Chu Discusses Solyndra Controversy
MELISSA BLOCK, HOST:
This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.
On Thursday, Energy Secretary Steven Chu will face tough questions from Congress about Solyndra. That's the California solar company that went belly-up after it got a $535 million government loan, part of the stimulus package. There are lots of questions about why Solyndra's loan was rushed through, and whether it was pushed to benefit a key donor to Barack Obama's presidential campaign. Secretary Chu joins me to talk about Solyndra. Welcome to the program, Secretary Chu.
SECRETARY STEVEN CHU: Thank you.
BLOCK: You were at Solyndra back in September of 2009 for the groundbreaking. And you, at that time, hailed the company as the first to get a loan guarantee from the Energy Department since the 1980s. Let's listen to what you said then.
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CHU: And we're going to make many more awards in the weeks and months ahead. We, at the department, are moving with unprecedented speed to help create new jobs that can't be outsourced and to help America's most promising companies grow at a time of tight credit and hesitant investors.
BLOCK: Secretary Chu, I'm curious. That unprecedented speed that you talked about back in 2009, has that come back to haunt you?
CHU: No. I - I'll stand by those words. Typically, you know, a loan, if it takes considerably more than a year or two to process loan from time of application to time of conditional commitment, business moves much faster than that. And so what we did was we improved the process. We did not cut corners. We actually made it more thorough and diligent, but we can improve the process so that it typically would take something on the order of one year to do all of the due diligence.
BLOCK: People now, though, Secretary Chu, are saying that were a lot of red flags through this process, that the loan was not properly vetted, and that there was pressure placed to approve the loan before your visit for that groundbreaking. Do you think that's a fair critique, that there should have been more due diligence before that loan went through?
CHU: We were very thorough in the application of loan at the time. In the end of 2008, the beginning of 2009, we asked outside people to give us second and third opinions. What was unanticipated was that the market for the prices of solar modules really plummeted. We're talking about something like over a two- or three-year period, we had more than 60 percent decrease. As we go back and look at what were people predicting as the months rolled on, they were consistently over-projecting what the selling prices would be. And so hindsight in some cases appeared to be better than 20/20.
BLOCK: Hmm. But Secretary Chu, six months after the groundbreaking, the company's auditor, Price Waterhouse, warned that Solyndra had real financial trouble. They talked about recurring losses, negative cash flows and raised what they called substantial doubt about the company's ability to continue as a going concern. This was the same month that you said you were confident that Solyndra would be able to repay its loan. Based on what? Were you aware of that audit at the time?
CHU: I was not aware of the audit instantly at that time, became aware of it later. And so what has happened during this period is we have a very good loan people, and they tried to, you know, what are the best projections, going forward, and how do you monitor progress of the loan? Certainly, any new company in the process of constructing a new factory that would be more efficient, more highly roboticized(ph) to be competitive would be burning through cash.
BLOCK: This was a point at which industry analysts, people who follow the solar industry, people at the Office of Management and Budget were raising concerns, were raising red flags. It does seem that the Energy Department was convinced that this was a good bet. Why? What were you basing that on?
CHU: As time went on, there was a growing concern because of the cash flow. And so we certainly were watching this and looking at this very closely. And then eventually, we recognized that they were in deep trouble.
BLOCK: Secretary Chu, you are no doubt going to be asked on Thursday before Congress about the billionaire George Kaiser. He was a fundraiser for the Obama campaign. His family foundation was a big investor in Solyndra, and there are a lot of emails that have been released that detail the foundation's interest in Solyndra and Kaiser's visits to the White House. Do you agree that this doesn't look good and that you have some explaining to do?
CHU: First of all, I was not aware and certainly no decision we made in the loan program had anything to do with who is investing in this company. There were people like George Kaiser, who have been associated with the Democratic Party. There are other people who have been associated with the Republican Party and have been donors there as part of this $1 billion package of private investment. Who was backing the company had nothing to do with the work of our loan professionals. To what extent they were even aware I can't really say. But certainly, at my level and the people I was talking to, we were not aware of either the Democrat or Republican backers.
BLOCK: There was a document released, Secretary Chu, released by the White House. It was an email that was sent by a clean energy activist named Dan Carol who advised the Obama presidential campaign back in 2008. He called you brilliant, but he also suggested you should be removed as energy secretary. Do you think that you have the full support of President Obama to stay on as secretary of the Energy Department?
CHU: Yes, I do, number one, and I don't know where this person got his information. I don't know him. He doesn't know me. And I'm not sure he knows the details of what happens in the Department of Energy. But all I call say is, as far as I know, I do have the support - the full support of the president.
BLOCK: Secretary Chu, thank you very much.
CHU: Thank you.
BLOCK: That's energy Secretary Steven Chu.
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