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Introduction
Solyndra, a California based solar panel manufacturer, was a very promising company that manufactured unique tubular solar panels. No one could foretell that Solyndra would collapse, as its solar panels were cheaper and more efficient than those of other companies were. The company had invented exceptional solar panels that customers could use without necessarily locating the panel’s faces towards sunlight (Paradiso, 2012).
In 2009, the company had been in operation for about four years, and the United States Energy Department granted it with a loan of $535 million. This was because the Energy Department felt obligated to facilitate projects that helped in saving energy and limiting air pollution. From a critical point of view, the money loaned was significantly huge, and it was very depressing because the lending turned out to be an enormous mistake. The company that appeared to be very promising due to its excellent prospects and innovative technologies collapsed in two years after receiving the loan. This paper will give a detailed description of all the legal and ethical issues associated with the Solyndra saga.
Legal and ethical issues related to the collapse of Solyndra
It is noteworthy that technologists are always trying to find new ways of making things better and efficient. Great economists may attribute Solyndra’s failure to the developed and enhanced technology. Indeed, the project aimed at providing low cost fuel that could have minimal harms to the environment (David, 2008). Its excellent prospects lured the Energy Department into offering the company with an enormous loan. However, with time, the price of natural gas reduced drastically, and the demand of Solyndra’s solar panels reduced significantly. Moreover, other sources of cheap electricity emerged, and there was increased competition. Solyndra experienced reduced sales, which translated into millions of losses; within no time, Solyndra Solar Company was bankrupt, and it closed down its operations.
Ethical issues
After the collapse of the company, critics arose on how the company had qualified for such an enormous loan. Indeed, the government had made a serious mistake of mismanaging the taxpayers’ monies, as the entire loaning procedures violated various laws. Firstly, the government should have addressed the bankruptcy issue sanely instead of letting the matter to get out of control. When Solyndra filed for bankruptcy, the United States Department of Justice should have found out whether the management of the company was reliable for its failures. Moreover, it would be useful to find out the reason as to why the prosperous company could not manage to survive in the competitive business world even after evading taxes.
In spite of its doubtful financial status, the company was able to secure such a large loan due to political matters. After various inquiries, the investigators found out that George Kaiser was behind all the ill incidences, and several ethical issues arose with regard to the enormous loan that was given to Solyndra. George Kaiser, who was an influential shareholder of the company, financed Obama’s presidential campaigns. Kaiser, an influential person in the presidential campaigns, used his power to influence the lenders to release the huge sum of money without due diligence. Moreover, it was discovered that the energy department worked together with the executives of the company to hide suspicion and facilitate the presidential elections. In fact, the Energy Department advised the executives of Solyndra Company not to dismiss the employees until the general elections of 2010 was over.
The entire issue is controversial, as the energy department worked together with Solyndra to risk the loan for selfish reasons. The reports give a clear indication of ethical deficits in the entire proceeds of the Energy Department; however, the investigation reports came when it was too late. It is very sad to note that the Energy Department violated the government ethics’ code of conduct. The government failed in its role of ensuring transparency, eradicating fraud, and protecting its people. There is a high probability that the money that ought to finance the operations of the company was redirected into financing the presidential campaigns. The self-interests that caused the taxpayers to lose millions of dollars are unethical acts. Moreover, causing families of the innocent workers to suffer greatly because of the closure of the company is unethical.
Honesty was an ethical code that Solyndra violated in two incidences. Firstly, the company made false reports about its bankruptcy, thus, it breached the provision of the American tax law by evading taxes (Harder, 2012). The saved money was intended to restructure the company, but since the managers never intended to save the company, they redirected the money into other uses. The company executives went ahead and breached the United States Code of Ethics by approaching the Department Of Energy, and deceiving the officials about their financial credibility. The loaning procedures had many legal issues as the managers had assured the Department of Energy of company’s financial safety, yet they had several legal shortcomings.
Indeed, Solyndra could not attribute its bankruptcy to unforeseen circumstances, as no economic recession happened during the period of their liquidation. Therefore, Solyndra could have exercised false bankruptcy or incautious bankruptcy. In either case, there was a need to identify the person who was answerable for the company’s failure. Interestingly, the financial managers and the executives of the company refused to discuss about the customers contracts.
Moreover, the executives refused to have the trustees of the company engaged in taking charge of the company’s failure. Apparently, the company had received a loan amounting to $75 million from private investors, where, the company was obligated to pay the investors first in case of liquidation. Indeed, the company’s administration was aware of the repercussions of its agreement with the private investors. There is a high probability that the executives of the company lead the company into bankruptcy before the taxpayers could claim their share.
Violating the Energy policy of 2005
According to reports, the legal background for the entire case was complex, as the Department of Justice would not find verifiable information concerning the company’s management. The Office of management and Budgeting and the Department of energy were in trouble as their approval of the loan was inconsistent with the loan agreement laws. Essentially, the energy policy of 2005 obligates the Department of Energy to consult the Office of Management and Budgeting, and seek consent from the secretary of the treasury before granting loans (Waskey, 2013). Indeed, the Department of Energy did not adhere to the mentioned procedures. For such a huge sum of money, it would be necessary to evaluate the value of the assets and financial perspectives before giving out the money. Indeed, the there were no assessments and evaluations of Solyndra’s assets and financial perspectives, and the involved parties were sure that the repayment of the loan was almost impossible. Indeed, the Ministry of Energy’s actions violated the Energy law of 2005, and it was a lesson to the public about investing money into unfeasible projects.
Violating the Workers Adjustment and Retraining Notification (WARN) Act
Indeed, the bankrupt company could not continue with its operations; therefore, it had to lay off its employees. However, the entire exercise violated the labor legislations, and the offended employees could not let the company to go uncharged. According to WARN Act, workers of any company ought to receive a warning 60 days prior to the day of their dismissal (De Meuse & Dobrovolsy, 2004). During that period, the employees are entitled to their salaries and the corresponding benefits. However, the opposite applied in this case, as about 1100 employees were suspended from their jobs without warning or severance pay.
Milton Friedman’s philosophy
Milton Friedman insists on the free market aspect, where, the government ought not to interfere with the procedures of any business (Ashford, 2010). In this case, the government resolved to come in and mediate in Solyndra’s saga by releasing millions of cash to facilitate its operations. However, the decision of the government caused various controversies. Milton’s philosophy would have encouraged the executives of Solyndra Company to keep on trying until they overcome the financial crisis without the government’s interference. In fact, the court ruled out that the company’s executives were innocent in the allegation of avoiding taxes, as the government was involved (Harder, 2011).
The executives of the company would have employed efforts to identify the underlying issue that lead to their downfall and address it accordingly. On the other hand, the government should have watched the entire situation and let the free market to take course. Milton’s philosophy argues that the government and the involved parties used the collapsing company to take care of their own selfish agendas. The free market philosophy clearly indicates that investors become discouraged whenever the government comes in to influence the operations of a company in which they have invested their money.
Essentially, the investors feel intimidated, as their powers to make decisions and control the operations of the company reduce significantly. Milton is against the government, as it breached the agreements that the company had made with the private investors. Seemingly, the agreements would be imperative, as they comprised of opinions of professional analysis. Essentially, the government actions that facilitated the issue of unjustified grants without diligence affected the executives financially, as each of the top managers had to pay about $370,000. Solyndra’s investors and the innocent executives will always place blame on the government for the collapse of the company.
Ethical framework other than free market ethics
Ethical frameworks are useful in bringing a clear understanding of ambiguous situations. Although the officials of the Department of Energy financed Solyndra due to its efforts to produce pollution free technologies, they had little or no authority to finance Solyndra as it was a startup company. The entire scenario might have been dilemmatic; however, ethical business practices occur due to peoples’ values, and ethical frameworks facilitate the choice of the right action in certain ethical dilemmas. In this case, the executives of the company decided to use deceptive measures to obtain funds from the Department of Energy.
Although the situation might have been too difficult to bear, the executives might have considered the moral rights rule that insists on making the right decision in every situation. According to the rule, the right decision protects the rights of the affected people in any difficult situation. Indeed, the ethical framework should have influenced the executives of Solyndra to reconsider their decision of applying for a loan, which they would never pay. They should have reconsidered their deceptive operations that would finally cause their employees to lose their jobs brutally, and cause the taxpayers to experience massive losses. Moreover, the ethical framework of the Solyndra saga acts as a revelation to the government officials, who ought to employ diligence whenever they are using taxpayers’ monies.
Conclusion
From the discussions, it is evident that Solyndra Company was a promising enterprise that would provide affordable and convenient solar energy to the citizens. However, due to uncontrollable factors, the executives of the company gave in to the demands of the government officials. At last, the Ministry of Energy and the executives of Solyndra were guilty of the massive loses of the taxpayers’ money. Selfishness is the core unethical practice that caused innocent people to suffer the losses of the company’s bankruptcy. Taxpayers and the workers of the company suffered greatly as compared to the powerful culprits.
This incidence should play a critical role in informing the government to be cautious when protecting citizens. Government officials should serve citizens selflessly, and they should repudiate unethical and illegal practices to portray their integrity. Moreover, business people ought to know that the guilty parties in Solyndra’s saga might have escaped the allegations, but other businesspeople who might try to deceive the government might face harsh charges. Therefore, it is always good to employ the moral rights rule that protects the rights of the affected people in every business decision.
References
Ashford, R. (2010). Milton Friedman’s capitalism and freedom: A binary economic critique. Journal of Economic Issues (M.E. Sharpe Inc.), 44(2), 533-541. Web.
David, B. (2008). Cylindrical solar cells give a whole new meaning to sunroof. Scientific American, 4 (6), 14-18. Web.
De Meuse, K. P., & Dobrovolsy, E. (2004). The Worker Adjustment and Retraining Notification Act: A closer look. Human Resource Planning, 27(4), 19-20. Web.
Harder, A. (2011). Legal memo incites partisan fight in Solyndra hearing. Washington: Atlantic media, Inc. Web.
Harder, A. (2012). Solyndra redux: DOE-backed solar company preparing to file for bankruptcy. National Journal Daily, 4(12), 5-15. Web.
Paradiso, T. (2012). Shedding light on solar technologies. New Hampshire Business Review, 1(8), 32. Web.
Waskey, A. (2013). Energy Policy Act of 2005. Pasadena, CA: Salem Press, Inc. Web.
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