Business Law Concepts

One of the problems demonstrating how the government fails to use its evaluation methodologies and laws is the failure of Solyndra. The problem demonstrates how the economy and governmental structures may be affected by enterprises that experience financial instability. When the government supplied funds to Solyndra to sustain its operations, there were a number of ethical issues that were brought up. The process of providing these money is also under scrutiny, particularly in light of the dearth of information that suggests they evaluated Solyndra's financial standing or the resources available to it for the payback of the disbursed monies. The United States Energy Department accredited Solyndra a sum of half a billion U.S dollars as a loan. The firm also received a tax break from the Alternative Energy and Advanced Transport Authority, alleviating the disbursing of $25.11 Million. The funds were expected to enhance the company's productivity and performance, but instead, the firm was closed due to bankruptcy. The purpose of this research is to consider the rules and laws available and applicable to the case of Solyndra, examine the ethical concerns and issues present in the same and evaluate on how these ethical concerns may affect the business.
Company Background
Solyndra is a company founded by Dr. Chris Grenet in 2005, Fremont. The firm was to deal with solar energy, and it became particularly unique in the course of its production. Among the products manufactured by Solyndra were tubular solar panels made of copper indicium gallium selenide. As such, their products were efficient and more durable compared to other companies providing similar merchandise. The United States Energy Department accredited Solyndra a sum of half a billion U.S dollars as a loan. The firm also received a tax break from the Alternative Energy and Advanced Transport Authority, alleviating the disbursing of $25.11 Million. The financial support was directed towards the development of a new plant for manufacturing the solar panels due to the anticipated demands for the product.
It is important to note that the sum of money loaned to the company was significantly high, and was possible due to the energy legislation that was adopted in 2005 to provide the federal government in backing loans to firms. However, despite the innovativeness of the company and the availability of enough funds to support their operations, the company failed after two years. The reason for failure is attributed to bankruptcy, with about one thousand workers being laid off and manufacturing of the solar panels stopping. Similarly, the production process was expensive and incurred in the production of products that were expensive. There was an increase in competition from other manufacturers such as China, whose pricing is relatively cheaper compared to that of Solyndra.
Legal and Ethical Issues
The United States Department of Justice and Prosecution had the mandate to examine the case of Solyndra's bankruptcy over the two years. The ten-week activity revealed various issues that should have been addressed. The first concern was to question the influence of the management of the firm internally and if it was connected to the bankruptcy. Similarly, the activity examined why the company, being prospective at the time of awarding the loan, failed to cope with the challenges facing them even after the loan was disbursed.
Legal Issues
According to Olson, and Biong, (2015), bankruptcy refers to as the state in which the debtor is unable to satisfy the claims of the creditor relating to any obligations involving money and that ay or has resulted in the failure to reimburse any payments required to the loaner. Bankruptcy may be segmented into three types inclusive of the sudden financial inability, false insolvency, and incautious bankruptcy. Solyndra was faced with bankruptcy, and it was difficult to determine if the management of the firm played a role in the firm's downfall. As such, actions of the CEO of the company and the directors was one of the focus for the authorities to regard while determining the cause. As such, various legal issues were to be addressed concerning the company and its downfall.
One fact evident from the case is that the private investor's money was to be received back in the event of the company's downfall, thus connecting the intention of the management to lead the firm to bankruptcy before the accusation of the taxpayers on the company for violating the Energy law of 2005. Most of the funding to Solyndra was provided by Title XVIII section 1705 and the Energy Policy Act of 2005. However, it is evident that the company failed to abide to the regulations and did not provide all their financial data for evaluation before they were assigned the funds.
Legal Issues Filled by the Workers
Thousands of employees were laid off following the bankruptcy state of the company, hence violating the labor legislation. As such, there were many individuals filing complaints that the company was acting illegally with the laying off of staff members. The firm was obligated to have notified its employees within two months, (60 days) of their dismissal as indicated by the United States Fir Labor Standard Act. In the course of bankruptcy, the firm failed to issue the staff members with the Workers Adjustment and Retiring Notification (WARN) 60 days before its closure. Therefore, due to the inconvenience caused by the firm, the staff members indicated that they needed a 60-day pay, additional indemnification for not less than 1,100 workers, 401(k) contributions and health benefits.
The ruling of the court, however, was in partial favor of the firm and the staff members. Despite the support of the judge for the workers to receive some coverage, the company was bankrupt and lacked the funds to cover all the necessary expenses especially since the creditors as well expected compensation and refund of their credit. As such, with the need to prioritize the creditors and compensate the employees, the United States Bankruptcy Code was issued as a general rule to have the workers be provided with a preferential right to their claims (Amankwah-Amoah, 2015).
Ethical Issues Facing Solyndra
The collapse of Solyndra is faced with ethical challenges depicting reasons to doubt the financial incapability of the same. One of the shareholders, George Kaiser, was responsible for the financing of the Former President of the United States, Barack Obama, and provided a large sum to support the same. The case indicates that the firm failed due to the lack of enough funds, while the largest shareholder was able to finance political activities. As such, it is evident that there was, beyond reasonable doubt, other reasons attributed to the failure of the company especially with their shareholders having enough funds.
Two Laws and Codes of Ethics that Apply to the Situation
One of the laws specifically for the situation is the United States Energy Policy Act, which indicates that the department of energy is expected to discuss with the secretary of the treasury as well as the office of management and budgeting concerning any loan deviations before their disbursement. Evidence suggests that the financial statements from Solyndra were not evaluated efficiently, and thus the risk of the firm failing to repay the loans was not established and measured (Wells, & Nieuwenhuis, 2015).
The firm also breached the provision of the American Tax Law. It is evident of the evasion of paying taxes that the company had an understanding that there was a risk of bankruptcy of the same. As such, the company, instead of utilizing the funds available for the same in saving the firm from bankruptcy, it engaged with the management to avoid taxes. Similarly, the United States Code of Ethics was breached by Solyndra since it did not conform to the Department of Energy of their financial inability. It is evident that despite the firm being successful since its inception, there were economic turmoil's affecting its operations. Due to the concealing of information from the Department of Energy, Solyndra breached the ethical codes depicted by the United States.
Moreover, George Kaiser, one of the largest shareholders of the company, was involved in the funding of the campaigns of the former United States President Obama. According to Olson and Biong, (2015), the contribution provided by this shareholder totaled up to $75 Million, indicating the direct effect on the possibility of funding for the corporation.
Ethical Framework
The ethical framework necessary for this situation is expected to link with the Department of Energy, the abuse of power from the officials from this department. These administrators are expected to practice professional conduct and engage in all the required activities when assessing the firms which require the provision of financial loans. However, the officials were unable to authorize the funding provided to Solyndra efficiently especially since they offered the substantial funds without checking their economic status. Lüdeke-Freund, (2014) notes that one of the factors that led to the money being disbursed quickly was due to the connection of the firm to the production of technology that was environmentally friendly and that did not pollute the environment. The officials from the Department of Energy should have carried out a proper financial evaluation of the company to detail out the capacity of the firm in paying back the loan and the strategies set in place for the same purpose. Similarly, the proper due diligence should have been engaged as well as determining the size of the company and approval from other institutions in the provision of loans (Nielsen, Cruickshank, Foged, Thorsen, & Krebs, 2010).
Milton Friedman's Philosophy
Milton Friedman is a well-known economist for his impact and philosophy on the issue of economics. He lived and worked within the twentieth century. According to Jennings, (2014), Milton supported free-market ideas that had no governmental support. His philosophy argued that the business entities should be left to act independently with the executive administration having limited influence on the market. In this regard, companies would have the opportunity to create a fair level of competition in the market. The thoughts and philosophy depicted by Milton can be applied to this case involving Solyndra. For the startups such as Solyndra, the opinion of Milton can be referred to develop unregulated markets to prove the inexpediency of financial elements for the same. Considering the Department of Energy leaving the firm to undertake an initiative where the company does not affect the consumer market, then the risk of loss of a quarter of taxpayers in billions will reduce. Therefore, the government will have no liability for the failure of firms and their management as indicated by Cafferky, (2015).
Influence on Solyndra Executives
As indicated by the defendants in the courts, it was notable that the executives of the firm had no intention of avoiding their liability to taxation. The win was possible through the avoidance of the criminal responsibility. However, the management of the company was involved in the court proceedings concerning the repatriation of the funds that the government had granted to the same. As such, the company was bound to abide by the actions suggested by the Labor Union against the breach of the labor legislation. As such, the business had to adequately compensate their workers for the sixty days of their unreasonable dismissal due to the absence of any notification detailing their unemployment status from the company.
The House Committee examined the unjustified granting of loans without proper due diligence along with the Prosecutors Office. According to Alstete, and Cannarozzi, (2014), all of the actions which the court initiated affected the Solyndra's executives. The court ruled that all of the top managers were to contribute about $370,000 each as part of the granted money by the government. Moreover, the executives and some of the investors had agreed on the lack of interference of the government in the startup firms within the state.
Conclusion
The case analyzed indicates how the actions of the government, if not well evaluated and measured, can have detrimental effects on the economy and other business operations. The political, legal, economical and ethical concerns are mixed with the issue of funds wasted in the process of providing taxes that are unpaid. Solyndra Company was promising, especially with the technologies they had integrated in their manufacturing process. However, when the firm was provided with funds from the government, it is notable that the company failed to become productive and this led to its downfall. The ethical framework necessary for this situation is expected to link with the Department of Energy, the abuse of power from the officials from this department. These administrators are expected to practice professional conduct and engage in all the required activities when assessing the firms which require the provision of financial loans. The management of the company was involved in the court proceedings concerning the repatriation of the funds that the government had granted to the same. As such, the company was bound to abide by the actions suggested by the Labor Union against the breach of the labor legislation. As such, the business had to adequately compensate their workers for the sixty days of their unreasonable dismissal due to the absence of any notification detailing their unemployment status from the company.












References
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Amankwah-Amoah, J. (2015). Where will the axe fall? An integrative framework for understanding attributions after a business failure. European Business Review, 27(4), 409-429.
Cafferky, M. E. (2015). Business Ethics in Biblical Perspective: A Comprehensive Introduction. InterVarsity Press.
Jennings, M. M. (2014). Business ethics: Case studies and selected readings. Cengage Learning.
Lüdeke-Freund, F. (2014). BP's solar business model: A case study on BP's solar business case and its drivers. International Journal of Business Environment, 6(3), 300-328.
Nielsen, T. D., Cruickshank, C., Foged, S., Thorsen, J., & Krebs, F. C. (2010). Business, market and intellectual property analysis of polymer solar cells. Solar Energy Materials and Solar Cells, 94(10), 1553-1571.
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. From https://brage.bibsys.no/xmlui/bitstream/handle/11250/2374349/Olson_Biong_IJBCRM%202015.pdf?sequence=3
Wells, P., & Nieuwenhuis, P. (2015). EV Business Models in a Wider Context: Balancing Change and Continuity in the Automotive Industry. In Electric Vehicle Business Models (pp. 3-16). Springer International Publishing.