Lawyers Who Backed Obama Advised on Failed Loan Programs

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Obama InvescoLast week NLPC reported that an international law firm, whose employees provided significant campaign support for President Obama, was paid $1.8 million from the stimulus to review and conduct “due diligence” for the Department of Energy’s suspended loan to Fisker Automotive, an electric vehicle start-up company. Fisker sent 65 workers to the unemployment lines.

Debevoise and Plimpton, which employs top Obama bundler and fundraiser David Rivkin, wasn’t the only largely Democratic law firm to reap such rewards. At least four other major law practices also analyzed DOE’s loan programs and its grantees – three of which gave large sums of money to the campaigns of President Obama and fellow Democrats.

Debevoise, on the heels of  $199,944 in donations to Sen. Barack Obama for his 2008 presidential campaign, was able to land the contract to analyze loans from DOE’s Advanced Technology Vehicles Manufacturing Loan Program to troubled Fisker Automotive and Ford Motor Company. Fisker had its $529 million loan suspended after failing to reach milestones; Ford received a $5.9 billion loan guarantee to retrofit plants for the production of hybrid and electric vehicles.

Another law firm that landed a similar contract to review ATVM loans was Paul, Weiss, Rifkind, Wharton & Garrison LLP. According to the Recovery.gov Web site, Paul/Weiss was tasked with reviewing loan documents for Tesla, Nissan North America and Magna E-Car Systems. During the three election cycles that cover 2008 to 2012, Paul/Weiss employees donated $889,144 to Democrat candidates and committees, and $154,290 to their Republican counterparts, according to data compiled by the Center for Responsive Politics. President Obama received $130,202 from Paul/Weiss during the same period, while 2008 GOP nominee Sen. John McCain received $29,200. Former Massachusetts Gov. Mitt Romney received $5,750. Jeh Johnson, an Obama bundler who became the president’s chief counsel at the Pentagon, was also a Paul/Weiss partner from 2000 to 2008. He led the study team that recommended a repeal of the “Don’t Ask, Don’t Tell” policy on homosexuals serving in the military. 

For its DOE work on the three loans (Magna E-Car’s did not close), Paul/Weiss was paid $987,336. Based upon Recovery.gov information, the labor required the equivalent of 1.07 attorney’s services (or one “green job,” apparently), which lasted from June 3 to December 7, 2009. So that’s almost a cool million for a single attorney’s six months’ worth of transactional lawyering.

The next law firm granted work on DOE’s ATVM loan program is international firm Cleary, Gottlieb, Steen and Hamilton, which was paid a total of $534,651 to provide legal counsel on “programmatic aspects” and “transactions proposed or consummated” under the program. Interestingly, part of the firm’s duties is “defending the loans.” The extent of the work required the equivalent time of a single lawyer (one “green job”) over the course of a few months in 2009. 

Employees of Cleary/Gottlieb were generous to political candidates as well. From the 2008 to 2012 election cycles, staffers gave Democrat candidates and their support committees $583,229. Republican candidates received $16,920. President Obama received $162,854 for his two campaigns (so far), while McCain received $2,000 in 2008 and Romney received $3,500 for this year’s campaign. One former associate of the firm, Grant Harris, served on the Obama-Biden transition team, and he is now Special Assistant to the President and Senior Director for African Affairs.

Another global law firm, London-based Clifford Chance, was paid $1,112,446 by DOE “to provide legal services and advice in support of DOE’s loan guarantee program.” One loan request the firm counseled about was the world’s largest wind farm, Shepherd’s Flat in Oregon, which received a $1.3 billion DOE loan guarantee. An analysis by The Oregonian determined that all the state and federal subsidies for the project would cost $34 million per permanent job it produced. The newspaper also reported that a memo written by President Obama’s own advisers criticized the green subsidies he has supported, because projects would have developed without taxpayer backing, with Shepherd’s Flat as “Exhibit A.”

“The memo said the project was ‘double-dipping,’” the newspaper reported, “gorging on a $1.2 billion smorgasbord of federal and state subsidies. The incentives...include a $500 million federal grant, $200 million in federal and state tax benefits from accelerated depreciation, $220 million in premium power prices attributed to state renewable energy mandates, and a $1.3 billion loan guarantee with a value of $300 million.

“The memo concluded that the carbon reductions from Shepherds Flat would have to be valued at more than six times the going rate for the climate benefits to equal the subsidies.”

Among the beneficiaries were Google, which invested $100 million in the wind farm, and General Electric, which got a $1.4 billion contract to supply and service 338 wind turbines for the project. Clifford Chance has advised GE on other matters.

According to Center for Responsive Politics data, lawyers and associates at Clifford Chance donated $135,508 to Democrat candidates and committees over the last three election cycles, while $26,100 went to Republican candidates. Employees gave $60,792 to President Obama’s campaigns for 2008 and 2012. They gave McCain $4,300 in 2008, and Romney received $4,000 for this year’s campaign.

Ironically, the one law firm listed on Recovery.gov as an adviser to the DOE Loan Guarantee Program whose employees gave more donations to Republicans than Democrats was the same firm that advised on the loan that is face of the program’s failure: Solyndra. The firm, Curtis, Mallet-Provost, Colt & Mosle LLP, was paid $342,623 by DOE and advised “in the structuring and documentation of the Loan Guarantee Program.” In reports to Recovery.gov the firm took credit for its “documentation and negotiation” role (scroll to bottom) in Solyndra’s receipt of the first loan guarantee, as well as another loan that went to Nevada Geothermal, which has also drawn scrutiny from House Oversight and Government Reform Committee Chairman Darrell Issa. Curtis-Mallet also apparently had a role in the approval process for the loan to Shepherd’s Flat.

Employees of Curtis-Mallet gave $30,150 to GOP candidates between the 2008 and 2012 election cycles, but $26,500 of that came from a single lawyer, Eliot Lauer. Democrats received $7,400; $2,300 went to President Obama in 2008. However, the Curtis-Mallet lawyer who co-led as counsel for the DOE Loan Guarantee Program – Roger Stark – was a passionate advocate for policies to restrain greenhouse gas emissions and promote renewable energy. He left the Curtis-Mallet firm in January 2011.

So four of the five outside law firms tasked with evaluation and documentation of DOE’s loan guarantees were major donors to the political party that assured the passage of the stimulus and President Obama’s green agenda. Employees of those five firms have given at least $640,568 for his 2008 and 2012 campaigns. Republicans were awarded as well, to be sure, and some supported the stimulus also. But those who had stewardship over the distribution of the funds – the Obama administration – appeared to reward some of their most loyal supporters.

Now there's a suspect track record with many loan recipients, with bankruptcies, cronyism, bailouts of previous efforts, suspensions of loans, indecision, and layoffs. It’s time to ask Energy Secretary Steven Chu if those loyal Obama supporters who helped decide where the money went were incompetent, or something worse. Besides the law firms themselves, a lot of the stimulus money went to companies that also provided financial support for President Obama and fellow Democrats' campaigns. Were the lawyers in place to make sure the right people were taken care of?

Paul Chesser is an associate fellow for the National Legal and Policy Center.