PRESIDENT BARACK Obama’s energy secretary, the Nobel Prize-winning physicist Steven Chu, will face tough questioning by Republicans on the House Energy and Commerce Committee today regarding the administration’s handling of loans to the now bankrupt solar energy company Solyndra.
The failure of Solyndra is one of the biggest sticks the Republicans have to beat Mr Obama and climate change activists with in the run-up to the 2012 presidential election. Conservative media devote significant coverage to it, and Republican presidential hopefuls bring it up often.
In 2009, the California-based manufacturer of solar panels promised to create 1,000 jobs with the $535 million in federal loan guarantees it received in the first months of the Obama administration. Mr Chu was guest of honour at the ground-breaking ceremony for the Solyndra factory, which Vice-President Joe Biden addressed via satellite link.
Mr Obama visited Solyndra in May 2010, portraying it as evidence of the benefits of his stimulus programme and a model for green energy initiatives.
The largest private investor in Solyndra was Argonaut, an equity firm managed by George Kaiser, who was a major donor to Mr Obama’s 2008 campaign. According to Fox News, Mr Kaiser visited the White House at least 17 times, and discussed Solyndra with White House officials.
On Tuesday, the House committee reviewed some 200 e-mails sent to and from the Department of Energy and discovered it had asked Solyndra to delay a damaging announcement the firm was about to close a factory with the loss of 40 jobs until after the midterm election on November 2nd last year. Solyndra postponed the announcement until the day after the poll.
Mr Chu will also be asked to explain why his department agreed last February to restructure Solyndra’s debt so that private investors who agreed to sink another $75 million into the company would be paid back first – before the government, ie taxpayers – in the event of a liquidation.
The department says it hoped the new infusion of cash would save the company, and the government’s investment. Republicans on the House committee say the matter should have been referred to the Department of Justice.
Senior White House officials last February circulated an outside report recommending Mr Chu's resignation because of anticipated controversy over Solyndra, according to the Washington Post. An editorial in yesterday's Wall Street Journalcalled on Mr Chu to "do the honourable thing" and resign.
A high-ranking official working under Mr Chu, the Department of Energy’s loan programme director Jonathan Silver, resigned last month. Solyndra filed for bankruptcy in August and its offices were raided by the FBI in September.
The right has seized on Solyndra as proof of government ineptitude. "The Solyndra economic model is that government knows how to allocate the national wealth better than private investors do," the Wall Street Journalsaid yesterday. "Every green energy firm has some kind of political connection, given that the entire industry is a creation of the government."
Both the House committee and the FBI are now investigating Solyndra. The Republicans are trying to prove political considerations led the administration to approve the half billion dollar loan, against expert advice. The FBI is looking into possible misrepresentations by Solyndra on its loan applications.
The Department of Energy is one of three government agencies which Republican presidential hopeful Rick Perry would like to close, but when saying this last week he could not recall its name.
In other bad news for the department, its own inspector general has recommended it be restructured with significant staff cuts, because only half of its $24 billion (€17.8 billion) annual budget goes to research, the other half to overheads. The same report said the department would have to reduce the $6 billion it spends annually to clean up pollution from nuclear weapons production in 35 states, concentrating on the worst contamination.