Download: DOE Inspector General Audit: DOE Loan Guarantee Program - March 2011
Energy Loan Guarantee Program Under More Scrutiny
The Department of Energy Inspector General recently released a report faulting DOE for a series of problems with the Loan Guarantee Program.
Unfortunately for taxpayers, the Loan Guarantee Program is no stranger to criticism. Several government reports have found significant shortfalls with the program since its creation in 2005.
The most recent audit of the Loan Guarantee Program by the Office of the Inspector General found that the program, "could not always readily demonstrate how it resolved or mitigated relevant risks prior to granting loan guarantees." This creates serious concern for taxpayers that the financial terms of the loans are not being judiciously decided.
Of the 18 projects that had been offered conditional agreements or loan guarantees at the time of the audit, 15 had either limited or no data of their loan origination files, documents that are supposed to "contain key documentation to support actions taken as part of the loan guarantee process." The remaining three projects were "more robust" but still left out important information. The report goes on to say that senior investment officials were “uncertain” about what records needed to be maintained “as part of the official due diligence process.”
The loan guarantee program already has serious structural flaws and this new information only adds to the long list of concerns with the program. The DOE cannot ensure that taxpayer funds are protected if the Loan Guarantee Program cannot demonstrate that the loan decisions it does make reflects market conditions and sound financial reasoning.
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