Ethical Issues in Solyndra Company

Name
Institution

The California Based Solar Panel Manufacturer
Business organizations are formed with the providing goods and services so as to make revenue and attain perpetual existence. However, some business may fail and become bankrupt because of different factors such as mismanagement and stiff competition. Solyndra Company is a solar energy company that was founded by Dr. Chris in 2005. The company produced unique solar panels made of copper indium gallium selenide (CIGS). The solar panels were unique because they were tubular in nature as compared to the traditional flat panels. Its unique features made the Solyndra solar panels revolutionary. Unlike the flat solar panels, the tubular panels produced by Solyndra were more efficient because they did not need to be strategically placed for them to fetch enough sunlight to generate energy. Due to these unique features, the company future prospects were bright, and people believed that the company will perform and remain in the market for a long time.
The United States Energy Department gave Solyndra Company a huge loan of half a billion U.S. dollars to help facilitate the construction of a new manufacturing plant (Olson & Biong, 2015). The company was also exempted from paying tax to the state that amounted to $25.1 million dollars. The funding was provided to the company because of the positive outlook of the demand for the solar panels. The huge loan was granted to Solyndra because of the energy law passed in 2005. The law permitted the energy department to give federally backed loans for creative and innovative ventures that will help in reducing air pollution.
Despite the funding and promising future due to Solyndra unique features, the company filed for bankruptcy two years later. Business activities came to a halt, and 1100 workers were fired. The management sighted high cost of production and increased competition from Chinese firms who sold their panels at cheaper prices. The company chances of survival ended completely due to administration misunderstanding concerning cash infusion in 2011.
The collapse of Solyndra brought about a lot of concerns and complaints to the U.S. government. People became to criticize the administration of Barrack Obama for making decisions that led to wastage of a huge amount of taxpayers’ money. However, it can be noted that different legal, ethical and management issues were the major cause of bankruptcy that would have been avoided in the first place.
Legal and Ethical Issues Surrounding Solyndra Saga
The U.S. Department of Justice began investigating Solyndra after the company filed for bankruptcy. Some of the issues that were of great concern were to investigate if the administration of the company led the organization to bankruptcy intentionally. And the underlying reason the company was not able to overcome its challenges after a big boost by the government.
Legal Issues
The legal aspect of Solyndra case can be analyzed properly by using the bankruptcy framework. Some of the main legal issues are to determine whether the financial health of the company was fully accounted or if there existed some accounting malpractices. The house committee also noted that Solyndra did not fully disclose customer’s contracts and the steps taken when engaging trustees to be held responsible for the corporation’s failure. Another aspect of the legal issue is taking back private investor’s capital for the purpose of leading the corporation to bankruptcy prior to the accusation of violating Energy law of 2005. However, it is important to note that the remittance from the government was legal since it was in agreement with the Title XVII Section 1705.

Legal Issues that were filled by employees
The laid off workers of Solyndra filed a petition with the court claiming that the company acted illegally. Their claims were founded on the notion that the company was supposed to inform the employees two months before their firing as it is stated in the U.S. Fair Labor Standards Act. It was the duty of the Solyndra to inform employees about their termination of contract as stipulated in WARN (workers adjustment and retraining notification) as stipulated by the law. However, Solyndra did not do so and because of that reason the workers demanded 60-day payments as an indemnification of all the 1100 employees. Creditors also claimed a refund for their money. The court favored the employees, but the big challenge was that Solyndra was bankrupt and could not gather for all its monetary obligations.
Ethical Issues Surrounding Solyndra Bankruptcy
One of the main shareholders of Solyndra, George Kaiser, helped in financing Barrack Obama presidential campaigns. Many people attributed this notion to the fact that Solyndra was able to secure the huge loan with easily, without proper due diligence with the help of the president. Other ethical concerns are that the energy department requested Solyndra management not to dismiss its employees until after the primary election in 2010. The energy department is also accused of hiding the fact that the company was in financial turmoil yet they know. These reasons indicate that there existed unethical issues, political interests, and failing of the government.
Laws and Ethical Issues that Apply in the Solyndra’s Case
The United States Energy Department dishonored the energy policy act of 2005 was by awarding a loan before consulting with the Secretary of the Treasury and OMB. The financial health of Solyndra provision was not evaluated fully before granting the loan (Stephens & Leonnig, 2011). This implies that the taxpayer’s money was put at stake.
On the other hand, the company evaded payment of tax. This evasion shows that the company violated the American tax law. The company filed for bankruptcy as a strategy to keep the remaining funds that would have otherwise be used in the restructuring of the organization. Therefore, it is evident that the management of Solyndra Company breached the tax law by filing for bankruptcy.
Solyndra also breached the United States Code of Ethics. This is because the company concealed the truth from the Department of Energy about its financial challenges. The investigation also revealed that one of the chief shareholders of Solyndra, George Kaiser financed Obama’s presidential campaign. This implies that the funding activity of the company was a show of appreciation from the Obama Regime.
The company also breached the U.S. Fair Labor Standards Act by dismissing its workers without following the appropriate procedure as stipulated by WARN (Workers Adjustment and Retraining Notification).
Ethical Framework
In this situation, it is quite evident that the officials working in the Department of Energy was abusing power. Department of Energy was not permitted to finance startup companies. It was not also ethical for the officials to grant a huge size of a loan without doing a proper evaluation of the beneficiary’s financial health and company activities. It is also important to ensure that before granting such a huge loan it is important for the Department of Energy to get approval from all the necessary authorities. A company should also be able to give a true and a fair view of its financial information without concealing anything. A company should also follow the right procedure when dismissing its employees by informing them at least two months before being dismissed.
Milton Friedman Philosophy and Solyndra’s Case
Milton Friedman is one of the 20th-century economists. His works advocated for capitalization and a free market devoid of government interference. His arguments are based on the notion that business organizations should act independently depending on the forces of demand and supply and that the government interference should be minimized (Butler, 2011). His notions are widely applied in many countries by privatizing state-owned corporations.
Friedman ideologies can be reflected on Solyndra case. If the Department of Energy had left the company to operate on its using market mechanism in sourcing and allocating resources, then the loss of billion dollars would have been evaded. Therefore, the United States would not have been held responsible for the mismanagement and bankruptcy that occurred in Solyndra Incorporation.
Therefore, it is evident that Milton Friedman line of thought is still applicable today. The government and other companies should adopt the concept of free market economy. The government should not interfere with the market by influencing either demand or supply in favor of a single organization. Instead, market mechanisms should be used in the allocation of resources. As such, private entities will have efficient allocation of resources based on market metrics such as demand, supply, competitive advantage, customer loyalty and such notions.
Court Rulings in Solyndra’s Case
The defendants proved beyond reasonable doubt that the management of Solyndra had no intention whatsoever to avoid paying tax (Plumer, 2011). Therefore, the executives were exempted from any criminal liability. However, the labor organization sued the management for breach of labor legislation and called for compensation of employees because they were dismissed without prior notification (Baker, 2011). After a full investigation on the process of granting the loan, the court ruled that the key management officials were indebted to return the bonuses repatriated to them. Each of the executives was to pay three hundred and seventy dollars each. Also, most of the investors and other stakeholders conferred with the notion that government should not meddle with affairs relating to the development of start-up businesses. Solyndra investors believed that the company would have been able to overcome its teething problems and eventually succeed if the government had left them alone.
Conclusion
Solyndra Company was a promising start-up business with promising future. Its unique features in the development of its solar panels could have been a source of competitive advantage. Such positive outlooks were the reason the state-funded the company to construct a new plant. However, due to irresponsible actions by the state it leads to the collapse of the company. It is evident that the collapse of Solyndra Company is as a result of different issues such as economic, ethical and political issues.
The state is also believed to influence the granting of the huge loan to the company as a form of returning the favor of one of the largest shareholders of the company (Bolin, 2012). The investigation revealed that George Kaiser one of the largest shareholders funded Obama presidential campaigns. This indicates that the granting of a huge loan to Solyndra Company also had political interests (Baker, 2011).
It is evident that the Department of Energy did not adhere to the procedures to be followed in allocating the loan to Solyndra Company. This is because the Department of Energy granted the loan without getting approval from other stakeholders, did not conduct due diligence and used the taxpayers money inappropriately. As a result, the company declared bankruptcy and the taxpayer’s money were lost. The company also breached the law, and conducted ethical misconducts resulting to tainting of the Solyndra Company and Obama administration reputation. However, if the company would have been left to meddle with its affairs without government interference, the company would have been able to overcome its challenges (Orlitzky, 2015). This is in agreement with Milton Friedman line of thought of free markets devoid of government interference.

References
Bolin, R. (2012). Risky Mail: Concerns in Confidential Attorney-Client Email. U. Cin. L. Rev., 81, 601.
Olson, E. L., & Biong, H. (2015). The Solyndra case: an institutional economics perspective on the optimal role of government support for green technology development. International Journal of Business Continuity and Risk Management, 6(1), 36-47.
Stephens, J., & Leonnig, C. D. (2011). Solyndra loan: White House pressed on review of solar company now under investigation. Washington Post. Retrieved from http://www.washingtonpost.com/politics/white-house-pushed-500-million-loan-to-solar-company-now-under-investigation/2011/09/13/gIQAr3WbQK_story.html
Plumer, B. (2011). Five myths about the Solyndra collapse. Washington Post. Retrieved from http://www.washingtonpost.com/blogs/ezra-klein/post/five-myths-about-the-solyndra-collapse/2011/09/14/gIQAfkyvRK_blog.html
Baker, David R. (7 September 2011). “Solyndra files bankruptcy, employees sue”. The San Francisco Chronicle p4
Orlitzky, M. (2015). The Politics of Corporate Social Responsibility or: Why Milton Friedman Has Been Right All Along. Annals in Social Responsibility,1(1).
Butler, E. (2011). Milton Friedman: A concise guide to the ideas and influence of the free-market economist. Harriman House Limited.