Saturday, August 18, 2012

NextEra Energy: Third Largest Power Company in the World is the Third Largest Recipient of DOE Risky Loans; CEO Sits on President Obama's Jobs Council

Lewis Hay, III and President Obama NexEra Energy Viewpoints

Through this special series on green-energy crony-corruption, we’ve been highlighting specific examples of green-energy loan guarantees and grants. What connects each of these cases is that they received fast-tracked approval from the Department of Interior (DOI) for their projects. Of course, they also have many other dots that connect, such as key players with White House visits, raising funds for Democratic campaigns, and serving within government agencies such as the Department of Energy (DOE) or as an appointed member to President Obama’s Jobs Council.

Now we come to the last of our “special seven” series. Like those before it, it contains many inside players and funding from various “stimulus” government programs. While Lewis Hay (the CEO of NextEra Energy) with his White House involvement and friendship with former Florida Governor Charlie Crist make for some juicy details in the NextEra story, we’ll begin with a brief background that will help put this next piece of the green-energy crony-corruption scandal in perspective.

NextEra Energy, Inc. is one of the oldest, third largest, and arguably one of the most solid power companies in the world, with “2011 revenues [that] totaled more than $15.3 billion.” It is estimated by Forbes, that CEO “Hay earns nearly $10 million in total compensation from NextEra.”

NextEra Energy Inc. has two primary subsidiaries:
  • Florida Power & Light is the third largest electricity producer in the US (about which a September 2009 report states: “it's a political dynamo, making millions in political contributions and lobbying assiduously to achieve its goals”).
  • NextEra Energy Resources is the largest generator of energy from sun and wind resources in North America. The company also has the third largest fleet (8) of nuclear powered electricity generating plants in the United States.

With its wealth and widespread influence, the DOE gave this huge energy conglomerate nearly $2 billion of taxpayer money, which includes the two risky projects listed below, plus hundreds of millions more in various stimulus grants.

Desert Sunlight: $1.2 billion
In September 2011, the DOE approved a $1.2 billion loan guarantee for the junk-rated Desert Sunlight project in California. A day after the loan was approved, First Solar, the project developer/owner sold Desert Sunlight to NextEra Energy Resources, LLC, the competitive energy subsidiary of NextEra Energy, Inc. and GE Energy Financial Services. Both CEO's are on President Obama's Job Council: Lewis Hay of NextEra Energy and Jeffrey Immelt of GE.  NOTE (and correction from the column): GE is another top Obama donor, donating $529,855 to his 2008 campaign, while they have raked in more than $3 billion of stimulus money, and counting.

Genesis Solar Project: $681.6 million
But as we reported in the beginning of this series, the Desert Sunlight Project is not the only large DOE “risky” loan that NextEra secured. NextEra Energy Resources also received $681.6 million from the DOE for its Genesis Solar project in Blythe, California. This was one of the few DOE 1705 loans that were not considered junk rated, as S&P placed it at a “lower medium grade.”


Remember that the common denominator of these “special seven” projects was a “fast-tracked DOI approval?” The policy has come back to bite the projects.

According to the Los Angeles Times (LAT), “The $1-billion Genesis Solar Energy Project has been expedited by state and federal regulatory agencies that are eager to demonstrate that the nation can build solar plants quickly to ease dependence on fossil fuels and curb global warming. Instead, the project is providing a cautionary example of how the rush to harness solar power in the desert can go wrong—possibly costing taxpayers hundreds of millions of dollars and dealing an embarrassing blow to the Obama administration's solar initiative.”

The problem is the “expedited” process may endanger the whole project. The House Committee on Government Oversight and Reform’s March 20, 2012 report says, “To expedite site approval, NextEra opted for a less thorough process.” As a result, the site “encroached on the habitat of the endangered kit foxes.” NextEra had to move the foxes prior to grading the site. “Ultimately, seven foxes died from NextEra’s removal process.”

Additionally, there have been concerns of desert tortoises and a “prehistoric human settlement.”

But warring factions within the environmental movement also plague the NextEra Genesis Solar project.

A small environmental group, the Wildlands Conservancy, raised $45 million to preserve 600,000 acres of the Mojave Desert—with the intent that it would be protected forever. The LAT reports, the Wildlands Conservancy bought the land and deeded it to the federal government only to have 50,000 acres of that bequest opened up for solar development. April Sall, the organization’s conservation director says, the group is “watching this big conservation legacy practically go under a bulldozer.” Sall’s group and others are feeling “burned by the rush to build solar projects.”

The small environmental groups are trying to fight utility-scale solar projects while the big national groups, such as the Sierra Club, have “scolded” some of the local chapters for opposing the projects. A national office directive instructed local chapters to “fall in line.”

Michael O'Sullivan, senior vice president of development for NextEra Energy Resources, says that “the problems threaten the entire project” and “the project could become uneconomical.”

If that were to happen, the LAT explains, “80% of the project's outstanding loans would be covered by the federal government, and the U.S. Bureau of Land Management would begin shopping for another renewable energy company that was interested in leasing the property. If there were no takers, the scarred land would be restored with reclamation bond funds.”

Smart-Grid and Wind Energy Grants  

In October 2009, Florida Power & Light (FLP) was awarded the maximum grant amount of $200 milllion for Energy Smart Florida. Interestingly, this is connected to Silver Spring Networks, one of Kleiner Perkins shining green companies, where John Doerr (another jobs council member that was influential in what went into the energy-sector of the 2009-stimulus) and Al Gore are partners, of which their 2008 $75 million investment had scored over $700 million.

The DOE started dishing out billions from the Smart Grid Investment Grant Program (part of the stimulus plan) in August 2009 and awarded select utility companies for particular smart-grid projects––close to sixty percent of Silver Spring “customers” were winners.

In fact, Florida Power and Light, Silver Spring, General Electric, and a few others have joined forces on a Smart Grid Miami project, which was announced in 2009.

(Note: if you are not familiar with the Smart Grid, Brian Sussman’s book Eco-Tyranny offers an overview which includes this: “President Obama cleverly sold it like this: ‘We want to invest in the next-generation of high-speed wireless coverage for 98 percent of Americans. This isn’t just about a faster Internet or being able to friend someone on Facebook. It’s about connecting every corner of America to the digital age.’ The digital age Obama spoke of is the age of Big Brother monitoring your carbon footprint. The Smart Grid’s interactive broadband capability will enable your home’s PCT, HAN, and smart meter to be connected and communicating with your utility provider. Once complete, the utility company will be your government-sponsored Big Brother, constantly monitoring and regulating your carbon footprint. With a bureaucratic keystroke any electrical device in your home could be selectively turned off—or on—without your approval.”)

Also, you'll be “blown away” by the billions ($4.4) of “wind energy grants” that blew out of the stimulus package back in February 2010. General Electric is connected to at least 26% of these wind energy grants as the “Turbine Manufacturer.” NextEra is the “project owner” and the recipient of a $99.9 million grant for a wind project in Colorado.


So, NextEra Energy, a multi-billion dollar company with a CEO who’s paid multi-millions, gets government grants and loan guarantees worth billions for risky projects that you and I wouldn’t have voluntarily invested in that even the environmentalists can’t agree on.

Despite the fact that NextEra CEO Hay was actually a “major political contributor to Sen. John McCain,” Hay quickly learned which side his bread was buttered on. (FPL employees and PACs have been known to give generously to both sides including $18,800 to Obama’s 2008 Presidential campaign.) On October 8, 2009, Hay dined at the White House in an intimate lunch “with President Barack Obama and a handful of other Fortune 500 executives.” Hay reportedly “boasted to the president about FPL Group’s environmental achievements and Florida Power & Light’s plans to open the nation’s largest solar power plant.” He also “discussed his belief that forward-looking, clean-energy policies are vital to America’s economic recovery and FPL Group’s strong support for legislation to combat global warming and strengthen America’s energy security.”

The opportunity to grandstand obviously worked. Later, in the same month, Hay’s FPL’s DeSoto Next Generation Solar Energy Center in Aracadia, Florida, provided Obama with the perfect backdrop for his announcement about the “nation’s biggest investment in clean energy.” The press release from the White House said: “President Barack Obama today announced the largest single energy grid modernization investment in U.S. history, funding a broad range of technologies that will spur the nation’s transition to a smarter, stronger, more efficient and reliable electric system. … The $3.4 billion in Smart Grid Investment Grant awards are part of the American Reinvestment and Recovery Act.”

While the announcement regarding the smart-grid grant disbursement was like “Christmas morning” for the 100 recipients, FPL received the maximum $200 million grant, as previously addressed, “to buy 2.6 million new smart utility meters to be placed in homes over the next two years and invest in other technology aimed at cutting energy costs.” And those risky loan guarantees issued to NextEra for the Desert Sunlight and Genesis Solar projects were approved after Obama’s “stimulus PR swing” appearance at FPL’s DeSoto Next Generation Solar Energy Center.

Hay and FPL have a long history of political contributions and have a “cozy relationship” with career politician former Governor Charlie Crist—Republican turned Independent to run against Marco Rubio in 2010, only to lose. In June 2009, FPL and its executives donated more than $36,000 to Crist’s Senate campaign, and Hay was an invited guest at Crist’s December 2008 wedding. While, we don’t know if Hay actually attended the Crist wedding, we do know that he donated to Marco Rubio’s 2010 campaign––what a difference two years make.

Thomas Saporito, an energy consultant and former FPL employee is quoted as saying: “It certainly appears to me that Gov. Crist and certain PSC Commissioners have a very cozy relationship with FPL at a time when FPL is seeking an unprecedented $1.3-billion dollar rate increase.” Crist announced his opposition to FPL's rate hike but objections were limited to a press release and a few comments to reporters.

President Obama's Council on Jobs and Competitiveness

Keeping with the “cozy relationship” model of doing business, Hay joined wealthy Democratic donors on Obama’s Jobs Council in 2011—of which at least five members have direct ties (two indirect) to firms that were awarded billions of clean-energy stimulus money and four are confirmed Obama donors.

A Jobs Council by the way –– those advising President Obama on how to create jobs and grow the economy ––  "is full of deep-pocket Democratic donors and high-profile financiers of Obama’s re-election campaign," as reported by ABC News in October 2011. 

Since the creation of the President’s Council on Jobs and Competitiveness, the members have pushed for renewable energy subsidies. In October 2011, these Obama advisors who’ve financially benefited from green energy projects—such as Hay—issued a report calling for among other things, “a new federal financing program to attract private investment for clean energy projects via loan guarantees and other tools.”

Hay is just one of the many Council members with green energy connections. Citigroup’s Richard Parsons with ties to SolarReserve, as well as Penny Pritker, who wears many liberal hats, including those close to the president. Pritker brings along her relationship to the $465 million DOE ATVM loan that went to Telsa Motors, which also has quite a few other interesting ties, like Steve Westly, Obama bundler and DOE Advisor. We also find GE’s Jeffrey Immelt and its $3 billion of green-government subsidies, as well as John Doerr of Kleiner Perkins, who has Al Gore as a partner –– where as of 2010 we find that more than fifty percent of its Greentech Portfolio had received money from the energy-sector of the stimulus package and through other government programs approved by the Obama administration.

These Jobs Council members, also known for their “job outsourcing” –– and others like DOE Insiders and the Stimulus Authors –– who’ve benefited from the deal making, deserve a more thorough (forthcoming) exposé. We’ll call it “Spreading the Wealth to Obama’s Wealthy Jobs Council Members.”

Author’s note: Thanks to Christine Lakatos, the Green Corruption blogger, for research assistance. Unless project-specific funding is raised, this will be the last in the green-energy crony-corruption series.

Published at August 17, 2012 as Third Largest Power Company in the World is the Third Largest Recipient of Risky Loans -- the final installment of our Special Seven Series, whereas: 
  • “Seven solar (two of which are geothermal) companies received fast-tracked approval by the Department of the Interior to lease federal lands in a no-bid process: Abengoa Solar, BrightSource Energy, First Solar, Nevada Geothermal Power, NextEra Energy Resources, Ormat Nevada, and SolarReserve,” as reported by the Washington Free Beacon in April 2012. 
  • Each of these seven companies received billions of DOE funds under the 1705 loan program as well as renewable energy grants from the Treasury Department—despite “junk bond” status. 
  • Christine's research of the DOE's 1705 Loan Guarantee Program, which she reported on in April 2012 –– Department of Energy “Junk Loans” and Cronyism, noted that 90 percent have "meaningful" ties to President Obama and other high-ranking Democrats –– or both.
  • We found these Special Seven on that DOE "junk" bond  portfolio, of which all have connections to President Obama and other high-ranking Democrats like Senator Harry Reid that has ties to at least four. 
  • Moreover, these 90 percent have plenty of Obama and Democrat "cronies" in the mix:  bundlers, donors, investors, operatives, lobbyists, aides, buddies, relatives, and so on. Throw in some White House appointees, staffers as wells as DOE Insiders (former and present), and you've got yourself a tangled web of "green" cronyism and corruption. 
That said, there is much more to expose...

Wednesday, August 15, 2012

Beacon Bust Tied to Obama Bundler and VP Hunter, the Infamous Washington Fixture, James A. Johnson

As I mentioned at the end of my Abound Solar report, this piece of the green corruption scandal will cause your head to explode. Beacon Power Corporation is one of the three renewable energy projects funded with $16 billion worth of excessively risky loans by the Department of Energy (DOE), which have since gone bankrupt.

I also covered the July 18th House Oversight hearing that revealed (amongst other things), shady email practices by former DOE Loan Advisor Jonathan Silver.

In fact, this is Part Four of DOE “Junk” Loans and Cronyism, exposing the 90 percent that have "meaningful" ties to President Obama and other high-ranking Democrats –– or both. As previously pointed out, there were 460 applications submitted, and only 7 percent were winners. It turns out that 21 firms represent the 26 projects (the 7%) that were funded by the DOE's 1705 Loan Guarantee Program, of which 23 were "junk" rated.

Of course if you ask the DOE, they were all based on "merit."

Beacon Power Corporation is on that DOE “junk bond" portfolio with one of the worst ratings –– CCC+ conducted by S&P in April 2010 that incorporated their anticipated $43 million loan guarantee.

As revealed in the March 20, 2012 House Oversight investigation, “Before its demise, Beacon Power relied on funding from the federal government. DOE gave Beacon Power over $25 million in grants. However, the largest investment came when DOE announced a conditional $43 million loan guarantee to Beacon Power on July 2, 2009, to create a 20 megawatt flywheel energy storage plant in Stephentown, New York.”

Despite the fact that S&P ran two default scenarios with dismal conclusions, and its own internal analysis, the DOE “ignored these warnings and finalized the loan guarantee in August 2010.” And, as predicted, just over a year later, Beacon went bust.

Unlike Solyndra ($535 million) and Abound Solar ($400 million), it wasn’t a huge loan, yet as you will see, this story consists of at least $170 million of taxpayer money –– not exactly chump change. Nonetheless, like Solyndra (Ener1 and SpectraWatt, to name a few) Beacon Power had the nerve to pay their executives bonuses in the midst of their fall. According to ABC News, “In March 2010, the Massachusetts energy storage company paid cash bonuses of $259,285 to three executives in part due to progress made on the $43 million energy loan” –– and the ink wasn't even dry yet.

The Infamous Washington Fixture, Jim Johnson

Most of you may be familiar with Beacon Power, maybe even the details I have just outlined. But did you know that Beacon Power is connected to the infamous Washington insider, James A. Johnson? Also known as Jim Johnson, “a fixture of establishment Washington, with ties to Wall Street and "a major presence in Democratic politics for more than two decades."

Wall Street was a major supporter of Obama in 2008. Despite the president's anti-Wall Street rhetoric and contrary to popular perception, they are still giving "big cash" to Obama's 2012 reelection bid. Johnson came from Lehman Brothers and serves on the Board of Directors of the Goldman Sachs Group, Inc., both top 2008 Obama donors that have also cashed in on "green" (renewable energy government money) –– Goldman Sachs with their DNA all over this green corruption scandal.

But there’s more…

Johnson “was listed as a campaign fundraising bundler for Obama in the 2008 race and committed to raising $200,000 to $500,000 for the upcoming [2012] presidential race,” as reported by the Washington Post in 2011. The Post goes on, "Johnson had supported Obama as a young senator," and "personally donated $55,400 to Obama’s two presidential campaigns, including a $35,800 check listed on Aug. 29 [2011] to Obama’s reelection effort."

Furthermore, Johnson headed Obama’s vice presidential selection committee in 2008; however, news surfaced that Johnson resigned his Obama VP vetting role amidst criticism over his part in the Countrywide Financial scandal. Ironically, during the 2008 presidential campaign, Team Obama condemned Senator Hillary Clinton's campaign for its Countrywide connections.

Johnson is no stranger to scandals. This is the same Mr. Johnson that ran Fannie Mae for almost a decade (1990 to 1999), as Vice Chairman to Chairman and CEO, another scandal of epic proportions that “centers around Johnson." This plot, from what I gather, “helped sink the American economy,” costing taxpayers about "$153 billion, thus far.”

A scandal –– as articulated by a 2011 New York Times Op-Ed by David Brooks, stemming mainly from the book Reckless Endangerment –– that implicates "dozens of the most respected members of the Washington establishment.” Whereas, “Johnson and other executives kept $2.1 billion for themselves and their shareholders. They used it to further the cause –– expanding their clout, their salaries and their bonuses.” Yet, “only two of the characters in this tale come off as egregiously immoral. Johnson made $100 million while supposedly helping the poor,” while former Massachusetts Representative Barney Frank kept his head in the sand.

Can anyone tell me why there have been no indictments here?

Johnson is not immune to “controversial executive compensation decisions in recent years” either that not only included those in the private sector, but inside Fannie Mae. As reported by The Washington Post back in 2008, “The accounting manipulation for 1998 resulted in the maximum payouts to Fannie Mae's senior executives –– $1.9 million in Johnson's case –– when the company's performance that year would have otherwise resulted in no bonuses at all.”

Still, these executive bonuses have been off President Obama's "attack radar," as are the energy firms that received government funding from his administration, which are implementing the same shameful bonus rewarding practices.

Perseus Energy & Technologies Portfolio: Three Green Stimulus Sweetheart Deals, Two Went Bust; Also Stands to Benefit from Nat Gas Act

While Mr. Johnson escaped the president's VP vetting table, he made it to Obama’s green energy table. From April 2001 until June 2012, Johnson served as the the Vice Chairman of Perseus, LLC, a merchant banking and private equity firm, whose portfolio includes quite a few winners of taxpayer funds, starting with Beacon Power and Evergreen Solar, Inc –– Perseus portfolio companies listed as Energy and Energy Technology investments, of which both were winners of stimulus money and went bankrupt.

The Beacon Bust

As mentioned, Beacon Power Corp. received over $25 million in DOE grants and a DOE loan for $43 million that was announced in July 2009, and solidified in August 2010 –– only to go bust in October 2011.

The Beacon Bust connection is not limited to Mr. Johnson. As revealed in the House Oversight investigation, and told by The Daily Caller in 2011, “Beacon Power’s CEO and president [F. William “Bill” Capp]" and other executives donated generously to Obama and other Democratic Party candidates.

We've established Johnson as a 2008 Obama bundler, and is reported be bundling for the president again, while personally donating to both of Obama's campaigns. However it's important to note that "Perseus officers have donated $120,700 to Obama and the Democratic Party’s top three fundraising committees since the 2007-08 election cycle."

The Evergreen Solar Shut Out

Evergreen Solar, Inc. –– now Evergreen Solar (China) –– was one of the Obama administration’s pet green energy projects, which apparently received "stimulus funds, grants, tax-credits, low-interest loans and subsidies." However, we don't know exactly how much or when. But we do know that in 2008, Governor of Massachusetts Deval Patrick made a speech to congratulate the expansion of Evergreen Solar in his state, touting the partnership as “what we must do to grow our economy and save our planet.” Further, we know that Evergreen collected a "$58 million financial aid package from the Patrick-Murray administration to support Evergreen’s $450 million factory."

The problem with tracking just how much taxpayer money Evergreen collected is that at the time their bankruptcy was publicized in August of 2011, the data went missing from federal records. Nevertheless, in April 2009, the White House announced Evergreen as a “green jobs creator," claiming that the Recovery Act was working  –– they were noted as a beneficiary of federal ARRA (American Recovery and Reinvestment Act), stimulus funds,” as dug up by David Mastio at the Washington Times.

Also, Governor Patrick cited Evergreen Solar as receiving stimulus money, while the state of Massachusetts had put out a press release, naming Evergreen Solar’s involvement with a project funded by the stimulus. Evergreen Solar put out its own press release in October 2010, noting that their panels were all compliant with the ARRA and could be used by projects funded by the stimulus.

A few news publications did pay homage to some of the stimulus awards while broadcasting Evergreen Solar’s demise –– they filed for bankruptcy in August of 2011, reporting 800 USA job losses, while moving their "green jobs" and entire company to China.

How much taxpayer money did Evergreen Solar take down the bankruptcy tubes (or to China)?  According to News Busters Tom Blumer: "unreported and impossible to track," best answers that question.

VPG Gets ATVM Loan and Green Car Cronyism

In March 2011, the Vehicle Production Group (VPG Holdings LLC), "a Miami start-up that is manufacturing wheelchair-accessible cars and taxis” received a $50 million ATVM loan from the DOE.

October rolled around, and "Surprise! Another Obama bundler benefits from 'green-tech' subsidies" read the headlines from the Washington Post, which finally connected the green corruption dots to the infamous Mr. Johnson, “An investment firm whose vice chairman has been an adviser and fundraiser for President Obama saw one of its portfolio companies win approval this year for $50 million in loans from the administration’s clean-energy loan program.”

However, the other two, the Beacon Bust and Evergreen Solar Shut Out, were sorely missed by the media –– a piece of the green corruption scandal that I've been sitting on for over a year now.

With seventeen companies listed on the Perseus Energy & Technologies Portfolio, I'm sure if we dug deeper, we'd fine more than three. On the other hand, there is one that struck me –– Clean Energy Fuels Corp., T. Boone Pickens’ alternative energy company. I remember digging up some research about Pelosi and Pickens.

Oh yeah, House Minority Leader Nancy Pelosi owns stock in that company, and Clean Energy Fuels Corp. stands to be the biggest beneficiary of passage of the Nat Gas Act that, so far, was voted down by the Senate in March of this year. This is another piece of legislation that will not only benefit those listed here (Mr. Johnson too), but others like George Soros, another major Obama connection and green corruption player –– both noteworthy stories, but for now we'll stay in the "green energy" car lane.

Johnson's firm Perseus was the winner of one of the five ATVM loans that were finalized by the DOE –– part of the DOE loan program, totaling over $34.7 billion of taxpayer money. Of those five, three have close Obama connections. In the summer of 2010, right after I began to follow the "green" stimulus money, I covered two of them. Eventually others took notice like iWatch in late 2011, "Energy's risky $1 billion bet on two politically-connected electric car builders."

They include Fisker Automotive for $529 million to build cars in Finland (haven't a few gone up in flames and what about those layoffs?), which is a Kleiner Perkins investment where John Doerr and Al Gore are partners. Doerr by the way, is not only an Obama donor, but is positioned on Obama's Job Council and had influence on what went into the energy-sector of the 2009-simulus package. Meanwhile Telsa Motors that received $465 million (as of late, had some design problems) is an investment of the "Green Bundler with the Golden Touch," Steve Westly (The Westly Group). Mr. Westly, of course, is a DOE Advisor.

Both of these firms are part of what I call the "elite green group" –– those Obama cronies raking in billions of taxpayer dollars through a multiple of green-government subsidies approved under the Obama administration, mainly from the 2009-stimulus package. This is a group that I have referenced in various parts of this scandal, and I will eventually expose a complete compilation, in order to grasp the extent of favoritism at play here.

Still, at this time we'll continue with the DOE “Junk” Loans and Cronyism, exposing the 90% that have "meaningful" ties (bundlers, donors, etc) to President Obama and other high-ranking Democrats, or both –– with at least four to Senator Harry Reid alone.

Although, I have completed some of these "green" cronyism, corruption cases, exposing President Obama's clean-energy dirt piece by piece –– General Electric and Abound Solar here on Blogcritics, there is much more. In fact, Marita Noon, columnist at, and I have chronicled the Special Seven: Abengoa Solar, First Solar, Nevada Geothermal Power, Ormat Nevada, SolarReserve, BrightSource Energy, and NextEra Energy Resources (Genesis Solar project).

Next up is the Solyndra Saga –– once the poster child for the president's clean-energy initiative, quickly morphed into the template for Obama's "green corruption" scandal (political payback). Yet, as most concluded a while ago, Solyndra is only the tip of this "corrupt" iceberg.

I hope the Obama Team has life jackets.

First published on Blogcritics Magazine, and it made top billing in politics: 
Beacon Bust Tied to Obama Bundler and VP Hunter, the Infamous Washington Fixture, James A. Johnson
At least three green stimulus sweetheart deals went to companies of Jim Johnson’s private banking firm Perseus, where two went BUST, taking over $100 million of taxpayer money down the bankruptcy toilet and USA jobs to China...

Now at Green Corruption –– the place where this entire scandal is being exposed piece by piece until the 2012 election.

Wednesday, August 8, 2012

How Democrats Say "Crony Corruption" in Spanish: Abengoa UPDATED VERSION

We are about to close with the final two installments of this Special Seven series––the renewable energy (mainly solar) firms that not only received billions in Department of Energy (DOE) loans and federal grants, but those that received “preferential treatment” from the Department of Interior to lease federal land in a no-bid process, meaning that they were approved without “adequate vetting.” Whereas the review process for establishing an oil and gas lease on federal land can take up to five years, some of these favored green-energy projects were pushed through in less than a year.

Our first five chapters on Solar Reserve, BrightSource Energy, Nevada Geothermal, Ormat Nevada (the two Nevada companies were featured in one report), and First Solar; revealed a convoluted and tangled trail of political ties in each of these green-energy crony-corruption cases.

This chapter looks at the Spanish company Abengoa that received more than $2.8 billion in loans and grants—making them the second largest recipient of the $16 billion doled out through the DOE 1705 loan guarantee program.

From the introduction of this serialized book, the thumbnail says:

Abengoa has two solar projects: Solana and Mojave Solar. Solana’s Fitch rating is BB+. Just before Christmas, 2010, the company received $1.45 billion from the DOE for a solar thermal plant, to use parabolic trough technology in Gila Bend, AZ. Mojave Solar’s rating was BB. Yet the company received $1.2 billion in September 2011 for its solar assembly collection project in San Bernardino County, CA. Abengoa has connections to California’s Democratic Senator Dianne Feinstein.

In addition to the two solar projects listed above, Abengoa also has a biofuel project located in Kansas, which Fitch rated CCC, that got a $132.4 million loan in August 2010.

As a report on Abengoa from the Institute for Energy Research says: “It’s true, a loan guarantee is not the same thing as an explicit subsidy. So long as Abengoa Solar doesn’t default on its loans, the US taxpayer hasn’t kicked in anything. Nonetheless, the whole reason Abengoa Solar had to get the guarantee from the government is that no private lender thought the risk was worth it. It is not ‘costless’ for the US taxpayer to be on the hook in this fashion.”

So how did such a poorly rated, non-American company get billions in US taxpayer loan guarantees? Can you say “crony corruption?” In short, Abengoa has a cadre of cronies in high places which includes Al Gore, former New Mexico Governor Bill Richardson, Senator Dianne Feinstein, and, of course, President Obama—plus, many others whose names you’ve probably never heard of.

Friends in high places

In 2007, Gore’s UK-based Generation Investment Management (GIM) bought a stake in Abengoa. He has extolled Abengoa for years, visiting “the largest solar platform in Europe” (operated by Abengoa) in October 2008 and delivering a high-powered speech at the company's Spanish headquarters in October 2010. GIM Advisory Board Member Mario Molino also serves on Abengoa’s Advisory Committee. GIM was started in 2004 by Al Gore and several Goldman Sachs’ big wigs, including David Blood, Mark Ferguson, and Peter Harris. (Note: Goldman Sachs was a top Obama donor in 2008.)

Bill Richardson is who got me chasing this whole green-energy crony-corruption scandal in the first place as my column addressing his crony capitalism is how I got connected with Christine Lakatos—who’s been researching this for years. Here in the middle of the Abengoa story is my former governor! Richardson has long been a supporter of solar energy, giving now-defunct Schott Solar $16 million in New Mexican state funds—so it is appropriate that he be involved here, too. Under President Clinton, Richardson served as the Secretary of Energy—leading the DOE—for three years. President Obama tapped Richardson to be his Secretary of Commerce but personal scandals kept him from passing the vetting—he withdrew his nomination. (Remember, John Bryson—former CEO of BrightSource—did become Secretary of Commerce.) With this vast résumé, Abengoa CEO Manuel Sanchez Ortega, felt that Abengoa was “extremely fortunate” to have Richardson’s “extensive knowledge of the renewable energy sector and his background in public policy” join Abengoa’s Advisory Board in March of 2011—which is reportedly a paid position. Richardson’s policies while Governor benefitted Abengoa. One of Abengoa’s DOE loans came through after Richardson joined the Advisory Board.

My introduction teased California Senator Dianne Feinstein’s involvement in Abengoa. Admittedly, direct connections are minor: she wrote a letter to the DOI on behalf of Abengoa asking the DOI to speed up the permitting process for accessing private land for DOE loan guarantees. One of the projects is in California, so advocating for it would seem reasonable. However, her husband, Richard Blum, is Chairman and President of Blum Capital, an equity investment management firm with investments in bio-fuel companies and Abengoa has a bio-fuel company—though, so far, no Blum investments in Abengoa Bioenergy Biomass of Kansas, LLC have been found. Feinstein has been accused of arranging to have the US Navy buy bio fuels from her husband, so a connection to Abengoa would not be unexpected. Feinstein is no stranger to conflict of interest and PG & E may be the bigger player in this story, as they are one of her largest campaign donors (2010 & 2012), and they have a contract to buy California’s required renewable energy from Abengoa—along with five other projects that got DOE loans. One last Feinstein/Abengoa link: Fred Morse—Senior Advisor of US Operations for Abengoa. Dr. Morse, who interestingly was a member of the New Mexico CSP Task Force, donated $1000 to Feinstein.

                             The "Green Corruption" Plot Thickens with Pacific Gas & Electric 

According to The Washington Free Beacon... Pacific Gas & Cronyism: Politically connected utility plays corporate bully, makes bank on green energy

PG&E maintains a strong political presence in Washington, D.C., having spent $81.4 million on lobbying since 2008. The company’s political action committee has given nearly $380,000 to Democrats since 2008, more than double the amount it gave to Republicans during that same time. PG&E corporate officers and board members have given tens of thousands of dollars to President Obama and other Democrats since 2007.

The company is actively involved in California politics as well, primarily in support of Democrats. In 2010, PG&E gave more than $1 million to Democratic candidates, and more than $645,000 to the California Democratic Party. Gov. Jerry Brown (D) received $31,580.

Former PG&E employees currently hold, or previously held, high-ranking government positions at the state and federal level, furthering the company’s influence.

Further, remember those condemning emails exposed by the House Oversight Committee during their May 2012 hearing when questioning John Woolard, CEO of BrightSource. Whereas, Woolard had emailed Matt Rogers, who was then Senior Advisor to the Secretary of Energy for the Recovery Act and played a significant role in disbursing funds to renewable energy companies. That particular email stated, "Darbee at PG & E talked directly to Obama about the program's challenges and the bad situation it puts him in." Now, "Darbee" refers to Peter Darbee, then-CEO and chairman of Pacific Gas and Electric, and it looks like he had communications with the president, it just remains to be seen how many times and about how many of these energy projects. 

After all, "in large part due to statutory requirements under California’s Renewable Portfolio Standard," PG& E has an "invested interested" in getting these renewable sources going. "PG&E is the sole purchaser of power from a number of green energy projects financed with taxpayer dollars. Six solar projects [Abengoa and BrightSource are just two] that will sell power to PG&E have received a combined $5.5 billion in taxpayer-backed DOE loans, nearly one-third of the total funding allocated for the program in the stimulus package."

                                                               Back to Abengoa

Fred Morse provides a perfect transition to the lobbyists and their connections, as Morse is a lobbyist for Abengoa with DOE roots. Morse was Executive Director of the White House Assessment of Solar Energy as a National Resource, serving in the Nixon, Carter, and Regan administrations and is thought of as Abengoa’s most credentialed conduit to policymakers. He currently sits on the board of various solar industry groups.

While Morse may be the “most credentialed conduit,” he is not the most interesting story. The "most-interesting" moniker would have to go to either Mark Rokala or Santiago Seage—you decide.

Before joining Abengoa, Seage was a partner with McKinsey & Company (another 2008 Obama donor)—where Jonathan Silver, the former executive director of the Energy Department’s loan guarantee program, started his career and Matt Rogers, a former senior adviser on the Recovery Act, was an executive. When Rogers left the DOE in September 2010, he returned to McKinsey & Company at their San Francisco office.  A handful of McKinsey & Company executives sit on Obama’s Jobs Council. Making the connections more provocative, we find that Silver held parties for Gore.

Abengoa’s lobbying efforts are headed up by Mark Rokala, a founding member of Cornerstone Government Affairs—which has received $870,000 from Abengoa in lobbying fees. Rokala came to Cornerstone from the PMA Group, which was shuttered in 2008 following a pay-to-play scandal—in which late Democratic Rep. John Murtha directed $137 million in government contracts to PMA clients, which in turn donated $2.37 million to Murtha and other Democratic congressmen who sat on the appropriations committee. PMA’s president, Paul Magliocchetto, is serving a 27-month federal sentence for illegal campaign contributions. Rokala has been a lobbyist for more than 20 years, the last seven in energy policy, and has served as legislative assistant for a Democrat senator.

Abengoa spent $540,000 on lobbying efforts for just 2011, with $160,000 going to Cornerstone Government Affairs.


More than $80 billion was earmarked for green energy in the 2009 stimulus package—which was sold to the American people as a means to stimulate the economy and create jobs. So, what kind of bang for our buck did we get from the $2.8 billion we gave to Abengoa? The Institute for Energy Research reports “the DOE’s own fact sheet claims that the Solana project has created 1,700 temporary construction jobs, while yielding a permanent 60 jobs ‘created or saved.’ Simple division shows that the $1.45 billion guarantee therefore works out to $824,000 per job (when we include the temporary construction ones), and a whopping $24.2 million per permanent job ‘created or saved.’ The numbers are similar for the more recent Mojave Solar project. For a guarantee of $1.2 billion, the DOE estimates it will create 830 temporary construction jobs, and will ‘create or save’ 70 permanent jobs. This works out to $1.33 million per job (including temporary ones), and $17.1 million per permanent job.”

The report from the March 20, 2012, hearing of the House Oversight and Government Reform Committee looking into the green-energy, crony-corruption debacle says this about the loans to Abengoa: “A single Spanish firm, Abengoa…reveals excessive risk. … making this concentration of investment in one  company  speculative and highly questionable.”

What is truly questionable is why did the DOE take “excessive risk” in giving $2.8 billion to a Spanish firm? The answer is friends in high places. Abengoa got a good return for its investment. They spent hundreds of thousands in lobbying fees, hired some big guns like former Governor Bill Richardson, and made friends with the likes of Al Gore—and what do they get in return? $2.8 billion in American taxpayer dollars.

What have your friends done for you lately?

Author’s note: Thanks to Christine Lakatos, the Green Corruption blogger, for research assistance.

This is Part Five of the Special Seven Series, Obama's Green-Energy, Crony, Corruption brought to you by Marita Noon and Christine Lakatos with the final installment to be published this week. However, we are just getting started –– stay tuned because there is much more Green Corruption to be exposed...