Term Sheet

The latest on private equity, M&A, deals and movements — from Wall Street to Silicon Valley

Solyndra report misses the point

March 27, 2012: 2:01 PM ET

A lost opportunity to end the Solyndra debate.

R. Todd Neilson has an impressive resume. Ex-special agent with the FBI. Founder of his own financial consultancy. Bankruptcy trustee for clients like Mike Tyson, and negotiator for sales of assets that included interests in luxury hotels and NHL franchises.

But when Neilson took his talents to Solyndra, he blew it. Big time.

Last October, Neilson was appointed by the U.S. Bankruptcy Court in Delaware to become Solyndra's chief restructuring officer. Among his responsibilities was to determine "if any improprieties had occurred with respect to [Solyndra's] finances," and to produce a report detailing his findings.

The 204-page report was made public earlier today, and completely fails to address the most commonly-asked question about Solyndra: Did the company or its investors use improper political influence to obtain, or amend, government loans.

To be clear, I am not sympathetic to Solyndra conspiracy theorists. To date, all of the available evidence suggests that the U.S. Department of Energy made a lousy investment decision, rather than a corrupt one. But Neilson was charged with taking a position on the matter, in order to help get the controversy resolved one way or the other.

Remember, the court asked Neilson to determine "if any improprieties had occurred with respect to [Solyndra's] finances." He chose to view this responsibility very narrowly, restricting his forensic investigation to whether the company's checkbook balanced, and if it submitted accurate information to the DoE (he found no wrongdoing in either instance).

A broader -- and more worthwhile -- interpretation would have been to examine whether or not Solyndra engaged in backroom arm-twisting to secure DoE loans. After all, was the $535 million in government loans integral to the company's finances? And wouldn't influence-peddling be an impropriety?

The fact that Solyndra submitted accurate financial information to DoE is important, but is by no means conclusive.

For example, let's imagine that I'm an entrepreneur raising money for my start-up. I provide a venture capitalist with legitimate, audited financial and operating information. But I also have a tape of the VC cheating on his wife, and threaten to upload it unless he invests. Do my accurate financial disclosures preemptively invalidate the blackmail?

Or here's a real-life example: When Andrew Cuomo went after private equity executives for bribing state pension officials, he never accused the executives of doctoring their financials. The impropriety was elsewhere.

Again, I'm not alleging crony capitalism at Solyndra. I'm simply wishing that Neilson had done his part to put the matter to rest, one way or the other. Even if he had done so in a limited manner, with the understanding that he did not have access to any possible correspondence between Solyndra investors and Administration officials.

"I have no intention of involving myself in political discussions why this was done, or whether it should have been done," Neilson told Fortune's Roger Parloff.

It's certainly true that Solyndra has become a political football. But that doesn't mean that your only option is to punt.

Sign up for Dan's daily email newsletter on deals and deal-makers: GetTermSheet.com

Join the Conversation
About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

Email a Tip | @danprimack | RSS
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.