy.”
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On Friday, company executives are scheduled to appear before a House committee investigating how Solyndra obtained its loan and whether the Obama White House rushed its approval for political reasons. Chief Executive Officer Brian Harrison and Chief Financial Officer Bill Stover were supposed to face a grilling about the company’s spending and collapse, but they announced Tuesday that they would assert their Fifth Amendment rights because of a criminal probe of the company by the Justice Department.
Full story at the Fiscal Times h/t to Tom Nelson
Izen said:
>U.S. Sen. Charles Schumer, D-N.Y., is proposing to end what he says are $4 billion a year in tax >subsidies to the biggest oil companies.
A little while back, I went to the Exxon website to see how much tax they pay every year. It is in the order of hundreds of billions of dollars. I recall that the combined payment of direct taxation by “big oil” is close to 1/2 trillion dollars a year. This doesn’t include the taxes paid by shareholders, employees and suppliers. For my business, this is about 3 times the corporate tax paid. My guess is big oil annually contributes well over one trillion in direct and indirect taxation world wide. I agree they shouldn’t get “subsidies”, but deferred taxes and write-offs for capital equipment are not subsidies.
Don’t take my word for it. Read the annual reports of Exxon, BP, Total, Shell and Chevron.
Cheers
JE
George E Smith,
“They went belly up, because nobody in their right mind, would have bought a Solyndra solar panel; taxpayer subsidized or not.”
Are you saying that the guvmint didn’t do their due diligence with this product? Shame on them.
Solyndra, just more Obamanomics.
http://www.americanthinker.com/2011/09/green_twilight.html
Solyndra … Soylent Green is there a connection?
The Solyndra screwup is unfortunate and likely preventable but there are lots of pieces to this story, not least is the recent huge investment in solar by China, over $20 billion dollars, allowing their plants to undercut just about anyone.
A good chunk of China’s success (not all, of course) has been from them gaming the system, such as keeping the yuan artificially low against the greenback. Had they played it straight all along, they likely would have lost a significant chunk of manufacturing jobs to India and Vietnam years ago.
It’s easy to point fingers at the current administration but the Solyndra deal goes back to 2005 and the Bush administration did try to fast-track it. And while a big deal was made about investment by one of George Kaiser’s firms, a curious omission was that another very large early investment was made by the Walton family ( not exactly Obama’s best buddies ).
And let’s not tar the entire solar industry with Solyndra’s brush – the year to year growth in solar running close to 7%, WAY above the rest of the economy as a whole.
It’s perfectly righteous to be indignant over the loss of taxpayer dollars but the big failure of the White House is that several trillion dollars of America’s life savings have been stolen and no one indicted, unless we all believe Bernie Madoff is to blame for the global financial catastrophe.
Nobody ever went broke underestimating the intelligence of the American public.
H. L. Mencken
US editor (1880 – 1956)
“The likes of Intel and AMD spend $10-$20bn on each new plant.”
I haven’t read all comments, but I just do not believe that any company has spent 10 billion on a new plant. Proof please!
Are Solyndra and Soylent Green connected? Maybe indirectly, although I have yet to see anybody promote the Soylent Green industry as the path to jobs, economic growth and prosperity.
@- Nuke Nemesis says: September 26, 2011 at 11:07 am
“You were doing alright until your last paragraph, when you decided to tack-on that neo-Marxist claptrap. You’re trying to reframe the long-standing social contract in redistributionist terms.”
Not quite right.
I am framing the ‘long-standing social contract’ as the RESULT of the creation and distribution of resources.
@- suyts says: September 26, 2011 at 11:40 am
“Good point, except you’ve gotten the subsidy relationship backwards. The infrastructure, water, sewage, police, etc. was accomplished only through the commercial enterprises’ subsidy to governments, via direct or indirect.
It is important to distinguish the difference, else, government tends to think they are the source of wealth, and thus the rightful owner of the wealth.
James”
Fair point; I was talking of government ‘subsidy’ as that was the thread topic, but that does imply a unidirectional process.
As you rightly point out the benefits and costs run BOTH ways. I think that historically the relationship between government and business has been symbiotic rather than parasitic. The ‘rightful ownership of wealth’ in such interdependent systems tends to be a matter of legal tradition and social convention. The ‘long-standing social contract’ and similar political epidemiologies arise from the co operational synergies that business and government reach to distribute that ‘wealth’.
It’s the biggest energy related Executive Branch scandal since Teapot Dome (or at least since Billy Sol Estes.) It was a bribe in return for a favorable decision.
Ten billion is too high for a new chip fab; more like $6 billion for a 22-nm plant but if the tech scales down, as it seems to do every 2-3 years, add another billion in upgrades.
http://www.anandtech.com/show/2814
In my last post -“epidemiologies”- should be epistemology
perhaps ‘political justifications’ would be clearer -grin-
Solar panels are lot like battery packs – you can not mix old discharged batteries with new ones New batteries will spend themselves in futile attempt to charge old batteries instead of driving loads. Parts of the solar cell that have low light will shunt current from parts that are exposed to lots of light, taking efficiency of panel way down. This is why uniform illumination of panel is very important. The only way around this problem is to actually separate large solar cell into bunch of small cells and use complicated controllers/power supplies arrays to sum output of each little cell together. This is very expensive and generally not being used.
I have no idea how Solyndra’s panels managed to work around this, but given that they did not publish their technical data anywhere, I suspect that they didn’t.
In absence of actual technical info that would show that this thing works as well as regular flat panels, I’d say the whole idea is a total fraud. To me, the requirement for white paint on the roof is a dead giveaway or how ridiculous this whole thing is.
When the Federal Labour government took over from the Liberal Co-Alition in 2007 they inherited a very healthy surplus of some 100’s of billion dollars. Although Australia’s economy was still running strong despite the downturn in the GE the Rudd/Gillard government emptied the bank by issuing stimulus packages to all people working, and including some overseas residents. This put Australia into debit by almost the same amount as they were in the black. The big winners of the stimulus package were department stores selling Chinese large screen LCD TV’s.
Carbon tax is a warm and fuzzy way that the Labour Government can get back into surplus and fund all those new positions in “Climate Change Departments” regardless of whether they personally believe in the Al Gore man made climate change story. Unfortunately governments in opposition also realise this.
It’s a high crime, Mr Demeanor.
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There isn’t very much information on these “subsidies”, but reading between the lines, it appears to relate to favorable tax treatment of exploration expenses. So, what’s really happening is that the government is NOT TAKING as much money as they might otherwise. If a burglar decides not to rob me, is that the same as handing me cash? No? Didn’t think so. Only on the left is not taking someone’s money a subsidy. If the government writes you a check and increases your GROSS income, that’s a subsidy. That’s not what’s happening in this case.
Suyts, check out the $75 million from Argonaut, please.
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Booty is only sin deep (just cut a corner) in the land of bilk and money.
The raid gives the executives “cover” for pleading the Fifth: they’re under criminal investigation by the Justice Dept. (I wonder if the House Committee would offer them immunity from prosecution.)
Mark in sandy echo says
This is exactly the problem with the merging objectives in a private-public partnership. Standing on its own Solyndra would have been conserving capital, and not open the new facility unless needed.
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Well obviously you werent around during the dot com era. Lots of the same kind of abuses but no government private partnership. So case not proven.
There are no clear cut rules about this kind of thing. You are communicating via the Internet. That started on the road to success as a government project and funded by government people with a bit of imagination. Clearly that was a success.
Considering that a large fraction of private businesses fail, expecting private government partnerships not to fail occaisionally is too high an expectation.
I feel your pain about tax dollars being wasted but I suspect it is not quite as bad as portrayed, since most of that money did circulate around the economy. It did help moderate a serious problem which was that money was failing to circulate through the economy.
Why not just throw it out the window on a windy day then.
““Actually ALL commercial enterprises are dependent on government subsidy to some extent whether direct or indirect. The social infrastructure of roads, clean water, sewage, police, fireman and power generation standards underpins the functioning and workforce of any industry”.”
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I’m sorry but I also have to add my two cents because this is the newest line used by politicians.
The roads, sewage, cops, whatever are a result of the wealth created by industry. People get jobs at a factory and pay their taxes which support the infrastructure. Private industry pays for all of government. Government is a creation of society, it did not create society.
I cringe when I hear this because you have politicians effectively raising a mob to attack “That guy sitting safely in his factory.” by telling people that they just live of what you and the government provide and not the other, correct, way. Don’t bite the hand that feeds you and then wonder why you are hungry.
Scary.
“”””” LazyTeenager says:
September 26, 2011 at 4:24 pm
Mark in sandy echo says
This is exactly the problem with the merging objectives in a private-public partnership. Standing on its own Solyndra would have been conserving capital, and not open the new facility unless needed.
———-
……………………
I feel your pain about tax dollars being wasted but I suspect it is not quite as bad as portrayed, since most of that money did circulate around the economy. It did help moderate a serious problem which was that money was failing to circulate through the economy. “””””
Well lazy, that’s what’s known as the broken window fallacy.
The taxpayer funds thrown down a rat hole by the profligae spending of these miscreants, is money that would in fact rattle around the economy, if thee Government didn’t steal it from the productive people who generated that wealth.
Instead the administration for totally political reasons chooses to say who shall be the winners and losers. And as we have seen they are better than most at picking total losers.
The department of energy has so far produced NO energy, and simply gets in the way of those who do.
You don’t get rich by encouraging people to break windows to make work for slackers
“”””” Tom says:
September 26, 2011 at 8:35 am
I’m unsure on this. Silicon fab plants are expensive. Very expensive. The likes of Intel and AMD spend $10-$20bn on each new plant. Obviously solar panels are not on the same scale as this, but I don’t know if $350m to set one up is excessive or not. “””””
Intel’s planned 14nm, 300mm wafer fab in Arizona will cost ~$5b, but this is bleeding edge tech, flat PV is old tech, you can convert a 20 year old fab to make it. The tube stuff may be a different story!
Cheers
Sethp,
My feeling EXACTLY.
There is too much misguided education in the new post normal education system in modern Western society that propagates these myths about “evil industry” and “evil corporations” and “evil employers” who are demonized as exploiting everything and everyone. The reality could NOT be further from the truth. It is actually the politicians and their crony capitalist friends (like Solyndra and others, there being a great many examples on either the right or left of the political divide) and lobbyists that are have become a HUGE parasitic problem. They are the Elephant in the Room. When political departments declare CO2 a toxic substance requiring regulation….well to put it mildly, Houston, we have a Problem!
Ahhh, Bill Stover! The former Micron CFO who stole my stock options when the division I worked for was sold off. No wonder Solyndra went under with that crook holding the purse strings…