Waste of the Day: Federal Loans Potentially Had Conflicts of Interest

Topline: There is no “reasonable assurance” that Department of Energy loans are being approved impartially and without conflicts of interest, according to a Dec. 18 audit from the agency’s inspector general.

Federal loans and a loose protocol

Key facts: The Loan Programs Office lends money to companies working on innovative clean energy and transportation technologies that are too risky to get a loan from a bank. As of September 2024, it had 219 federal workers and over 300 contractors managing more than $385 billion appropriated during President Joe Biden’s administration, according to the audit.

The inspector general reviewed 24 loan projects worth $31 billion and found they “did not always ensure compliance with Federal Government ethics regulations.”

Out of 40 random employees, eight had a conflict of interest for the loans they were in charge of approving. One employee was in charge of loans for a technology that was also being financed by a company where he previously held a management position. Another employee had financial ties to a contractor working for the loan office.

Agency leadership did not know about any of the conflicts, possibly because they are not properly vetting new employees, the audit found. The loan office is required to consult with ethics officials before assigning employees to review loan applications, but there was no documentation proving the consultations ever happened.

Violations of protocol

Senior-level loan office employees are required to file public reports listing all of their current and former employers, but two reports out of a random sample of 24 had missing information, according to the audit. One senior-level employee did not disclose that he holds millions of dollars of stock in a financial investment company and is on the Board of Trustees for a different nonprofit. Another employee did not disclose that he used to work for several companies that were later hired by the loan office as contractors.

There were nine employees working for both the federal government and another employer, but they never obtained written approval to do so, as is required under ethics law. One employee told auditors that he “self-determined” that his other job was not a conflict of interest, “without obtaining input from the supervisor or assigned ethics official.”

Search all federal, state and local salaries and vendor spending with the world’s largest government spending database at OpenTheBooks.com. 

Background: The audit was completed in September 2025, a month before the Department of Energy authorized the loan office to approve $250 billion in loans by September 2028. The loan office also renamed itself the Energy Dominance Financing Program and removed a requirement that applicants consider how their technology will affect greenhouse gas emissions.

Summary

Summary: If America is to truly establish energy dominance, it must fund technological innovation based on merit, not hidden relationships.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com

This article was originally published by RealClearInvestigations and made available via RealClearWire.