It may have been necessary for executives to defraud the government simply to exist; “The fact that federal loan guarantees were even necessary for Solyndra tells us that few, if any, lenders thought that giving the firm money was a very good idea” (Taylor & Van Doren, 2011, para. 4). Indeed, employees of Solyndra realized that the company was unfeasible even at it's startup. A caller to “The Ethical Barometer” declared that this was the case for the low level employees as well; “Well, the little talk-show caller, just a frontline employee, was absolutely correct. What she may not have known were the financial details and investment priorities that make that knowledge of 'it won’t work because they won’t sell' critical to a criminal investigation.” (Jennings, 2011, para. 14) Eventually, Solyndra collapsed under it's own financial instability, an instability it hid from the government; “The FBI is investigating the now-defunct Solyndra in connection with allegations of financial statement fraud. Solyndra received more than $500 million in government loans from the Department of Energy (DOE) as part of the stimulus package, but when it filed bankruptcy at the end of August 2011, the government realized it was not as healthy as it had presented itself in financial statements submitted to obtain and then renew government financing.” (Ethics4CPAs, n.d., para. 1). Solyndra's executives continued the pattern of ethics violations at a later hearing for bankruptcy by taking the 5th; “ 'Management’s invocation of the Fifth Amendment does not excuse them from performing their fundamental disclosure and reporting duties under the Bankruptcy Code,' the filing says.
Some government officials did their job. “On August 20, 2009, a DOE staffer asked 'how can we advance a project . . . that generates a working capital shortfall of $50 [million] when working capital assumptions are entered into the model?," adding "it also simply won't stand up to review by oversight bodies. Solyndra's federal loan guarantee closed the following month. “ (The Wall Street Journal, 2011, para. 6). It wasn't just staff asking questions. Mary Miller, an assistant Treasury secretary, wrote “expressing concern that the Energy Department had not asked Treasury to review the loan restructuring as required. She said that the deal could violate federal law because it put investors' interests ahead of taxpayers'” (Stephens & Leonnig, 2011, para. 8) We will return to Miller's concern later. At the time, all warnings were ignored; “Energy Department officials were warned that their plan to help a failing solar company in Fremont by restructuring its $535 million federal loan could violate the law...” (Stephens & Leonnig, 2011, para. 1). But why were these warnings ignored?
There was collusion between Obama administration officials and Solyndra's executives. “One of Solyndra's top investors was also a bundler for the Obama campaign responsible for tens of thousands of dollars in campaign donations.” (Wilson. 2011, para. 7). This collusion reached into the Department of Energy as well; “Facts continue to come to light around the controversy underlying government loan guarantees to the now bankrupt Solyndra solar power company. Now Wilson Sonsini Goodrich & Rosati stands accused of a conflict in connecting with its work represented the company.” (Law Firm Risk Management Blog, 2011, para.1). DOE official Spinner was married to a member of
From a deontological point of view these these ethical breaches are serious enough; violations of honesty to the public, to employees, and shareholders, refusing to testify in open court, and collusion with government officials. But the consequences of these actions are the truly painful effects. To start with, the taxpayer suffers; “When government takes $535 million and invests in a loser, it not only wastes taxpayer money but it also denies that capital to some other project in the private economy that might have succeeded “ (The Wall Street Journal, 2011, para. 10). Following this, it undermines public trust in the government to handle economic duties; “And there you have America's Solyndra economy, as the White House understands it: Washington allocates capital, and taxpayers pick up the tab if those choices go bust.” (The Wall Street Journal, 2011, para. 2). And finally, it undermines the public trust in politics overall; “It isn’t a Republican or a Democratic Party problem, and it isn’t unique to the Obama Administration. It is a structural problem in American government, a conflict of interest that pits the best interests of the American people against the political interests of the party in power.” (Ethics Alarms, 2011, para. 1). Returning to Asst. Secretary Miller's concern, as Solyndra went into bankruptcy, it transfered it's losses in tax credit to the succeeding company. The $500 million was indeed lost to the taxpayer.