Fisker Automotive grilled by Congress for financial troubles
A House committee is investigating whether the automaker used political connections to get its $529 million loan and how well the government was tracking its performance.
Fisker Automotive executives testified before Congress on Wednesday in a battle for their company's credibility -- and creditworthiness -- as the electric automaker faces bankruptcy and falls behind on government loan payments.
The House Committee on Oversight and Government Reform, chaired by Rep. Darrell Issa, R-Calif., alleged that the automaker may have used political connections to gain clout over other companies competing for funds under the $8.4 billion Advanced Technology Vehicles Manufacturing program, originally created by President George W. Bush in 2008.
At issue was the Energy Department’s communication with Fisker after it approved a $529 million loan in 2010 and quietly halted funding in June 2011 when the automaker missed its financial milestones. The loan seizure was not publicly announced until early 2012. So far, Fisker has drawn $192 million and missed its first payment on Monday. On Tuesday, the department forced a $21 million withdrawal from Fisker's reserve account.
In his opening statement, Former Fisker Chairman Henrik Fisker said that the company "met initial milestones before informing the department that it would not meet certain future milestones on time."
The timing of this information was heavily debated during Wednesday's hearing, with some media reports saying that Fisker was in jeopardy well in advance of its loan seizure in June 2011.
The Associated Press reported that a department official wrote in June 2010 that Fisker "may be in limbo due to a lack of compliance with financial covenants" and that a separate document listed Fisker's missed milestones. In December 2011, Fisker told shareholders it "will not meet certain financial covenants and project milestones" required by the loan agreement, which included earnings and profit benchmarks, according to Reuters. Fisker allegedly also had a junk bond rating, the committee said.
Issa said that former loan director Jonathan Silver, a venture capitalist who quit in October 2011 after the Solyndra bankruptcy and that solar company's connections to the Obama administration, had violated the Federal Records Act by using personal emails to purposely keep internal business discussions off the record. Whether or not these emails were related to Fisker is unclear, Issa said.
The first Karma was delivered in late 2011, and just 2,000 of the $103,000 plug-in hybrid sedans have been sold.
Fisker, current Chief Operating Officer Bernhard Koehler and Nicholas Whitcombe, an investment officer in the loans office for the Energy Department, all said they were not aware of any political connections made to favor Fisker. John Doerr, a partner of venture capital firm Kleiner Perkins, which had invested "10 to 100 million dollars" in Fisker before the loan was approved, is on President Barack Obama's Council on Jobs and Competitiveness. Al Gore is the second partner and one of Fisker's first customers.
The ranking Democrat on the committee Rep. Elijah Cummings, D-Md., was more defensive of the loan process and blamed Republicans for their "false and irresponsible claims that this program is nothing more than the Obama administration rewarding political cronies."
Issa said he wasn't against the loan program and had in fact helped a now-failed automaker in his district, Aptera, to apply for loans, but said that the department needed to "get it right upfront and minimize losses" when considering loaning millions to startup companies.
"We want to make sure there's no gamesmanship in terms of having multiple loans for the same technology," he said.
Earlier this month, Fisker fired nearly three-quarters of its workforce -- about 160 employees, including the entire public-relations department -- and was then hit with a California lawsuit for not notifying employees at least 60 days prior to a mass layoff.
In March, company founder and Executive Chairman Henrik Fisker quit over "major disagreements" with the board. Fisker Automotive has been trying to sell the company since at least February but no deal has gone through.
[Source: Oversight Committee, et. al; Photo: File/Reuters via NBCNEWS]
I would say "the blind leading the blind" but for the fact that there is no "leading" in our government.
Congress couldn't grill a hot dog.
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