Probe doesn’t back allegations of ‘impropriety’ in energy loan program

The Energy Department’s (DOE) internal watchdog has not found evidence to back claims of “improprieties” in DOE’s review of conflicts of interest among law firms retained to help vet green energy loan applications.

“We did not substantiate the specific allegations that were the predicate for this inquiry,” the department’s Office of Inspector General (IG) concludes in a report released Thursday.

The report is a bit of good news for the embattled loan guarantee program, which is in Republicans’ crosshairs over the collapse of the solar company Solyndra and the woes of a few other taxpayer-backed companies.

The department requires outside law firms to disclose conflicts of interest, provide plans for mitigating or avoiding them, and allows DOE to grant waivers that enable the firms' work on application reviews.

“We received anonymous complaints alleging various improprieties in the Loan Programs Office related to the procurement of legal services and the management of law firm-disclosed conflicts of interest in the Innovative Technology Loan Guarantee Program,” the report states.

“Our inquiry did not substantiate the specific allegations outlined in the complaint. Absent additional information, we plan no further action regarding the original allegations,” it adds.

However, the review also found that the loan program could do a better job of vetting of the outside law firms, noting opportunities to “improve transparency over the Program's management of organizational conflict of interest waiver requests.”

It says the program has not implemented a “tracking system” to manage law firms’ conflict-of-interest waiver requests, and “had not documented, in an organized system of records, the rationale for denying or approving waiver requests.”

DOE officials say they agree with the recommendations in the report and are taking steps to tighten up the system. Among them:

In response to our recommendations, management stated that the Loan Programs Office is in the final stages of developing and implementing a state of the art records management system as well as an integrated information management system that will integrate the recommended tracking and document retention systems to allow waiver requests to be followed from receipt to final disposition.

The report notes that the loan program, which has multibillion-dollar portfolio, has retainer agreements with 10 outside law firms.

IG reviewed 70 conflict of interest waiver requests that have been approved.

The loan program requires law firms to request waivers if the firms’ “activities and relationships” could erode its impartiality or objectivity in helping review loan applications, such as cases in which the law firm represents a company seeking a loan guarantee.