Solyndra, a renewable energy company in California, has in the recent past entered the league of companies riddled with legal and ethical issues which might impact negatively the other companies investing or interested in investing in the renewable energy. This is a result of the companies’ political positioning and linkage to taking side with the existing political structures. This comes at a time when the company’s financial standing is under intense scrutiny, a fact resulting from being in the verge of bankruptcy.
Solyndra’s application for $535 million loan from the Federal government was linked to the support of Obama’s administration, presidency and advising the United States of America navy to agree to sign a contract with them. This has raised ethical questions among key decision-makers, capital investors as well as federal agencies. This act by Solyndra contravenes the White House’s commitment to ending impunity through the influence of lobbyists. Termed as a political appointee, the company focuses on the stake of the stimulus package of $40 billion.
Looking at the chronology of Solyndra’s formation in December 2005, during the Bush administration, and applying for a loan the following year since the company’s CEO efforts to seek the energy secretary, it shows that company’s financial base was not strong enough and was relying on political goodwill for survival. During the same year, a DOE staffer criticizes the deal as prompting the White House to push for loan approval. This raises so many ethical and legal questions since the loan process was not followed and not many detailed documentation was available to dispute this assertion.
The Obama factor joined the circle after the loan was approved and Joe Biden appeared during the Solyndra ground breaking in March 2010. Concerns from auditors were raised over the company’s financial operations with the same warning coming from the donor on Obama’s planned visit to Solyndra on 24th March 2010. Despite the ongoing concern regarding the loan approval, Obama visited the facility and declared it as a model of clean technology and a job creation centre. Ten months later, the company runs out of cash with a warning that rescuing it with public money was a political risk. This led to Solyndra executives conceding that the company was on the brink of liquidation, a situation rescued by DOE refinancing in February 2011, while investors put in an additional $75 million only for the company to shut down on August 31 2011, and as a result sent most of their staff home.
This is a clear indication of flouting the California code of ethics with symphonic money through a company, which went down on a span of under four years. Neither the company executives nor the government or political forces are able to explain the money laundering-sort-of-dealing stage. Any public funding organization has the ethical responsibility to let all stakeholders going through their accounts and raising concerns where appropriate, a case which was not exhibited in the Solyndra case. This appears like an arrangement between few political individuals seeking to get public funds through a wholly registered and recognized company. Most definitely these politicians acted this way to safeguard their political positions.
The manner in which Solyndra came into existence and it’s winding up raised many questions, giving the amount of dollars which changed hands with the blessings of the political administration. The timing of the loan approval and the involvement of Biden also raises questions. There is also the close relationship between Obama and Solyndra which many say has a lot to do with the embezzled funds. All these and much more leave the law and ethics agencies with a myriad of boardroom intrigues. The team of the company’s executives intends to keep the dealings under the lock. It is also a good ground for the ethics agencies to sweep.
Legally, this act does not auger well with the renewable energy industry investors and other stakeholders. This raises the questions on the government’s involvement in full-scale support for renewable energy and other emerging related technologies. Worse though is the question of Obama’s inclination towards the company and he displays the company as a good example of spurring his stimulus initiative of achieving clean technology in the US during his tenure and beyond. The link to George B. Kaiser, a key fundraiser for Obama, who also happens to own a stake at Solyndra, raises the question if the taxpayers should shoulder the burden of paying the half billion-dollar loan; a clear case of favoritism, which goes against the federal law.
The ethical issue arising is that Solyndra, as an investor, should not lobby for any support for application for a federal loan guarantee. This does not only apply to this firm, but also the others in the renewable energy sector. To complicate the matter, the advisor’s wife works for a law firm which represents Solyndra in their legal matters. The advice to the US Navy to on buying Solyndra’s technology through the Pentagon’s Defense Venture Catalyst Initiative (PDVCI) is in itself in contravention of the ethical provision, as well as a total conflict of interest. Such dealings have not been in secrecy, but open for the public and stakeholders’ perusal and scrutiny.
On the other hand, the direct connection between Solyndra personnel and White House ignored the fact that they are under the existing ethical policies and should take the anti-trust compliance seriously, a fact that should be put as a secret under spurring economic growth. The government’s involvement in the deal should have been left solely to the commercial sector since taxpayer’s money was involved. It is easier for shareholders to go through the due process in case of any resulting financial failures on part of Solyndra. The department of energy should have been the last to back Solyndra, since the government is not in the business of supporting such large-scale manufacturing ventures through political influence, but provision of the necessary processes and expertise.
As much as there is no clear cut between campaign contribution and lobbying for loan awards as a conflict of interest, the law clarifies that such corrupt officials must disqualify themselves from taking part in such deals if in the last 12 months they have received any cash close to $250 from a financially interested party or person. According to the California Attorney General’s office and The Fair Political Practices Commission, any public officer should exercise his or her zest, skill and diligence for the sole benefit of the general public. Acting in the contrary directly violates the above mentioned doctrine.
According to Milton Friedman, a professional in the field of philosophy of economics, the governments should cut down their spending and instead concentrate on protecting its citizens from external economic forces in a free market. His philosophy is a clear contrast to the Keynesian economic law, clearly demonstrated by both the government and Solyndra Company. The deal entrenched generosity when dealing with issues touching on unemployment and price control, which the current Obama administration is fronting.
Friedman advocated for deregulated capitalism, so that the government allows business the freedom to constraints associated with bureaucracy, leading to the economy becoming the sum total of individual effort, thus disconnecting the vital role of corporations. This is a fact that Solyndra exhibited through lobbying to evade the long laid down government procedures. Using their political connections, the solar company followed Friedman’s philosophy that “new things get done fast and properly by creating a crisis”.
By freely exchanging money from the government coffers to the public through selected friendly companies, this money ends up in the hands of the upper echelons. It is only the general public who suffer from these consequences. Such deals do not only affect the common hardworking man, but a hugely contributes to the inflation. This situation becomes even worse when the government ignores its responsibility of putting in place a strong team of experts to investigate any financial deals that are carried out by top individuals in the government.
Milton Friedman’s economic philosophy on one hand had a direct influence on the company’s executives. In this case it is through the misconception that following the due course when approving a loan is time consuming and cumbersome. This is based on his crisis management school of thought. Not only does the philosophy back the action of the company management as a whole, but it also raises questions on the integrity of the custodian of the state coffers and its separation from the pressure and influence held by the political power barons.
Pushing for the fast approval of the loan through the White House means that there are procedures which the Solyndra executives were trying to evade and the only soft spot was using their senior partners, who supported the political class to get power to reciprocate the gesture through the quick loan approval. It has to be noted that there is always the unethical way of returning a favor. This was the opportune time for the fundraising to get back to the rightful owners. Milton Friedman tries to bring about in his philosophy a model project for the people and the country as promised by the Obama-Biden administration during their campaign sessions.
There are various scenarios in this case which leave an observer with many unanswered questions. First it is the involvement of the government of the day with a company which has not operated long enough to warrant it to get a huge loan from the public reserves through unauthorized procedure and approving that loan in secrecy. There is also the existence of a team of executives who were supposedly not very experienced in the clean energy sector, using the political structures to justify their company’s existence and operation, despite the advice from auditors on the consequences of getting the funding. The failure by the energy department to give clear guidance before disbursing funds to the company despite getting warnings from various stake holders not to do so. Also, the energy department did not follow up the implementation of the proposed project.
The involvement of high-powered delegation of government officials from a particular political group supporting the whole project to an extent of highlighting it as a model for their visionary economic pillar shows that there is still high level of corruption in the United States. From an economic point of view, this is a blatant transfer of taxpayer’s money from a central reserve through a non-performing company to the pockets of the select few. This is a contravention of both the state law as well as breach of the existing code of ethics. The executive might have been above board salvaging Solydra from collapse and ensuring employment for its workers, while sustenance being influenced by external powers. This though does not clear the company management off the blame, as custodians of the company’s finances and the management should have raised the alarm and give recommendations on the way forward.