Solyndra; The Problems, Legalities, & Ethical Frameworks

Background
Solyndra was a Fremont, California based manufacturer of cylindrical solar panels, founded in 2005. The solar panels that Solyndra manufactured could be used on top of flat rooftops, such as Target©, without needing additional land to set up the panels. (Grabell, 2012) Prior to any political and legal issues, Solyndra was well known globally and had hundreds of solar assemblies around the world. Solyndra had over $1 billion in private investments and over $2 billion in backlogged orders. (Grabell, 2012) Now, we fast forward to the American Recovery Act and Reinvestment Act of 2009, where Solyndra was granted a $535 million loan guarantee from the Department of Energy (DOE), to build a 300,000 square-foot factory near the existing manufacturing site, in an effort by the Obama Administration to go “green”, and create 1,000 jobs. The American Recovery and Reinvestment Act of 2009 (ARRA), is also known as the Stimulus Act. It was intended to save and create jobs and provide relief to programs like education, health, and renewable energy. Solyndra defaulted on the loan from the stimulus and eventually filed Chapter 11, Bankruptcy. After the Solyndra debacle, efforts to promote going “green” were considered scandalous. (Markham, 2013)
Legal Troubles and Applicable Laws Many businesses and countries were all attempting the green efforts during the 2009 time period and China, specifically, was blamed for the ultimate bankruptcy filed by Solyndra in 2011. President Obama’s first public comments addressed the Chinese and competition with them, but Office of Management and Budget had raised a concern two years before this incident to postpone because China was so much further advanced in the Solar Energy research and development. Additionally, a staffer in the Obama Administration tried to recommend that the loan guarantee be postponed due to financial issues within Solyndra and to ensure that all paperwork was properly completed before making a national announcement that the U.S. had committed itself to the “green” energy with the loan guarantee. (Light, 2013) In 2010 Solyndra and its company officials notified Department of Energy that they did not foresee themselves succeeding and were running out of cash. The head of the Department of Energy approved the restructuring of the loan and giving Solyndra two additional payments of tax payer dollars, to postpone the inevitable fall of Solyndra. (Leonnig & Stephens, 2011) Other legal troubles had started to sprout in late 2011 when Solyndra was under investigation for misrepresenting their financial health by the House Energy and Commerce committee's Subcommittee on Oversight and Investigations. The Obama Administration was also accused of pressuring Department of Energy to make a loan, despite the reports that Solyndra was in financial troubles. (Light, 2013) Solyndra’ loan defaulted and shortly after Solyndra filed bankruptcy they laid off 1,100 employees without giving them any type of severance pay. (Catan, 2011) The loan guarantee helped initiate a 1,000 person hire, leaving 113 employees on the payroll to assist with the companies attempt at restructuring itself. (Brickley, 2011) During the investigation into Solyndra, the president and the chief executive officer, Brian Harrison, invoked their Fifth Amendment rights against self-incrimination, within minutes after a hearing began in September 2011. (Light, 2013) An extensive investigation concluded with over 300,000 pages of information and eventually the Solyndra investigation became “forgotten or less visible”, as time and other world matters arose. (Light, 2013) Additionally, as time went on President Obama continually distanced himself from the green jobs ideologies that he pushed so desperately in his 2008 campaign.
Department of Energy violated the language of the law when they purposely reconstructed the terms of the loan for Solyndra and gave them two additional payments, knowing that they would not be able to complete the terms of the loan guarantee. The Department of Energy is required to consult with Office of Management and Budget (OMB) before granting any deviations of the law. Solyndra is also guilty of tax evasion, tax evasion is a criminal offense and defined as using illegal means to avoid paying taxes, and Solyndra filed for bankruptcy to avoid paying taxes and recoup millions of dollars to finance their restructuring attempts. There are many reports that Solyndra’ financial issues were known within the Department of Energy and the Obama Administration, which were later brought out by subpoena in court documents, due to the fact that The White House refused to assist the ongoing investigation. (Solomon, 2011) The documents also showed that pre-approval of the loan, Solyndra had estimated that they would not make it financially past September 2011 at the rate they were spending investments. The guidance they were given was to hold off on making any information public until after elections were completed. Thus, showing that even the Department of Energy and the political supporters were involved in the wrong doing of the millions of tax paying citizens, who were basically, stolen from. Solyndra owed $528 million at the time it filed Chapter 11, Bankruptcy. A political supporter of President Obama had significant interests in the approval of the loan guarantee. Mr. George Kaiser owned two shell companies that pumped funding into Solyndra and was the only corporation that was awarded re-imbursement from the bankruptcy claim. Mr. Kaiser visited the west wing of the White House four times in two weeks on the behalf of Solyndra, to ensure the loan guarantee would be approved before the election was completed. (Greene, 2012) Many documents filed by Solyndra show that they could possibly reap tax breaks between $306 million to $341 million, but they would need to be in business and make between $875 million to $975 million of taxable income before they could take advantage of the tax breaks. Solyndra only raised roughly $13 million during a series of auctions, real estate that could be worth up to $90 million and are currently out of business. (Brickley, 2012) It was determined by the Treasury Department that the Energy Department rushed the loan which caused tax payers losing $528 million that will never be recouped from Solyndra.
Ethical Framework
Ethics in a corporation cannot be decided at a government level, ethics are a conscious decision made by decision makers on whether or not something is right for a business or wrong for a business, in line with its business theories and practices. Legalities and government play a role in the decision making process, such as, does it follow the law? Or, does it break the law? But, there is no law saying what is ethical or not ethical. Social Responsibilities or Ethics are something a person or organization feels strongly about to do the right thing. Creating Ethical Frameworks within a company can be difficult, as each member or shareholder of a corporation has their own ethics.
Milton Friedman is a well-respected economist and supporter of the Free Market Ethics theory. Free Market Ethics states that a corporation will do anything to increase shareholders earnings as much as possible without breaking the law or ‘basic rules of society’. (Friedman, 1970) Freidman’s position also represents what is best in a community setting, in a long term situation. (Schaefer, 2007) Solyndra, used this theory as framework within their company, they attempted to follow ethical and government laws and failed with the pressures that came with the $535 million loan guarantee and the $2 billion in backlogged orders. Once Solyndra laid off 1,000 employees and only kept on vital employees they were operating within a free market ethical framework to reduce as much costs that they could and regain some kind of profit for the shareholders and possibly come back from bankruptcy by restructuring the business in whole. It is repeated throughout the references that Solyndra downsized to avoid paying employees, however, in a free market; the corporations are not concerned with the employees but the shareholders. The shareholders are typically the first priority to a corporation operating in a free market. The practice of downsizing falls within the law and are not viewed as being deceptive (Schaefer, 2007)
The Solyndra failure further proves that the economic market should be making investment decisions not the government and that the Free Market Ethics framework, Department of Energy’s work when ethical considerations are taken, while increasing profit. Additionally, it proves that the political arena desperately needs to be reconfigured to remove government involvement in the free market. (Hess, 2012) Removing government involvement and leaving choices to individuals is critical in a free market and reduces risk to the government getting tied up in more ‘Solyndra’ scandals. (Halbert, 2008)
Conclusion
There are many issues within the Solyndra scandal between the company knowing it wouldn’t be able to operate past September 2011 to The White House knowingly pushing for them to make a public announcement of the “green” initiative. Overall, it is obvious that the law and ethical frameworks were all abused and the truth was hidden throughout investigations. The ultimate price that was paid $535 million of tax payer money that can never be recouped and essentially no punishment for any of the major players who so obviously needed to be held responsible for purpose disregard of law, such as, the Department of Energy and White House officials that assisted in holding up the investigation. Solyndra was a scape goat for a presidential election to go the way of a specific political party, while promising the American people new, green-er ways, all the while knowing the products that were being produced could not compete in the market at the time.

References:
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Catan, T., & Solomon, D. (2011, Sep 09). FBI raids solar-panel maker --- probe of solyndra centers on actions in obtaining U.S. loan guarantees. Wall Street Journal Retrieved from http://search.proquest.com/docview/888083914?accountid=8289
Friedman, M. (1970, Sept. 13) The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine
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Hess, David J. Good Green Jobs in a Global Economy : Making and Keeping New Industries in the United States. Cambridge, MA, USA: MIT Press, 2012. ProQuest ebrary. Web. 22 November 2014.
Leonnig, C. D., & Stephens, J. (2011, September 29). Chu takes responsibility for a loan deal that put more taxpayer money at risk in Solyndra - The Washington Post. Retrieved from http://www.washingtonpost.com/politics/chu-takes-responsibility-for-a-loan-deal-that-put-more-taxpayer-money-at-risk-in-solyndra/2011/09/29/gIQArdYQ8K_story.html
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