More Bankruptcies Just Mark of 'Success' for Dept. of Energy
“Recognizing that these investments would include some risk, Congress established a loan loss reserve for the program, and the Energy Department built in strong safeguards to protect the taxpayer if companies could not meet their obligations,” Bill Gibbons, an agency spokesman, said in an e-mail to Bloomberg News. “Because of these actions…the Energy Department has protected nearly three-quarters of our original commitment to Fisker Automotive.”
Leave to the Obama administration hucksters to sell yet another green energy loser as a gain for the taxpayers. With this bankruptcy, it’s a $139 million loss that DOE gets to spin. The stellar defenders of the public purse originally thought Fisker was worth a $529 million risk, but quickly recognized that mistake and stopped paying at $193 million. Ever since it’s been a series of almost comedic errors that have included a partnership with battery-making dud A123 Systems, fire incidents, recalls, a bad Consumer Reports review, and other mishaps.
Like A123, a foreign investor will now buy Fisker’s cadaver. A group called Hybrid Technology LLC, led by Richard Li, the son of Hong Kong’s richest man, will buy the leftovers for $25 million. Bloomberg reported that Fisker listed assets of $500 million and debts of up to $1 billion in its Chapter 11 filing.
“(Hybrid Technology) is committed to building upon the Fisker legacy and presence in the United States as a foundation for the design and manufacture of advanced hybrid electric vehicles,” said a spokeswoman for the group, in another unfailingly positive statement put out by the DOE. “We will work to realize the full potential these fantastic cars offer in helping to remake the auto industry for the 21st Century.”
Fisker legacy? Fantastic cars? It’s too bad DOE’s breezy forecasts and eternal sunshine weren’t enough to power all the wind and solar projects they have forced taxpayers to subsidize. But the PR-ocracy has generated plenty to make even their worst “investment” disasters appear as if they were genius visionaries.
For example, in September DOE spokesman Bill Gibbons told the Washington Free Beacon that stimulus support for Ecotality was “meant to establish the seeds of infrastructure needed to support a growing market for advanced vehicles,” noting that “the company installed more than 12,500 charging stations in 18 US cities—or approximately 95 percent of their goal.” In other words, despite our loss of millions of dollars in public money, it was (almost) mission accomplished!
And when Colorado-based Abound Solar declared bankruptcy in June 2012, DOE deputy director of Public Affairs Damien LaVera wrote a lengthy article defending the agency’s “investments” in solar energy.
“Of the $400 million that Abound was originally approved for, the Department only lent the company less than $70 million,” LaVera wrote. “Because of the strong protections we put in place for taxpayers, the Department has already protected more than 80 percent of the original loan amount. Once the bankruptcy liquidation is complete, the Department expects the total loss to the taxpayer to be between 10 and 15 percent of the original loan amount.
“This effort has seen many successes as well as a few setbacks,” LaVera added, “but one thing is clear: America must continue playing to win in the clean energy race.”
Then there was the September testimony by former DOE Loan Programs Office director Jonathan Silver, in a hearing about secret email exchanges on private accounts held before the House Oversight and Government Reform Committee. When Rep. Jim Jordan of Ohio questioned him about millions of dollars in lost “investments” thanks to his agency’s poor judgments, Silver said the losses only represented three percent of the portfolio and one percent of the loan loss reserve set aside by Congress for the stimulus, which Silver said made the program a “success.”
For its part, the relentless cheerleaders at DOE have rah-rah-ed praises for Silver.
“Under Mr. Silver’s leadership,” DOE’s Web site says, “the Loan Programs Office has grown to become the largest project finance effort in the United States. Since Mr. Silver took office, the agency has committed over $40 billion in 42 clean energy projects with total project costs of over $63 billion. Cumulatively, these projects create or save over 66,288 jobs across 38 states and avoid over 38 million metric tons of carbon dioxide, equivalent to taking over 4.5 million vehicles off the road or about as many vehicles as in the state of Michigan. The program’s 23 generation projects produce over 32 million megawatt hours, enough to power nearly 3 million homes.”
So in the eyes of DOE you can mark down Fisker as another feather in their cap. When the Department announced in September it would auction the remainder of Fisker’s loan obligation – after coming to the conclusion that no one in their right mind would buy the company otherwise – current executive director of the Loan Program Peter Davidson saw the development as another opportunity to tout success.
“While our original loan commitment was for $528 million,” Davidson wrote, “only $192 million was actually disbursed. In addition, the Department has already recouped more than $28 million from the company’s accounts. These actions combined have already protected more than two-thirds of our original loan commitment….
“Despite Fisker Automotive’s bankruptcy setback, the DOE loan portfolio remains very strong – and is playing a crucial role in helping America’s auto industry thrive, innovate and compete.”
So the only people daring to rain on the bankruptcy positivity parade are those who are owed money by Fisker. News reports say a Delaware judge has the case on a fast track, with a hearing on the sale scheduled for January 3. According to Associated Press, unsecured creditors are owed $250 million, “but stand to receive a minimum total cash distribution of only $500,000.” Among those who have filed claims are former employees who say they are owed $4 million in back pay and benefits.
The Orange County Register reported the Fisker filings include a 669-page document of creditors. “Some of the names on the list indicate how well-connected the company was to Hollywood, Silicon Valley and Washington, D.C.,” the newspaper reported. Among them are actor Leonardo DiCaprio and Al Gore, as well as Joe Biden’s son, Hunter. The vice president appeared at an announcement in Wilmington, Del. in 2010 to promote Fisker’s plans to produce its second model at a former GM plant there, which never happened.
John Doerr, a senior partner with the Kleiner Perkins tech investment firm and big supporter of President Obama, was also listed as a creditor. After the scandal of Solyndra, and the bondholders who got screwed in the government’s GM bailout, it will be interesting to see who gets what’s owed them in the Fisker case
“Fisker’s collapse closes yet another sad chapter in DOE’s troubled portfolio,” said House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Oversight and Investigations Subcommittee Chairman Tim Murphy (R-PA) in a statement. “The jobs that were promised never materialized and, once again, taxpayers are on the hook for the administration’s reckless gamble.”
Remember when the taxpayers were supposed to be the ones protected first in cases where their money went to failed enterprises? Don’t be such a stick in the mud; just enjoy the breeze and the sunshine.
Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes CarolinaPlottHound.com, an aggregator of North Carolina news.