The Obama administration is famous for its crony capitalism. It’s famous for wasting money on disastrous investments like Solyndra to pay off its political allies. It now appears, however, that they go a step further: they put public funds in bad investment loans, then double down on their bad loans with free cash grants.
Here’s the short story: Angus King, former governor of Maine, Obama supporter, and front-running independent Senate candidate, owned a wind company. Obama’s Department of Energy handed over a deeply questionable $102 million loan to that company. It appears that as that company was coming under investigation, King quickly divested himself of his interests, hoping he was doing so just in time to escape scrutiny, and as he was preparing to announce his candidacy for Senate.
But that’s not where the story ends. It seems that before he left the company, King helped apply for a Department of Energy grant worth some $33 million. Which means one of two things: either the company was thriving, in which case King was helping bilk taxpayers for an additional $33 million; or the company was having financial difficulties, in which case the $33 million grant was designed to help cover the cost of the loans, $23 million of which was coming due with a maturity date of April 27, 2012.
Either way, the situation doesn’t look good for King, or the Obama Administration. Either the two were working to ensure that King’s company got paid millions so that King could reap the benefits, or they were working to cover up a troubled company and highly questionable investment subsidized with federal tax money.
Here’s the more complete story.
In 1997, Governor King signed into law a bill that would require utilities to generate at least 30 percent of their energy from “green” sources like wind. In 2007, King decided to take advantage of his mandate and founded a wind energy company, Independence Wind. The first major project of Independence Wind was to build the Record Hill wind farm, near Roxbury, Maine.
Ironically, King once said, “In the process of rebuilding Maine, we must never compromise the integrity of our environment. It’s not only immoral, it’s bad economics.” Yet his wind project has blasted the tops of mountain ridges along many of bucolic Maine’s well-known and beloved mountaintops to make way for a new and much less attractive landscape consisting of hundreds of windmills.
In 2011, King’s company received a $102 million for development of Record Hill. The loan came through the same stimulus program that funded Solyndra. The original federally-guaranteed loan was as questionable as the Solyndra loan. As it turned out, there was no need for a federally-guaranteed loan on the surface; the company supposedly had $127 million in liquid assets available, assets it had to have under Maine state law in order to commence construction. The loan program was specifically designed to help companies that couldn’t get private loans otherwise.
Furthermore, the company may not have been eligible for the loan, since its technology wasn’t innovative under the applicable regulation. But the company got the loan anyway, from an Obama administration eager to help out its cronies. Angus King was, of course, an Obama supporter, endorsing him and having contributed at least $10,000 to Obama’s reelection campaign.
Record Hill promptly used the money on foreign companies. Just a quarter of the cash was reinvested in the State of Maine; 58 percent of the cash went to Siemens to pay for building 22 windmills. The turbines themselves were manufactured in Europe “because that’s where the biggest turbine market is, and the tower sections are made in Asia, because that’s where the new efficient steel mills are,” said King’s partner in Record Hill, Rob Gardiner. About 467 people worked on the site, reportedly, but “at least some of these jobs could measure their duration in days rather than weeks or months.” Today, nobody is employed by the wind farm itself.
In March, King declared his Senate candidacy. He would run as an independent, but he would likely caucus with the Democrats. He was a solid lock to replace Sen. Olympia Snowe (R-ME).
But the loan was coming under scrutiny. As steam picked up on the curiosity about Record Hill, King spoke out. “The project is operating and actually is ahead of its production schedule,” he claimed. “The risk now basically is that the wind won’t ever blow again, and that is a pretty low risk.”
Despite King’s assessment of the situation, the House Committee on Oversight and Government Reform, led by Darrell Issa, released a report bashing the Department of Energy and singling out Record Hill as a loan that shouldn’t have happened. Two days before the report was released, King dropped his association with Record Hill, dumping all of his stock. He told a Maine news outlet the timing was an “amazing coincidence.” Actually, Record Hill was notified that they’d be mentioned, and King almost certainly wanted to avoid blowback. Gardiner admitted that he’d received a letter of notification from the Committee two days before King sold his stock.
But wait, there’s more! From August 2011 to January 2012, the federal financing bank signed checks worth $101.5 million to Record Hill. In March 2011, King and Gardiner said they’d expect another $70 million in stimulus funds; as of July 2012, they’d received another $33.7 million in Section 1603 cash grants. A grant, not a loan.
Was the grant designed to help Record Hill cover loan repayments that the company couldn’t pay? Or was it just double-dipping by a highly-connected company?
If it’s the former, this is fraud. For the federal government to guarantee a loan, know the loan is going bad, and then give a “grant” to a company to pay off that loan is cooking the books.
If it’s the latter, King and company were all too happy to grab more and more taxpayer money.
King, for his part, continues to maintain that the company is in solid financial shape. But if it is, why should the Department of Energy give it a $33 million grant? What need would the company have for such a grant? Angus King and his former partner are wealthy magnates; the company supposedly had $127 million in liquidity when it began. If these 1 percenters are so flush, why do they insist on taking money from the 99 percent to pay for their already-flourishing company?
This isn’t Solyndra. This is far worse than Solyndra. It wasn’t just a Solyndra-like loan to a wind energy company designed to make a Senate candidate rich – although it appears that the Department of Energy loan was Solyndra-lite. It’s the follow-up grant that’s even more troubling. The cash grants arrived just two months after King cut ties with the company – and it takes several months for such grant applications to be filed. If the company was doing well, it wouldn’t need a grant; if it was doing poorly, it didn’t deserve a grant. But it got a grant nonetheless.
This is not the first time that Angus King has been involved in a Solyndra-like situation. King’s son, Angus III, is vice president of First Wind, another wind boondoggle that received federal stimulus dollars and almost went bankrupt.
King’s wind fixation certainly enhanced his wealth. It hasn’t enhanced the wealth of Maine or American taxpayers, though. It’s cronyism at its finest. And it’s a double-down Solyndra story that should make any taxpayer cringe.
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