Romney’s Solar Flareout
http://factcheck.org/2012/06/romneys-solar-flareout/
http://factcheck.org/?p=61856
Summary
An ad from the Romney campaign strains facts to make its point that federal grants and loans to green-energy companies were improperly steered to Obama’s political backers, and that federal money was wasted on failing companies that are now laying off employees.
- It claims the “inspector general said contracts were steered to ‘friends and family.’ ” But that’s not exactly what the inspector general said. And in the year since he said he was investigating such alleged “schemes,” no public charges have been made, at least not yet.
- The ad highlights the struggles — company losses, nose-diving stock and layoffs — at several companies that received substantial Department of Energy loans and grants. The ad fails to note, however, that most of the layoffs at those companies were overseas, or that the projects backed by DOE are largely moving along as planned. An independent review of the DOE program says its failure rate has been better than anticipated.
- The ad uses an inflated figure from a partisan source to quantify loans and grants that went to Obama donors.
Analysis
In a speech standing in front of Solyndra’s headquarters on May 31, Mitt Romney made clear that he intends to make “crony capitalism” a major theme in his campaign, and a counter-attack to the Obama side’s emphasis on the worst-performing investments of Bain Capital during Romney’s time there.
The Romney ad — which employs an arresting strobe-like effect to create a sinister vibe — says Obama is “spending your tax dollars to create jobs” and asks rhetorically, “How’s he doing?”
⬐ Click to expand/collapse the full transcript ⬏
Romney for President Ad: “Not Even Half”
Announcer: President Obama is spending your tax dollars to create jobs. How’s he doing? You’ve heard of Solyndra. They took $535 million in taxpayer loan guarantees and went bankrupt. But that’s not even half the story. Obama’s Department of Energy has handed out billions of dollars in loans and grants. First Solar: Three billion dollars in taxpayer-backed loan guarantees. Now they’re cutting jobs and their stock is near all-time lows. ECOtality: Received $126 million in taxpayer money. Lost $45 million, and currently under investigation. SunPower: More than a billion dollars in loan guarantees. Lost half a billion last year. Laying off workers. More than $16 billion have gone to companies like Solyndra that are linked to big Obama and Democrat donors. The inspector general said contracts were steered to “friends and family.” Obama is giving taxpayer money to big donors. And then watching them lose it. Good for them. Bad for us.
The opening volley is an attack on Obama with a familiar punching bag, Solyndra. “You’ve heard of Solyndra,” the narrator states. “They took $535 million in taxpayer loan guarantees and went bankrupt.” Solyndra’s downfall is well-documented. The California start-up solar company announced in August it would file for bankruptcy protection — about two-and-a-half years after receiving a $535 million loan guarantee from the Department of Energy. Solyndra remains the subject of a months-long investigation led by House Republicans. Among the revelations so far are that an Energy Department adviser and former Obama fundraiser sent emails pushing for Solyndra loans even though he had pledged to recuse himself because his wife’s law firm represented Solyndra.
But, the ad’s narrator states, “that’s not even half the story.” The ad then highlights a series of federal loans to green-energy companies that have since lost money or stock value, or have slashed employees.
We’ll get to each of those companies, but first let’s deal with the ad’s most explosive claims: “More than $16 billion have gone to companies like Solyndra that are linked to big Obama and Democrat donors. The inspector general said contracts were steered to ‘friends and family.’ Obama is giving taxpayer money to big donors. And then watching them lose it. Good for them. Bad for us.”
We’ve dealt with this $16 billion figure before when it was cited in TV and print ads from the Republican-leaning Crossroad GPS. As Crossroads did, the Romney ad misleadingly cites Newsweek as the source of the figure, but the magazine was just publishing an excerpt from the book “Throw Them All Out,” by conservative writer Peter Schweizer. A former foreign policy adviser for Sarah Palin and speech-writing consultant for the George W. Bush administration, Schweizer is now a fellow at the conservative Hoover Institution.
We found Schweizer’s $16.4 billion claim to be too high by nearly $6 billion. But that still leaves billions of dollars that went to companies run by or primarily owned by Obama financial backers. Payola? One might expect that a healthy percentage of owners of green-energy companies might lean Democratic, so it’s not surprising that some loans and grants went to companies run by Democratic donors. Some went to Republican donors as well. The question is whether those federal dollars were improperly or unfairly steered to donors in a quid pro quo arrangement.
The next line in the ad, “The inspector general said contracts were steered to ‘friends and family’ ” suggests that’s exactly what was going on. But the inspector general’s words have been twisted.
Here’s what Gregory Friedman said before a House subcommittee in March 2011:
Friedman, March 17, 2011: We currently have 64 open investigations associated with the Recovery Act [the stimulus], nearly 25 percent of our current case load. Schemes under investigation include the submission of false information in applications for funding, fraudulent claims for rebates, claims for unallowable or unauthorized expenses, the directing of contracts and grants to friends and family, weatherization fraud to include mischarging, and other attempts to fraudulently obtain Recovery Act funds. To date, our Recovery Act-related investigations have resulted in over $1 million in monetary recoveries and two criminal prosecutions. Further, nearly 20 percent of our other ongoing Recovery Act investigations have been accepted for either criminal or civil prosecutive action. And, Recovery Act funds, in large measure, are just being spent. Thus, we expect that our efforts in this area will continue for some time.
Friedman never said contracts were steered to “friends and family.” He said the office was investigating that kind of thing.
We reached out to the DOE’s inspector general’s office to find out what it has come up with so far. The office cannot comment on open cases, or closed ones in which no wrongdoing was found. But what about convictions? The office released a statement to us that said: “None of the cases that resulted in convictions for Recovery Act fraud related to the directing of contracts or grants to friends or family.”
Perhaps one of the ongoing cases will reveal some instances where money was directed to friends and family, but so far, there’s nothing except a year-old statement that the inspector general was looking into it. The ad suggests cases have already been discovered, and that’s not true.
An independent review of the DOE loan program, headed by former Treasury official Herb Allison, also “failed to turn up the waste and incompetence that critics said riddled the programs,” the Los Angeles Times noted, though it did call for better oversight after companies are awarded contracts. The review also concluded the program could lose as much as $2.7 billion on loans to green-energy companies, but that was actually less than the $10 billion anticipated by Congress. The Allison report was criticized by some Republicans as incomplete, particularly since the panel did not evaluate Solyndra as part of its review.
In addition to that investigation, Politico noted that “investigations launched by the House Oversight and Government Reform Committee and the Energy and Commerce Committee have yet to turn up evidence of political favors to Democrats in the loan program.”
A Dec. 25, 2011, Washington Post analysis of thousands of memos, company records and internal emails concluded the green-technology program was “infused with politics at every level.” But the Post story didn’t document any corrupt pay-to-play scheme. Instead, the “politics” described by the Post involved the backing of financially shaky companies to push the administration’s green agenda, not any rewarding of campaign donors. The story said: “The records do not establish that anyone pressured the Energy Department to approve the Solyndra loan to benefit political contributors.”
As we noted in an earlier report, there’s an ongoing criminal investigation of Solyndra’s executives, led by Republican House investigators. So new revelations could emerge in the future. But so far what’s been documented is evidence of questionable business judgments to push the Obama administration’s green-energy platform or wishful thinking about the economic viability of solar energy, not of any outright payola or quid pro quo.
Now about the specific companies featured in the ad …
First Solar
The ad’s first example is First Solar, a global provider of solar modules. Of First Solar, the ad states: “Three billion dollars in taxpayer-backed loan guarantees. Now they’re cutting jobs and their stock is near all-time lows.”
It’s true that First Solar secured federal loan guarantees of more than $3 billion for three major solar projects. (And got them after spending $2.2 million on Washington lobbying since 2007.) After arranging and negotiating financing options, all three projects were promptly sold, to NextEra Energy, NRG Energy and Exelon. So First Solar no longer owns the DOE loan guarantees (though it is building the plants for those companies — so much of the federally guaranteed loan money is certainly flowing its way).
Ted Meyer, a spokesman for First Solar, said that despite the ad’s implication that First Solar was another Solyndra deal, the structure of the loans is very different. The loans for the projects are backed by long-term contracts from major energy companies in California to purchase the power generated by the solar plants.
It’s true that First Solar is cutting jobs, but most of them have been overseas.
Associated Press report, April 17, 2012: First Solar Inc. will lay off 2,000 workers and close its factory in Germany following a collapse in solar panel prices that has erased the industry’s profits and forced some smaller companies into bankruptcy. America’s biggest solar manufacturer said the layoffs amount to 30 percent of its global workforce.
… First Solar will also shutter some production in Malaysia. It plans additional job cuts in Europe and the U.S.
… The price of solar panels, which generate electricity from sunlight, has plummeted recently. An influx of Chinese competitors has led to a rapid buildup in supply. At the same time governments in Europe, the biggest market for solar power, are reducing generous subsidy programs that had fueled demand.
According to Meyer, more than 90 percent of the staff reductions from the April restructuring of the company were outside the U.S. Those layoffs are wholly unrelated to the three projects funded by DOE, Meyer said. Those three solar projects will employ about 1,200 people during the three-year construction phase, Meyer said, and about 12 people per site permanently.
As for U.S. jobs, Greentech Media reported First Solar furloughed 120 of its 240 employees at its DOE-backed Antelope Valley solar project in California. But contrary to a Fox News report that originally ran under the headline “Obama-Funded Solar Firm Lays Off Half Its Workforce” (it was later changed), that’s just one project First Solar is working on. It is unrelated to the company restructuring, Meyer said, and is due to an unresolved code issue with the county. Once that issue is resolved, he said, First Solar plans to expand construction there again.
As for First Solar stock being “near all-time lows,” it’s true that the price is lower than it has been in more than six years. The crude graphic in the ad seems to suggest the stock has dropped to $4 per share, but that’s not accurate. It was trading at $13.40 on May 30, but that is still down precipitously from its high of $311.14 in May 2008.
Meyer released this company statement about the ad: “It’s surprising a candidate that claims to support U.S. economic growth would criticize a great American success story like First Solar. First Solar has proven that an American company can compete and win in renewable energy globally, and our success supports almost 10,000 American jobs, more than $1 billion in U.S. purchasing, tens of millions of dollars in exports, and record-setting innovation that reduces pollution and enhances U.S. energy security.”
ECOtality
The ad states that San Francisco-based ECOtality has “received $126 million in taxpayer money. Lost $45 million, and currently under investigation.”
That’s not quite accurate. In October 2011, ECOtality Inc. was awarded a $26.4 million contract from the Department of Energy to conduct advanced vehicle battery testing and evaluation for DOE. Previously, ECOtality was awarded a $114.8 million grant to install 14,000 electric car chargers in five states. As part of the arrangement, for every dollar spent by ECOtality, the federal government reimburses it 45.8 cents. The remainder of the cost of the project is picked up by private investment money from companies like Nissan and GM. To date, the company has received about $42 million from DOE. So the ad is technically incorrect to say the company has received all of the $126 million. But it will if the project is completed in 2013, as expected. Also, the ad doesn’t mention anything about jobs in relation to ECOtality, but the Recovery Act website reports that the company projected the grant would create 144 jobs.
According to company filings with the Securities and Exchange Commission, the company posted net losses of $22.5 million in 2011, and $16.4 million in 2010. But on a positive note, the company reported that the first quarter of 2012 was its first profitable quarter, with net income of $1.2 million.
On a decidedly less positive note, the company confirmed that it has received subpoenas from the SEC as part of a fact-finding inquiry related to the trading of shares between Aug. 1, 2008, and Aug. 31, 2009. The Heritage Foundation obtained and posted a copy of the subpoena sent to the company’s CEO. According to CBS News, the company is under investigation for insider trading.
SunPower
Lastly, the Romney ad targets the solar company SunPower, saying: “More than a billion dollars in loan guarantees. Lost half a billion last year. Laying off workers.”
On Sept. 30, 2011, SunPower got a $1.2 billion loan guarantee to build the California Valley Solar Ranch Project, a 250-megawatt solar plant in San Luis Obispo County, Calif. And SunPower reported an operating loss of $534 million last year. But after that, the ad’s case starts to fall apart.
Before any federal funds were released, SunPower sold the project to NRG Energy. So NRG is the owner of the loan guarantees and the company responsible for repaying them. SunPower is now the lead contractor on the project.
Despite its losses, SunPower is financially solvent, and– as the same KGO-TV report cited in the Romney ad notes — the company’s new majority stockholder is Total, “a French company that ranks among the top oil and energy companies in the world.”
As for SunPower layoffs, according to a public filing with the SEC last November, the company did announce that it would be laying off 85 employees. But as was the case with First Solar, most of those layoffs were overseas, and represented a small fraction of the company’s global workforce. In its public filing, the company stated that it was consolidating or closing facilities in Europe “in response to reductions in European government incentives, primarily in Italy, which have had a significant impact on the global solar market.” The number of layoffs ended up being less, a company spokeswoman told us, and together with newly created jobs, the net reduction was 41 jobs.
More important, the jobs related to the DOE-backed California Valley Solar Ranch are unaffected. According to SunPower, more than 350 workers are currently constructing the solar power plant. The plant, company officials said, will begin generating 25 megawatts of power by September, and when completed will generate enough electricity to power 100,000 California homes (and is already contracted to do so).
According to Bloomberg News, even with the losses from Solyndra, the default rate for the DOE’s loans to solar, wind and bio-energy projects is less than 3.6 percent, less than a third of what the White House anticipated. So Romney is using the same “lemon-picking” strategies that critics of his Bain years use — choosing a few sour specifics to give a misleading picture of the larger reality. And he’s straining facts and misquoting a leading investigator as well.
– by Robert Farley
Sources
CBS San Francisco. “Fremont-Based Solyndra Goes Bankrupt; 1,100 Workers Laid Off.” 31 Aug 2011.
U.S. Department of Energy Office of Public Affairs. Press release: “Obama Administration Offers $535 Million Loan Guarantee to Solyndra Inc.” 20 Mar 2009.
Associated Press. “Former Obama fundraiser pushed for Solyndra loan.” 07 Oct 2011.
Jackson, Brooks, Farley, Robert and Blackburn, Scott. “Wind Spin.” FactCheck.org. 09 Feb 2012.
Schweizer, Peter. “Obama Campaign Backers and Bundlers Rewarded With Green Grants and Loans.” Newsweek. 12 Nov 2011.
Friedman, Gregory H. Inspector Inspector General, U.S. Department of Energy, statement before the Subcommittee on Oversight and Investigations Committee on Energy and Commerce, U.S. House of Representatives. 17 March 2011.
White House website. Report of the Independent Consultant’s Review with Respect to the Department of Energy Loan and Loan Guarantee Portfolio. 31 Jan 2012.
Dixon, Darius and Guillen, Alex. “Mitt Romney’s Solyndra ad a mixed bag on facts.” Politico. 29 May 2012.
Stephens, Joe and Leonnig,Carol D. “Solyndra: Politics infused Obama energy programs.” Washington Post. 25 Dec 2012.
Nash, James and Snyder, Jim. “First Solar shines at lobbying, but results are spottier.” Bloomberg News. 04 Jan 2012.
Das, Krishna N. “First Solar project loan delay hits stock.” Reuters. 10 Feb 2012.
Kahn, Chris. “First Solar lays off 2,000 as Europe demand wanes.” Associated Press. 17 Apr 2012.
Trabish, Herman K. “Update: First Solar ‘Furloughs’ Half Its AVSR1 Workforce.” Greentech Media. May 30, 2012.
Nasdaq.com. Interactive Stock Chart – First Solar, Inc.
Sailors, John. “Ecotality wins $26.4M DOE contract.” San Francisco Business Times. 06 Oct 2011.
Securities and Exchange Commission website. ECOtality, Quarterly Report (10-Q). 17 May 2012.
Strickler, Laura. “Stimulus recipient under investigation for insider trading.” CBS News. 22 Mar 2012.
Lachlan Markay, Lachlan. “Ecotality Examined: SEC Subpoena for Stimulus-Backed Company Revealed.” Heritage Foundation blog: The Foundry. 02 Apr 2012.
Department of Energy Loans Program Office website. DOE Finalizes $1.2 Billion Loan Guarantee to Support California Solar Generation Project. 30 Sep 2011.
Securities and Exchange Commission website. SunPower Corporation, Quarterly Report (10-Q). 04 May 2012.
Louie, David. “CA’s solar industry continues to show signs of distress.” KGO-TV. 04 Nov 2011.
Securities and Exchange Commission. SunPower Corporation, Quarterly Report (10-Q). 04 Nov. 2011.
Efstathiou, Jr., Jim. “Solyndra Losses a Fraction of Default Budget.” Bloomberg News. 10 Nov 2011.
![[info]](http://l-stat.livejournal.com/img/userinfo.gif?v=92.2){kind=small}
montyy0's Friends Page
