$20 billion in stimulus money to Green companies, leads to 3450 jobs, or about $5 million per job; considered a failure. 


Obama admin reworked Solyndra loan to favor donor

By MATTHEW DALY The Associated Press

WASHINGTON — The Obama administration restructured a half-billion dollar federal loan to a troubled solar energy company in such a way that private investors — including a fundraiser for President Barack Obama — moved ahead of taxpayers for repayment in case of a default, government records show.

FILE - In this Aug. 31, 2011, file photo, Solyndra workers leave Solyndra in Fremont, Calif. Newly released emails show that the Obama administration was worried about the financial health of a troubled solar energy company even as officials publicly declared the company in good shape. An email from a White House budget official to a co-worker discussed the likely effect of a default by Solyndra Inc. on President Barack Obama’s re-election campaign. (AP Photo/Paul Sakuma, File)

Administration officials defended the loan restructuring, saying that without an infusion of cash earlier this year, solar panel maker Solyndra Inc. would likely have faced immediate bankruptcy, putting more than 1,000 people out of work.

Even with the federal help, Solyndra filed for Chapter 11 bankruptcy protection earlier this month and laid off its 1,100 employees.

The Fremont, Calif.-based company was the first renewable-energy company to receive a loan guarantee under a stimulus-law program to encourage green energy and was frequently touted by the Obama administration as a model. Obama visited the company's Silicon Valley headquarters last year, and Vice President Joe Biden spoke by satellite at its groundbreaking.

Since then, the implosion of the company and revelations that the administration hurried Office of Management and Budget officials to finish their review of the loan in time for the September 2009 groundbreaking has become an embarrassment for Obama as he sells his new job-creation program around the country.

An Associated Press review of regulatory filings shows that Solyndra was hemorrhaging hundreds of millions of dollars for years before the Obama administration signed off on the original $535 million loan guarantee in September 2009. The company eventually got $528 million.

Given the company's shaky financial condition, Republican lawmakers say the decision to restructure the loan raises questions about whether the administration protected political supporters at taxpayers' expense.

"You should have protected the taxpayers and made some forceful actions here after this analysis," Rep. Cliff Stearns, R-Fla., told a top Energy Department official this week. "Because you should have seen the problems. And you should have said, 'Taxpayers need to be protected and this has got to stop.' "

The loan restructuring is one element congressional investigators are focusing on as they look into the federal loan guarantee Solyndra received under the economic stimulus law.

Under terms of the February loan restructuring, two private investors — Argonaut Ventures I LLC and Madrone Partners LP — stand to be repaid before the U.S. government if the solar company is liquidated. The two firms gave the company a total of $69 million in emergency loans. The loans are the only portion of their investments that have repayment priority above the U.S. government.

Argonaut is an investment vehicle of the George Kaiser Family Foundation of Tulsa, Okla. The foundation is headed by billionaire George Kaiser, a major Obama campaign contributor and a frequent visitor to the White House. Kaiser raised between $50,000 and $100,000 for Obama's 2008 campaign, federal election records show. Kaiser has made at least 16 visits to the president's aides since 2009, according to White House visitor logs.

Madrone Partners is affiliated with the Walton family, descendants of Wal-Mart founder Sam Walton. Rob Walton, the eldest son of Sam Walton, contributed $2,500 last year to the National Republican Congressional Committee.

The AP review also found that officials at Solyndra had been seeking a second round of loans from the Energy Department to expand the company's Silicon Valley headquarters. The request for a second loan was denied.

"We have incurred significant net losses since our inception, including a net loss of $114.1 million in 2007, $232.1 million in 2008 and $119.8 million in the first nine months of fiscal 2009, and we had an accumulated deficit of $505 million at Oct. 3, 2009," the company said in a December 2009 filing to the SEC. "We expect to continue to incur significant operating and net losses and negative cash flow from operations for the foreseeable future."

Energy Department spokesman Damien LaVera said Friday that the company's financial losses were not uncommon for a high-tech startup and were a major reason Solyndra applied for the federal loan. The loan program is intended to help promising companies that cannot receive financing through private banks because of high risk.

Jonathan Silver, executive director of the Energy Department's loan program, said DOE officials faced a stark choice late last year and early this year: Refuse to allow the loan restructuring, "thereby ensuring that Solyndra would close its doors immediately" or allow the company to accept emergency financing, "thereby giving it and its almost 1,000 workers a fighting chance at success, and the government a higher expected recovery on its loan."

The decision by Energy Secretary Steven Chu was not an easy one, Silver told the House Energy and Commerce Committee, but appeared to be the right action at the time.

"Without DOE's agreement to restructure Solyndra's loan, the company likely would have faced bankruptcy much earlier — in December 2010" or soon after, Silver said. "Restructuring gave them a fighting chance to compete and succeed, and kept approximately 1,000 workers from losing their jobs."

Republicans were not impressed.

"If their model was weak to begin with, and then the market gets worse, doesn't that mean that maybe we should have just not thrown good money after bad?" asked Rep. Morgan Griffith, R-Va. "Because now we're in a worse position in the bankruptcy courts to get our money back."

GOP presidential candidate Michele Bachmann called the Solyndra loan an example of "crony capitalism" that benefited political donors.

"It's wrong to abuse executive authority with unilateral actions" Bachmann said at a campaign event Friday in California. "And of course the other problem with Solyndra is the fact that it appears there was crony capitalism, that there were political donors that benefited by this $535 million loan."

Newly released emails show the White House was worried about the likely effect of a default by Solyndra on Obama's re-election campaign.

"The optics of a Solyndra default will be bad," an OMB official wrote in a Jan. 31 email to a colleague. "The timing will likely coincide with the 2012 campaign season heating up."

The budget official, whose name is blacked out in the email, wondered whether Solyndra should be allowed to restructure its loan.

"Questions will be asked as to why the administration made a bad investment, not just once (which could hopefully be explained as part of the challenge of supporting innovative technologies), but twice (which could easily be portrayed as bad judgment, or worse)," the email says.

Associated Press writer Gillian Flaccus in Costa Mesa, Calif., contributed to this story.

Follow Jack Gillum at and Matthew Daly at

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Obama fundraiser linked to loan program that aided Solyndra

The revelation is likely to spur new inquiries about the solar company's political influence. Separately, California lawmakers seek investigation of a state tax break the firm received.


President Barack Obama lifts a solar panel with Solyndra Chief Executive Officer Chris Gronet during a tour of the company in May 2010. (Mandel Ngan, AFP/Getty Images)

The White House faced mounting political complications as a second top fundraiser for President Obama was linked to a federal loan guarantee program that backed a now-bankrupt Silicon Valley solar energy company, and as two California lawmakers called for investigations of a state tax break granted to the firm.

Steve Spinner, who helped monitor the Energy Department's issuance of $25 billion in government loan guarantees to renewable energy projects, was one of Obama's top fundraisers in 2008 and is raising money for the president's 2012 reelection campaign.

Spinner did not have any role in the selection of applicants for the loan program and, in fact, was recused from the decision to grant a $535-million loan guarantee to Solyndra Inc. because his wife's law firm represented the company, administration officials said Friday.

But Spinner's role as a top official in the Energy Department program, which had not been previously revealed, is likely to spur new inquiries into whether political influence played a role in the handling of the "green" energy fund. Solyndra faces a congressional probe, a criminal investigation and separate internal inquiries at the Energy and Treasury departments.

"This will fuel more questions, and now you've got real people involved at the inspector-general level who will be turning over chairs and cabinets, asking questions," said Stanley Brand, a criminal defense and ethics lawyer in Washington who has served as general counsel to the U.S. House of Representatives.

He noted that none of the details that had emerged suggested any laws had been broken. "It's embarrassing, it's ham-handed, it looks bad, but so far all we have is the White House trying to advantage itself in a political way with a loan," he said.

The largest investments in Solyndra were funds operated on behalf of the family foundation of billionaire George Kaiser, another major fundraiser for Obama in 2008. Kaiser has denied personally investing in the solar energy company or talking to White House officials about the loan.

Some Republicans in Congress charge that the White House pushed to get the loan approved for political reasons, which the White House denies.

Before its collapse, Solyndra was a showcase of the White House initiative to develop clean-energy alternatives. Obama visited the factory in May and praised Solyndra as a green technology company that would create jobs and help lead the country's economic recovery.

The company filed for Chapter 11 bankruptcy protection Sept. 6. Two days later, agents with the FBI and Energy Department's inspector general served a search warrant at Solyndra headquarters in an inquiry focusing on whether the company misled the government in applying for the loans.

In announcing its closure, Solyndra cited an unexpected reduction in demand for its products and intense competition from Chinese companies that drove down the price of solar panels it could sell.

Spinner, who raised at least $500,000 for Obama in 2008, is leading efforts to raise money from the technology industry for the president's reelection campaign. He did not respond to requests for comment Friday.

Last week, he invited Obama fundraisers who were in Chicago for a national finance committee meeting to the launch of the Technology for Obama fundraising program. In July, the Obama campaign credited Spinner with raising between $200,000 and $500,000 so far this year.

Spinner was a Silicon Valley investor who founded a sports and wellness company before he joined the administration in April 2009 after serving on Obama's transition team. He was named an advisor to Energy Secretary Steven Chu and was charged with helping oversee a loan guarantee program authorized by the American Recovery and Reinvestment Act, the economic stimulus program.

"Steve Spinner acted as a liaison between the Recovery Act Office and the Loan Programs Office," Energy Department spokesman Damien LaVera said in a statement Friday. "In that capacity, he played no role in the decision-making or evaluation of the Solyndra loan application."

During his tenure, the program approved 20 loan guarantees totaling $25 billion for energy storage, wind power and solar generation, according to Spinner's resume on LinkedIn. Among them was final approval for Solyndra, which planned to manufacture thin solar modules for flat rooftops.

The company applied for a loan guarantee in December 2006, filing under a program created by George W. Bush's administration. It received a conditional commitment for $535 million in March 2009, shortly before Spinner arrived.

In the months that followed, department staffers negotiated the final terms and provided the Office of Management and Budget with data as it assessed the risks of the deal.

In August 2009, while that risk assessment was underway, White House officials began expressing interest in having Vice President Joe Biden announce the deal during a trip to California the following month, according to emails released to House investigators this week. That spurred exchanges between officials

at the White House, the Energy Department and the OMB about whether they could speed up the final approval.

Spinner was the recipient of at least one of the emails, administration officials confirmed Friday — an Aug. 25, 2009, message from Biden's office saying that "we would want the VP [to] satellite into the event on 9/4. It's the same day the unemployment numbers come out, and we'd want to use this as an example where the Recovery Act is helping create new high tech jobs."

Spinner forwarded the email to another Energy Department staffer, who responded that she thought the event was scheduled for Sept. 8.

Spinner, who left the department a year ago, remains an enthusiastic proponent of the loan guarantees. In an op-ed he co-wrote on the blog ThinkProgress on July 13, he urged Congress to appropriate more money to the effort, calling it "an outright success."

"Even the most controversial loan guarantee recipient — Solyndra, a solar manufacturer — is seeing an operational turnaround," he wrote with Richard Caperton, a senior policy analyst at Center for American Progress, a liberal think tank where Spinner is a

senior fellow. He did not

disclose in the piece that he had played a role in the program.

Two months later, after the department declined to restructure the loan a second time, Solyndra declared bankruptcy. By that time, $527 million in taxpayer money that Solyndra borrowed from the Federal Financing Bank, operated under the supervision of the Treasury Department, had been disbursed to the company — funds that the government may not be able to recoup.

Separately, lawmakers in Sacramento questioned a $27-million tax break given to Solyndra under a state law intended to encourage clean-energy companies to do business in California.

State Sen. Alex Padilla (D-Pacoima), who co-wrote the bill, said he planned to examine the tax break at a hearing this fall.

"We're certainly revisiting the due diligence that was done before an award was given," he said.

Assemblyman Brian Nestande (R-Palm Desert) said he intended to ask Treasurer Bill Lockyer's staff to explain "what their vetting process was."

The law, which was approved unanimously by the state Senate and Assembly and signed by then-Gov. Arnold Schwarzenegger in March 2010, exempts qualified clean-technology companies from paying sales tax when buying manufacturing equipment.

The law established a committee to review applications from companies that sought the tax breaks. In November, Solyndra applied for a credit that would allow it to avoid paying nearly $35 million in sales tax on the purchase of more than $380 million of equipment.

The request was granted, but the company used only $27 million of the credit before it went out of business, said Joe DeAnda, a Lockyer spokesman.

Solyndra also received other indirect benefits from state agencies.

Under the California Solar Initiative, a program created by Schwarzenegger and the Legislature, customers that bought Solyndra-manufactured solar-power modules received about $4.9 million in state subsidies, according to Terrie Prosper, a spokeswoman for the California Public Utilities Commission.

Prosper emphasized that the state subsidies went to Solyndra's customers and not to the company, which is how the program works.


Obama's Solyndra scandal reeks of the Chicago Way

Those of us from Chicago know exactly what the Solyndra scandal smells like. And It doesn't smell fresh and green.

President Obama Speaks At Solar Panel Manufacturing Facility

President Barack Obama tours the Solyndra solar panel company plant in Fremont, Calif., last year. Solyndra, which got a $535 million government-backed loan, recently went bankrupt. (Paul Chinn, Getty photo / September 18, 2011)

The Solyndra scandal cost at least a half-billion public dollars. It is plaguing President Barack Obama. And it's being billed as a Washington story.

But back in Obama's political hometown, those of us familiar with the Chicago Way can see something else in Solyndra — something that the Washington crowd calls "optics." In fact, it's not just a Washington saga — it has all the elements of a Chicago City Hall story, except with more zeros.

The FBI is investigating what happened with Solyndra, a solar panel company that got a $535 million government-backed loan with the help of the Obama White House over the objections of federal budget analysts.

Obama and Vice President Joe Biden got a nice photo op. They got to make speeches about being "green." But then Solyndra went bankrupt. Americans lost jobs. Taxpayers got stuck with the bill. And members of Congress are now in high dudgeon and making speeches.

Federal investigators want to know what role political fundraising played in the guarantee of the questionable loan. Washington bureaucrats warned the deal was lousy. And White House spokesmen flail desperately, like weakened victims in a cheesy vampire movie.

So forget optics. What about smell? It smells bad, and it's going to smell worse.

Or, did you really believe it when the White House mouthpieces — who are also Chicago City Hall mouthpieces — promised they were bringing a new kind of politics to Washington?

This is not a new kind of politics. It's the old kind. The Chicago kind.

And now the Tribune Washington Bureau has reported that the U.S. Department of Energy employee who helped monitor the Solyndra loan guarantee was one of Obama's top fundraisers.

Fundraising? Contracts? Imagine that.

Steve Spinner was the Obama administration official in charge of handing out billions and billions of tax dollars to "green" energy deals. According to the Tribune story, Spinner the other day invited Obama's national political finance committee to a meeting in Chicago.

The name of the Obama fundraising initiative?

"Technology for Obama."

The idea of the Obama fundraisers getting together, talking "green," and perhaps offering taxpayer loan guarantees to insider businesses in the interest of helping the environment — it all seems rather fresh.

Like a mountain meadow.

Until you realize it's the same old politics, the same kind practiced in Washington and Chicago and anywhere else where appetites are satisfied by politicians. When the government picks winners and losers, who's the loser? Just look in the mirror, hold that thought, and tell me later.

Republicans are hoping to hang this around Obama's political neck, and they're doing a good job of it now because his approval ratings are low and the jobless numbers are abysmal and the Democrats are in full killer-rabbit panic. But there have been Republican national scandals, too, and they're always ridiculously and depressingly similar.

At least in Illinois our scandals are quite ecumenical, with Republicans eager to help Democrats steal whatever they can grab.

In Solyndra, like any proper City Hall political scandal, there are similar archetypes.

There are the guys who count. The guys who bring the cash. They count because they do the counting. They have leverage. They're always there at the fundraisers. And so they're the ones who are allowed to gorge at the public trough.

The bureaucrats are the fulcrum so the guys with the leverage can lift great weight without too much effort. And while they might whine privately among themselves, they don't hold news conferences to blow the whistle.

They keep their mouths shut until the deal is done. If anyone gets caught and the problem becomes public, at least they've got email to cover their behinds. And they're doing a good job covering.

But there's one group that doesn't get their behinds covered.

Instead, their behinds are right out there, suspended foolishly, and waiting to get kicked.

We're the taxpayers — in Illinois we call ourselves chumbolones because we're the ones who stupidly end up covering all the losses. As in the Solyndra mess.

It's the Chicago Way, but instead of a paving or trucking contract, it's a "green" solar panel contract. The company received a $535 million loan.

"The optics of a Solyndra default will be bad," according to a Jan. 31 email from an Office of Management and Budget staffer printed in the Washington Post. "If Solyndra defaults down the road, the optics will arguably be worse later than they would be today. … In addition, the timing will likely coincide with the 2012 campaign season heating up."

I love the use of "optics." It's one of those bloodless words finding favor these days.

"Optics" suggests bureaucrats might think in terms of symbolism, political hieroglyphs, in grand vistas, rather than in hard numbers, like the $535,000,000 that went poof.

But it's not their money, is it? It's ours.

So this is not about Washington optics after all. The Solyndra scandal is about the Washington smell of things.

Those of us from Chicago know exactly what it smells like. And It doesn't smell fresh and green.

Solyndra execs will decline to testify at hearing

Tue Sep 20, 2011 7:26pm GMT
Print | Single Page

Sept 20 (Reuters) - Solyndra LLC's chief executive and chief financial officer will invoke their Fifth Amendment rights and decline to answer any questions put to them at a Congressional hearing on Friday, according to letters from their attorneys obtained by Reuters.

In the letters sent to the House Energy and Commerce Committee's Subcommittee on Oversight and Investigations, attorneys for Solyndra CEO Brian Harrison and CFO W. G. Stover said they advised their clients not to provide testimony during the hearings.

The bankrupt company's $535 million federal loan guarantee is being investigated by the House Energy and Commerce Committee.

Harrison is represented by Orrick, Herrington & Sutcliffe and Stover is represented by Keker & Van Nest.

Solyndra's offices were raided by the FBI two days after the company filed for bankruptcy, although the FBI did not say what prompted the raid. (Reporting by Nichola Groom in Los Angeles, editing by Gerald E. McCormick)


Issa to launch probe of Obama actions on Solyndra, LightSquared

By Justin Sink - 09/20/11 09:55 AM ET

Rep. Darrell Issa (R-Calif.) said Tuesday that his committee plans to investigate government loan programs to private corporations in light of allegations of improper dealings between the White House and failed energy company Solyndra and wireless start-up LightSquared.

"I want to see when the president and his cronies are picking winners and losers… it wasn't because there were large contributions given to them," the chairman of the Oversight and Government Reform Committee said Tuesday morning on C-SPAN.


Issa said the committee was looking at whether it was improper for members of Congress or White House staff to select companies eligible for subsidized government loans when those companies could give campaign donations. Loan programs have been a popular tool to provide funding for popular industries — like tech, green energy, and American auto companies — at more favorable terms than could be secured privately.

The Obama administration has been defending itself against criticism by Republicans that it exerted improper influence to the aid of both companies.

Solyndra abruptly filed for bankruptcy earlier this month, surprising both employees and the administration, which had secured $535 million in low-interest loans for the company.

More from The Hill:
♦ Gibson Guitar is playing a Tea Party tune
♦ Environmental, green groups push back against Gibson
♦ White House doubles down on green energy loans
♦ Rep. Stearns: Fire top Energy Dept. official over Solyndra
♦ LightSquared investor: Influence peddling claims 'disgusting'
♦ Sen. Brown still waiting to play basketball with Obama

Republicans in Congress quickly mocked the bankruptcy as emblematic of the president's green technology initiatives under the stimulus bill — and noted that a key Solyndra investor had been a bundler for the Obama campaign. House Republicans say they have emails showing the White House pressuring Department of Energy bureaucrats to expedite the loan approvals, although the White House has argued that nothing improper occurred.

Republicans have also charged that the White House pressured an Air Force general to revise testimony before a closed congressional hearing to aid LightSquared, a wireless start-up company. Emails between the company and the White House make mention of the fact that the company's CEO would be attending Democratic fundraisers in Washington, and administration officials met with executives from the company on the same day that CEO Sanjiv Ahuja wrote a $30,400 check to the Democratic National Committee. 

The company is facing a tough regulatory road after initial tests showed LightSquared's technology had been found to interfere with military and aviation GPS. But both the company and White House have denied any influence-peddling.


Although Issa did not specifically accuse the White House of wrongdoing, he suggested that government loan programs tempted corruption. 

"This is another reason that crony capitalism … is dangerous, because they're going to pick winners that they ideologically, or in some cases because they support their candidacy, want to see win," Issa said.

The congressman said he also wanted to expand the investigation to see whether congressmen were also exerting influence on the bureaucracy, which is commonly tasked with approving low-interest government loans.

"We see that as a backdoor, easy way to end up with corruption in government," Issa said.

Comments (610)

Solyndra is the classic case of spend-to-win politics that was brought in with Obama.

The Chicago way was to have billionaire Kaiser to bundle money for Obama in exchange for getting a $500M government loan guarantee.

Isaa should have plenty of witnesses ready to cover themselves by exposing others.
BY Fred on 09/20/2011 at 10:19
But I bet he NEVER investigates the $2 TRILLION that the Pentagon LOST.

Or how about the $10 BILLION that Paulson gave away to Goldman Sachs.
BY gone fishing on 09/20/2011 at 10:27
I see this man still trying to make a name for himself. Why do this clown investagate the Bush Administration for war crimes if he wants to be taken seriously. This will be another dead in hunt because Solyndra started with BushBY party of no plan on 09/20/2011 at 10:27
I want to see when the president and his cronies are picking winners and losers… it wasn't because there were large contributions given to them," the chairman of the Oversight and Government Reform Committee said Tuesday morning on CSPAN.

If this Issa clown wants to be taken seriously, he needs to start investigation all the war cronies and the Bush Administration. This clown never misses an opportunity to attack President Obama, but continue to give the cronies in Bush Administration. This move was very predicable and this will be just another dead in.
BY Party of no plans on 09/20/2011 at 10:31
Would the Oversight Com. have the authority to investigate fraud so rampant in the Food Stamp Progam..that videos are being posted on YouTube?
The Link is at Drudge. WARNING..language is bad. THE EBT ..FREE FOOD SWIPE CARD…used to try to buy beer..dope..hookers…The guy is rapping and talking about when he wants something..he just swipes swipes..his EBT card..oreos…chips..he goes into McDonalds and just swipes. swipes..gets on a bus and just swipes swipes..
He is singing about when he is done..he just borrows one from his sister…I thought..maybe this is satire? then I thought how many times have I seen this at the grocery..the drugstore..the quickie mart…
LORD HELP THIS NATION..IF THAT MAN IS FOR REAL. AND I THINK HE IS…no wonder the approval rating for Congress is less than 13%. A full scale investigation ..and not by Democrats..or Republicans..but by State Governors..should be done..right now. No wonder we don't have any money. And they take our tax jerks like this can try to buy liquor…junk…ladies of the evening and coke with it? No wonder the Cartels are doing so well in the USA..and endless source of money are those EBT cards. Why can't they use stamps? THERE SHOULD BE SOME SHAME IN GETTING CHARITY IS THIS IS THE RESULT OF BEING 'SENSITIVE".
BY PAT on 09/20/2011 at 10:33
If anybody for one second doesn't think that this "loan" was pushed through so the company could be a centerpiece of the green jobs/climate change bill you have to be kidding me. Already blaming Bush..Whatever…Get over it. Your green job program is failing…(six dollars to make a three dollar part and make it up on volume) Did they ever make any payments on loan. I wonder. 30k checks to the dem party…The dems are like a cheating spouse…deny deny deny. BY the beakinator  on 09/20/2011 at 10:37
There is no way Rep Issa can avoid digging into the stinking pile of corruption surrounding the eco-scam industry and their ties to the Obama administration. Before it is all over, there will be perp walks and jail time for many demrats, and many eco-scammers!BY gone fishing on 09/20/2011 at 10:37
Between this "Solar-gate" & the "Fast & Furious" debacle resulting in BP Agent Terry's murder, this administration's 21st century legacy will make Iran-Contra, Watergate,Teapo t Dome , etc looks like childsplay.BY MJ on 09/20/2011 at 10:37
It has bee over 8 months, Issa still have not found any thing on this Administration. BY party of no plans on 09/20/2011 at 10:38
Issa should investigate to see if Obama does anything that is not crooked. Finding him crooked is a life time job,BY not crooked on 09/20/2011 at 10:38

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White House’s Testimony ‘Guidance’

Sep 19, 2011 11:44 PM EDT

LightSquared, a wireless network backed by billionaire Democratic donor Philip Falcone, could beam broadband Internet everywhere—but some military officials fear it could interfere with critical GPS signals. Now, as The Daily Beast's Eli Lake exclusively reports, two U.S. officials allege the White House tried to influence their testimony to rush key testing, to LightSquare's benefit.

A second government official has come forward saying the White House tried to influence his testimony concerning a wireless broadband project backed by a Democratic donor that military officials fear might impair sensitive satellite navigation systems.

Anthony Russo, director of the National Coordination Office for Space-Based Positioning, Navigation, and Timing, told The Daily Beast he rejected “guidance” from the White House’s Office of Budget and Management suggesting he tell Congress that the government’s concerns about the project by the firm LightSquared could be resolved in 90 days, a timetable favorable to the company’s plans.

“They gave that to me and presumably the other witnesses,” Russo said. “There is one sentence I disagreed with, which said that I thought the testing could be resolved in 90 days. So I took it out.”

Russo said he objected to that language because “I have low confidence that we can complete all of the testing in 90 days.” He estimated that such testing would take at least six months. Russo called the White House efforts to alter his testimony “guidance rather than pressure.”

Russo’s comments come just days after four-star Air Force Gen. William Shelton, who heads U.S. Space Command, told Congress in a classified briefing that he felt pressured by the White House to change his testimony about the same project to make it more favorable to the company.

National Security

Anthony Russo, National Coordination Office, Space-Based Positioning, Navigation and Timing at NOAA, testifies on Capitol Hill in Washington, Sept. 15, 2011., Lauren Victoria Burke / AP Photo

Shelton also rejected the suggested edits and testified he has concerns LightSquared’s project could interfere with Global Positioning Satellite (GPS) signals key to military navigation and targeting systems.

Eric Schultz, a White House spokesman, said the OMB review of the witness testimony was routine and not designed to curry political favor, and that all the witnesses who testified to Congress were allowed to state their concerns about the LightSquared project and its potential ramifications for conflicting with GPS signals.

“Every administration witness testifying at every hearing on LightSquared has been explicit in identifying the problems it would cause for GPS, and that LightSquared should not be allowed to move forward unless those interference issues are resolved,” he said. “If OMB professionals were making sure that testimony before Congress was consistent with administration policy, that means they were doing their jobs because OMB reviews and clears all agency communications with Congress, including testimony, to ensure consistency in the administration’s policy positions.”

“We did not ask for any special favors and we have not asked for any special handouts, and consequently did not receive any special favors or handouts,” Falcone said.

House Republicans now want to know whether the White House’s suggested edits to the testimony amounted to an effort to help the company.

Philip Falcone, who owns a majority stake in LightSquared, told the Beast that while he met with White House officials and a federal regulator he “did not ask for any special favors and we have not asked for any special handouts, and consequently did not receive any special favors or handouts.”

Falcone acknowledged, however, he told anyone in the federal government willing to listen that testing his company’s signal for GPS interference on commercial and military equipment “should not take that long.”

“Everything is already set up, the labs are set up. All we need are the list of devices that need to be tested. We have been telling the people who are asking for the testing of this for months now,” he said in an interview Monday.

The Beast obtained the paragraph the OMB asked government witnesses to insert into their recent congressional testimony, which says in part, “We hope that testing can be complete within 90 days.”

LightSquared has told Congress and regulators that the strength of its signal was approved in the mid 2000s by a Republican-led Federal Communications Commission and that its proposal to convert its satellite license to one for terrestrial mobile wireless devices would not change these interference issues.

Nonetheless, the issue of the timeline for testing is crucial to LightSquared, which wants to build a new wireless broadband service on a spectrum close to GPS signals as part of President Obama’s mandate to expand wireless access for Americans.

“The FCC mandated the most aggressive build-out in the history of telecommunications,” Falcone said. “We expect that we will have consumers on this network by the second half of 2012.”

Harold Furchtgott-Roth, a former Republican-appointed FCC commissioner, said it was highly unusual to put a timeline on the kinds of technical tests discussed in the OMB paragraph.

“Primarily these types of tests sometimes have a finite end and sometimes they don’t,” he said. “Sometimes they go on for long periods of time. To pick a number and say the tests have to end by a certain date is not consistent with commission precedent. Secondly, you don’t know what you will find when you do the test; you can’t predetermine that you will absolutely be finished after 90 days.”

Rep. Paul Broun (R-GA), the chairman of the House Science Committee’s Subcommittee on Investigations and Oversight, said he was troubled that four out of the five government witnesses before his Sept. 8 hearing had “identical language in their written testimony reflecting the administration’s view of the LightSquared project. The language diminished the otherwise blunt assessments the witnesses articulated during the hearing when pressed by committee members.”

Last week, the Center for Public Integrity first reported a batch of emails between LightSquared executives and staffers of the White House Office of Science and Technology Policy (OSTP). The nonprofit investigative journalism organization reported that LightSquared CEO Sanjiv Ahuja met with the chief of staff for OSTP just eight days before Falcone and his wife gave $30,400 each to the Democratic Senatorial Campaign Committee (DSCC). Ahuja also contributed $30,400 to the Democratic Party, though he made the same contribution to the Republican Party in 2009.

Falcone told The Daily Beast he made the donations to the DSCC because his wife was hosting a fundraiser for women in politics. “She asked me to contribute,” he said. “If I had said no, all hell would have broken loose.” He also said in a separate interview with Fox News that he was a registered Republican.

Falcone had one meeting with an official from the OSTP, he told The Daily Beast. He also said he met with FCC Chairman Julius Genachowski in September 2009. “I did not want the FCC to be surprised,” he said. “It was a kind of in and out thing.”

Falcone said he does not believe he has received any favors from the White House. “I met in September of 2009 with somebody from the Office of Science and Technology. I never met Obama and I never met his advisers,” he said. “The discussion was around wireless in the marketplace and some of the things we were thinking and some of the different things we were doing.”

Furchtgott-Roth questioned the process by which the FCC granted a waiver to LightSquared so that it may use its initial license for satellite bandwidth to service terrestrial mobile devices.

“In January the commission said LightSquared could use its license for exclusive terrestrial purposes,” he said. “That decision from January was an unprecedented and surprising development. That they would make this decision at the bureau level and not at the full commission level is just stunning.”

Brophy Sunday 18 September 2011 - 11:08 am | | Brophy Blog

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