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Solyndra Insider: WaPo is full of crap!
I've had numerous email exchanges with a former Solyndra employee. I wrote about this on 9/19.
The Washington Post has an article out that suggests that a portion of the government’s $535mm loan was wasted in the final few months of the company’s existence. The article quotes a different former employee, Peter M. Kohlstadt. WaPo also makes reference to “$344mm” as a number relating to the cost/value of the manufacturing facility built by Sol (Fab2).
I contacted my guy and asked for clarification between his version of events and those described by WaPo. His words:
On where the DOE money went
As far as I know, 100% of the DOE loan went to the construction and development of making the bare field that existed into a working, functioning 200+ Mw solar facility.
The price tag for transforming the bare, empty field into the 200+ Mw solar facility was 775+ million dollars; 535 million slated from the DOE + a series of big equity rounds at the same time or a some a little later.
Who put up the money to build Fab2?
The "money" for the full cost of Fab 2 was:535 million DOE loan;240+ million from preferred stock equity/convertible note to pref.
If you look at the press releases of Solyndra, right at the time of loan announcement, Solyndra announced one such round.
From Sol 3/20/09 press release:
The guaranteed loan, expected to provide debt financing for approximately 73% of the project costs, will allow Solyndra to initiate construction of a second solar panel fabrication facility (Fab 2) in California
Remember, a fab is highly sophisticated, highly modern integrated mfg facility. The cost to transform a shell building to such a facility is huge.
Note: Fab2 was completed. It came in slightly under plan. When it was completed it produced panels. It met the design specifications.
The DOE loan was fully funded for more than nine months before Sol went BK on 9/6. All of the loan proceeds were spent on the construction of Fab2. It’s not possible that any money spent by the company in the final months were related to the DOE financing.
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Think of the construction of Fab2 as a commercial real estate deal. There was 25%+ equity to debt. That is not at all unreasonable. When the plant was completed, the DOE had a first lien on an operating, state of the art facility. There was a “tenant” (SOL) that would use this factory. The thinking was that there would be a profit from the sales of panels. That would pay for the factory.
Of course that did not happen. Global prices for solar panels collapsed. Classic supply and demand was influenced by excess investment in production capacity by virtually all industrial country's governments. Even SOL's new plant could not make a buck in that environment.
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On WaPo’s article in general
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The story is laughable. I love how they use "research engineers" as guides to sales, and whether monies were being used properly. Money was spent fast, we had sharp market windows to catch. Welcome to the real world, research engineers. Second, I believe one of them has a very serious "bee in his bonnet", as I know that Kohlstadt (one of the named engineer sources) filed suit over the layoff within a day of the layoffs.
More on the WaPo
Note: The WaPo article was critical of a contract that was awarded by SOL to VDL (Dutch company). The following is a discussion of the role that VDL played. This is “wonkish” (and snarky) engineering talk. I provide it to give some credibility to the source. You can’t make this stuff up.
Yes, VDL was brought in with "loan in hand". The predicate for the tool was not loan in hand, it was the fact that the tool was targeted at the most time consuming portion of the assembly.
Each tube was placed into another, "stuff" was placed inside, an optical and protective fluid was placed into the tube, the contacts were made between the inner tube and the outer contact, and the outer seals were hermetically sealed. And, the unit was subject to about 4 individual tests in this process. Each of these steps was performed at an individual station with associated time delay in between. The simple reason was that *no one* had ever made this form factor before and we had to design each step of the process (and each specialized tool to do the function.....)
So yes, we contracted with VDL to build a highly automated machine to collapse all these steps into one. The reason: feed the machine the inner tube PV device, the outer sealer tube, the special "stuff" for the inside, the optical coupling fluid, and the end contacts, you press one button and blammo, presto at the other end you get a complete module and with far more efficiencies than a series of steps on individual machines
So the term "the company had never built that kind of equipment" should actually be read as "no one in the blimey world had ever built that type of equipment"...... and it is a bare sentence with no conclusion. Just lets you do the self-insinuation crap that passes for journalism these days.
My posts with the information from this Solyndra source have not been popular with readers. I’ve introduced this person to individuals in the MSM. They don’t like his story either. There is no smoking gun. Sorry.
Solyndra (and all the other FFB/DOE energy loans) are a policy failure by the administration. They should never have been providing debt capital for Silicon Valley start ups. That is a private sector function. FAB2 should not have been built. DOE should never have provided the financing. But they did, and the factory was built according to plan. SOL was a disaster for everyone involved. But it was not a scam.
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Bruce, time to put you out to pasture..say hi to Leo, the rumor is he was all in on this Scam , solars, also..captured journalism has no place on ZH.
presenting this guy's story is one thing then making the verdict NOT guilty based on this is well not up to ZH standards..would not accuse you of kickbacks but smell this does.
While your statement is entirely inappropriate and unfair it is extremely funny so for Humor +1 "say Hi to Leo" LOL
I suspect Leo is quite busy grazing with Mad Hedge Fund Trader who I suspect joined him in the pasture earlier this week.
Wait, wait, wait.
So your analysis is that it never should've been financed and built. But it was financed and built. And now a bankruptcy court can be used to wash away the debt. Won't someone get this whole thing for pennies on the dollar, and dump the tax payers in the process? If so, that sounds like a robbery in progress. All risk is shifted to the government, and if things don't turn out perfectly, the government is dumped. Maybe the FBI is spoiling things. But this is still a scandal, no matter how you look at it.
As for the source, nothing he's said sounds convincing. "As far as I know..." we didn't do anything wrong. And WaPo not having a good writer doesn't change the situation on the ground. Love you work Bruce. But IMO, this still has the look of people taking advantage of the government.
Bruce,
Has the Government produced their financial information provided by the COmpany which allowed them to do the credit risk of whether or not this company was worthy of such a loan? I have yet to find any financial information on this company and when I speak with others int he "know" they too cannot provide such information. Surely it is available some where. I would love to perform my own analysis and see what the Government saw in this dog of a company which permitted them to burn through OUR TAX DOLLARS.
The scam is yet to be fully realized. Keep an eye on who picks up the shiny new plant for pennies on the dollar.
pay no attention to the headlines.
this contact , protests too much !.......Guilty
Bruce, do you decide the outcome of a fight of your children in a similar fashion?
If one were to use the logic and inside source investigation employed by you, the Mob and union impacts on big city projects would be touted to great success. Oh wait, that's the Democratic machine process.....
The fact is the type of technology Solyndra chose to run with was known to be a loser. Yet politics chose otherwise. Why?
From this piece of yours one can conclude one thing with certainty, your biases and investigative prowess are suspect.
There is no smoking gun. Sorry.
No, just the smoking wreckage of another bureaucratically-botched, politically-driven boondoggle. Isn't that enough? Whether corruption was involved or not, we the taxpayers are still out several hundred million dollars that we could've kept in our pockets.
the problem is the law. if the government gave someone money and there is after the fact corruption, the law need not apply to clawing back that money from the hands of private profiteers.
it doesn't bother most people that much that blue collar workers were given jobs that failed. that's a good thing. in the soviet union they would have had jobs for years even if the plant were producing nothing. this is a good sign of capitliasm. but the bad sign is that projects that were doomed to fail were funded by GOVERNMENT because of corruption.
if a person decieves another private person, of course the law should apply. if you deiceive the government to obtain funds, there should be an implied by law ---personal guarantee bond posting of all moneys you extract out of the project.
look up the biggest transfers of money out of the project that were distributed to principals and asociated corporate counterparties for financing or consulting services----and then force these guys to sue the government if they want this money back.
A job is simply a means, not an end. The end is PROFIT, defined as whether or not a product or service, FREELY offered and consumed, generates greater resources over time than is consumed in its creation.
There is no smoking gun. Sorry.
I guess that's why Solyndra's execs are taking the fifth
Bruce did it occur to you that your contact might have an ulterior motive? Second rule of investigative journalism: confirmation
I can't argue with you. I have tried (as have others in the MSM) to get this guy to actually come forward. That's not happening.
I have done everything that I can to confirm this fellow as an actual insider who has real info to share. I have thought about this long and hard. I actually do care about journalistic standards.
You are correct. Everyone in this story has an ulterior motive. This individual included.
The fact is, no one in media has any legitimate contact with SOL insiders other than me. So I'm out on a limb with this.
Just a question for you:
If I have further contact that sheds more light on the story, should I write about it?
I would be interested in any all comments on this. I have to admit that I am conflicted. So input would be appreciated.
Bruce Krasting
Get a Chart of Accounts. Pick out the Executive Salaries and expenses accounts. Trace every dollar spent right down to the lowliest employee and see if he or she really exists and what they actually do there.
Until you do that, the report is useless.
A full fraud audit, top to bottom, not paid for by the Solyndra, but a party interested only in accounting for every cent of the $535MM will do.
Bruce,
You should keep on reporting and getting what information you can. When it is sole source, flag it as such and put together a YMMV disclaimer to put at the end of the articles based on a sole source.
If Solyndra went from brown field to production on that size facility in that period of time, they at no time planned on making a market competitive product. The cost of the facility and equipment would run 2 - 3 times their market competitive prices (during a massive recession!) for the accelerated schedules ( equipment manufacturing shop floor time, labor construction time, having to take out or tear down what has been built due to design changes, etc)
You have been doing a good job on this story but their is more dirt likely to be found if you look at the construction companies and equipment manufacturers. Who owns them and do they tie back to Obama campaign donors? Or to some of the friends of friends involved in the construction unions?
barliman
I'll be a bit presumptuous and hazard a response to one of the top financial bloggers out there:
you should keep on Solyndra, you virtually broke the story or at least gave it profile, which is why you are likely getting these communiques.
a simple caveat such as your response above and because of the tentacles of this story clarification on which one you are pursuing e.g. fraud vs. WH interference vs. mgmt incompetence vs. DOE incompetence (last one goes without saying)
yes keep writing about it. dont get confused this is a scam.
It's the first rule when finding yourself in the middle of a witchunt.
IMO it's entirely possible that they are just incompetent and the goobermint is out to find a scapegoat to take the heat off Barry O.
What other myths do you believe?
The sun rises?