On The Money: Solyndra Scandal
California taxpayers may be on the hook twice – for helping out a solar firm that fired its workers and then abruptly shut its doors. CBS 13 has learned that automatic tax breaks may have contributed to the scandal surrounding Solyndra – a Bay Area firm that has now declared bankruptcy.
When President Barack Obama visited the Solyndra plant in May 2010, he praised the Fremont company as an "engine of economic growth." But Solyndra has since been raided by the FBI following complaints about financial fraud with taxpayers on the hook for $535 million in government-guaranteed loans.
"It appears we have a great heist of over half a billion dollars," said Congressman Fred Upton, a Republican from Michigan.
CBS13 obtained confidential memos written by White House officials discussing political fallout for the president, should Solyndra fail.
One memo, dated January 31, 2011 states, "If Solyndra defaults down the road, the optics will arguably be worse later than it would be today." The memo goes on to say, "In addition, the timing will likely coincide with the 2012 campaign season heating up."
Solyndra officials had little to say when questioned by Congress.
"I respectfully decline to answer any questions," stated W.G Stower, Solyndra's Chief Financial Officer.
"It appears you knew the Titanic was sinking and you made sure you got to the lifeboats first," noted Congressman Tim Murphy, a Republican from Pennsylvania.
California taxpayers may suffer a double hit – because of a deal allowing Solyndra to purchase new solar equipment – while paying no sales tax. It gave the company a $25 million tax break – in sales tax revenue that California will never collect.
"You may lose some money if a firm like Solyndra goes bankrupt," noted California Treasurer Bill Lockyer. "People need to understand what the risks are - that there's risk of losses," Lockyer added. He wants to suspend sales tax exemptions for solar firms – and other alternative energy resources – until California tax payers are better protected.
"No one anticipated the Chinese flooding the market with cheap product," Lockyer told CBS 13.
Solyndra's solar panels were just too expensive to compete in the market place, despite spending $250 million on equipment.
California has created $42 billion in tax breaks statewide that benefit corporations and individuals, according to Treasurer Bill Lockyer. The California Senate is holding hearings to re-evaluate tax breaks for renewable energy.
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