Subpar record-keeping at Energy Dept.'s loan guarantee program, audit finds
One way to improve the Department of Energy’s controversial $71-billion loan guarantee program? Auditors recommend better record-keeping.
The program, designed to spur investment in clean-energy start-ups, is highly competitive. As of December, just eight recipients had landed loan guarantees worth a total of $3.9 billion, with conditional commitments for another $12 billion.
But when it comes to performing due diligence and risk assessments during the selection process, the documents on file didn’t always match testimonies from officials, according to the report from department Inspector General Gregory H. Friedman.
“The program had not adopted a records management system that would have
imposed structure, consistency and discipline in the development and retention of loan
documentation,” the audit found.
Of the 18 loans and conditional commitments examined, there was no archived information for three and only limited documentation for 12. Details about applicants’ credit worthiness and risks were missing from files for the remaining three.
Program managers should also do a better job reviewing billings and reimbursement requests, according to auditors, who looked into the loan guarantee program from August through January and visited one of the recipients on-site.
Earlier reports from the inspector general and the U.S. Government Accountability Office arrived at similar conclusions. Department officials said they have boosted the number of staff assigned to the loan guarantee program.
A record system that is riddled with holes could become a liability if loan guarantee recipients are taken to court or if taxpayers are exposed to undue risk, auditors said. The requirements for landing a loan guarantee have always been murky, and the results aren’t always promising.
The program’s first recipient, Fremont-based solar panel manufacturer Solyndra, scored a $535-million guarantee in 2009 to build a state-of-the-art factory. But the company was struggling not long after opening the facility last year and eventually closed an older plant and slashed its staff.
-- Tiffany Hsu