Jigar Shah (energy.gov), Teri Donaldson (Energy GOP YouTube)

The Department of Energy's inspector general on Tuesday issued an unprecedented call to suspend the Biden administration's $400 billion energy loan program, warning that officials aren't complying with conflict-of-interest rules and that the program carries a "significant risk of fraud."

The news comes as the Energy Department's Loan Programs Office (LPO) has been rushing to dole out billions in loans to green energy companies before President Joe Biden leaves office in January.

The inspector general's criticism could halt that funding blitz and draw new congressional scrutiny into the loan program. The loan office has already come under fire from Congress for dispensing billions in loans to high-risk companies, some of which had prior financial or personal links to office director Jigar Shah.

Inspector General Teri Donaldson said her office, while conducting a months-long review of the loan program, uncovered significant defects in the department's conflict-of-interest procedures. According to the memo, the LPO hasn't been identifying or reporting potential conflicts between loan-seekers and federal contractors that the department hired to vet loans.

Donaldson called for the loan program to "put into abeyance all loan and loan guarantee packages until the LPO can ensure that contracting officers and the contracting officers' representatives are complying with conflicts of interest regulations."

Following Donaldson's memo, Sen. John Barrasso (Wyo.), the leading Republican on the Senate Energy and Natural Resources Committee, demanded that Energy Secretary Jennifer Granholm immediately suspend the loan program.

"In its final days, the Biden Administration has been shoveling taxpayer money out the door with insufficient safeguards against fraud, waste, and abuse. Secretary of Energy Granholm should immediately stop the entire loan process until the department puts strict safeguards in place to protect American taxpayers," Barrasso told the Washington Free Beacon.

The IG said she issued the emergency memo because she is concerned that the LPO plans to close at least $22 billion in loans and loan guarantees in the next month, "without ensuring compliance with conflicts of interest regulations."

In response to the inspector general's memo, Shah declined to suspend upcoming loans, noting that the memo doesn't report any direct examples of conflicts of interest. The reason for that, Donaldson countered, is that the LPO "does not track the information necessary to identify conflicts of interest."

"Perhaps the most troubling statement in the [LPO's] response is that the LPO has not experienced a single conflict of interest 'for the last 15 years,'" wrote Donaldson. "The LPO seems to be asserting that as long it does not compile, track, update, or reconcile relationships, it maintains a 100 percent compliance rate across the LPO."

Donaldson said her office is working on a larger report on its findings. The inspector general has spent over a year reviewing the Loan Programs Office, which has been accused of dishing out billions in government loans to politically connected recipients, including companies teetering on bankruptcy and entities linked to foreign adversaries.

The formerly small office, whose budget was expanded more than 2,200 percent under Biden, now has a lending authority that rivals the commercial loan portfolio size of Wells Fargo and other international banks.

The office has been on a lending spree in recent weeks, as it scrambles to dispense cash before President-elect Donald Trump takes office.

Some recent loan-seekers have previous links to Shah. In October, the LPO finalized an $861 million loan to AES Marahu, a subsidiary of AES Corporation, to fund the construction of solar farms in Puerto Rico.

Before joining the Biden administration, Shah was on the board of solar panel company sPower, which he said he helped sell to AES for $850 million in 2017.

The LPO is also in advanced talks to approve a $1.5 billion loan to Plug Power, a hydrogen fuel company. Prior to joining the Biden administration, Shah was a major investor in Plug Power, pouring $100 million into the company through an investment firm he founded called Generate Capital.

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