Internal watchdog urges Biden's green lending office to stop issuing new loans over conflict of interest concerns — is it shocking?

From the Daily Caller

Nick Pope
Contributor

In a letter Tuesday, an internal federal watchdog called on the Biden administration's green lending office to halt work on new deals, citing concerns that the office failed to adequately manage potential conflicts of interest in its work.

Department of Energy (DOE) Inspector General Teri Donaldson on Tuesday wrote to David Crane, DOE Undersecretary for Infrastructure, informing him of the preliminary findings of the Loan Program Office (LPO) No conflict of interest disclosure or exemption requests are tracked. Donaldson also said the LPO should “suspend all lending and loan guarantee schemes” until the LPO can ensure compliance with all appropriate safeguards. LPOs have been booming since President-elect Donald Trump won the election on Nov. 5, locking in several large loans and reportedly busy locking in others during the transition period. That comes amid protests from Republicans who say the office's lame-duck loan bonanza goes against the will of voters, who expressed it on Election Day.

“Although risks and conflicts may arise if the LPO contracts with contractors who also work for potential borrowers, [Office of the Inspector General (OIG)] The audit team was surprised to find that the LPO failed to ensure that the contracting officer and the contracting officer's representative tracked the third-party expert,” Donaldson's memo states. “For example, of the 18 projects reviewed by the OIG, the LPO Technical Division was able to provide the OIG with the names of the applicant's third-party engineering experts for only three of the 18 projects.” (Related: House Republicans threaten to subpoena Biden’s green energy loan czar)

The OIG memo also makes clear that “the LPO does not track contractors who may provide services to both the LPO and potential borrowers” ​​and that a key LPO contractor, Archetype, “has not implemented organizational conflict of interest training required by its management plan scheme. Donaldson wrote that its shortcomings in adhering to procedures to ensure taxpayers were protected resulted in “the LPO functionally abdicating any responsibility to identify, assess, avoid, neutralize or mitigate conflicts of interest”.

Donaldson's memo shows that the LPO has closed 15 loans with a total value of $15 billion so far, and the office apparently plans to consolidate another 13 loans with a total value of $22 billion before the Trump administration takes office next month. The DOE Office of Inspector General has previously highlighted in official documents that the LPO is prone to waste, fraud and misuse of taxpayer funds, particularly given its push to quickly close loans.

Just days before Donaldson sent Crane's memo, a group of House Republicans asked the LPO to stop issuing new loans because rushing to dump billions of dollars in a short period of time would put taxpayers at risk. According to Bloomberg, the U.S. Department of Energy considered the Office of Inspector General’s report to be “unorthodox” and “full of errors.”

Donaldson's Tuesday memo, however, included comments from the auditor that pushed back on the Department of Energy's assertion that the review never found specific examples of conflicts of interest.

“The Department's claim that the OIG did not identify any actual conflicts of interest misses the point of the audit. The scope of the OIG's audit was to evaluate the LPO's processes and internal controls to prevent and mitigate potential conflicts of interest. ” Scope of the audit This does not include attempts to audit the entire LPO portfolio for actual conflicts of interest. Furthermore, it is currently difficult to conduct an audit to identify actual conflicts because LPOs simply do not track the information needed to identify conflicts of interest.

Separately, LPO director Jigar Shah has drawn scrutiny from elected Republicans, who say he is essentially selling out by continuing to work with the Clean Technology Leaders Roundtable, the green energy trade group he founded before joining the Biden administration. The right to use huge amounts of LPO funds.

The LPO was active during the Obama administration, lending $535 million to Solyndra, a green company that went bankrupt about two years after closing the LPO loan. The office was not particularly active during the Trump administration, but the Biden administration and Congress provided hundreds of billions of dollars in loans to LPOs to emerging green companies that might otherwise have difficulty obtaining private sector financing.

The U.S. Department of Energy did not immediately respond to a request for comment.

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