A financially-troubled Canadian alternative energy company with ties to Senate Majority Leader Harry Reid paid a director the lion's share of $758,828 (CAD) in reported consulting fees, according to an analysis of the filings made by the company. The fee was a part of a consulting agreement in order to successfully arrange a loan guarantee by the Department of Energy.
The loan, made by insurance powerhouse John Hancock, could put taxpayers at risk for 80 percent of both interest and principal due to the insurance company under the terms of the agreement amidst signs that the energy company may be bankrupt by the end of the year.
In the June filings for Canadian-based Nevada Geothermal, which according to the New York Times employs only 22 people in Nevada, the company’s auditors issued “going-concern” warnings that without additional investment or revenues, the company could cease operations.
At stake is about $135 million in financing by the federal government including loan guarantees and grants, says the Times.
The note from auditors Deloitte & Touche LLP’s Canadian office notes that “the Company has incurred net losses over the past several years, has an accumulated deficit of $44.0 million and an anticipated inability to retire its long-term liabilities. These conditions, along with other matters as set forth in Note 1, indicate the existence of material uncertainties that may cast significant doubt about the Company’s ability to continue as a going concern.”
Note 1 states that the company is “not able to service its loan with EIG Global Energy Partners (“EIG”) for the full loan term,” and that company did not have sufficient “power production” to meet the terms of the loan. The EIG loan is in addition to the government guaranteed loan made by John Hancock.
No wonder they gave the director a big, fat bonus. They were able to get a loan guarantee from Obama even though they couldn’t service their existing loan.
It gives a whole new meaning to the phrase: “Occupy Wall Street.”
The fee was detailed in the Consolidated Financial Statements for the 4th Quarter ending June 30th, 2011.
What do you call a loan that’s sub-sub-sub-prime? Guaranteed by Obama, that’s what.
At these negative rates of return, no wonder he wants to tax the rich.
The company’s stock is trading around $0.13 from a 52-week high of $0.89. The downward price on very low volume means that there is a good bet that negotiations with EIG are not going successfully. To be clear, this is an investment that, because it’s a penny stock with low volume, wouldn’t be suitable for even the most speculative of public investors.
So why would the Obama administration, with an assist by Harry Reid, make a loan of this type? Why would they have made any of these loans that look like such bad bets?
I’m guessing that the real beneficiaries of these loan guarantees will be the investors behind the investors.
Nevada Geothermal has a partnership with a company called Ormat Technologies. The head of Ormat Technologies is former Harry Reid energy and public lands staffer Paul Thomsen. Thomsen is the ultimate “clean energy” insider.
According to the Clean Power Campaign Thomsen is “the President to the Board of Directors of the Geothermal Energy Association; serves as past-chairman of the United States Clean Heat and Power Association; is an industry expert on the DOE Geothermal Technologies Program Blue Ribbon Panel; and, sits on Senator Harry Reid’s Blue Ribbon Council on Renewable Energy.”
“Just last month, again with Mr. Reid’s support,” writes the Times, “Ormat secured its own Energy Department loan guarantee, worth $350 million, to help support three other Nevada geothermal projects.”
I expect that as Nevada Geothermal unwinds, Ormat will be there to pick up the pieces for pennies on the dollar.
Only Democrats could make “clean power” so damn dirty.
Last week I wrote that I thought GE and Obama pal, GE head honcho Jeffery Immelt, would be there to buy up all the bad investments by the federal government in the solar business, as indicated by their aggressive move into the industry over the last several months.
First Solar received $2 billion worth of loan guarantees on projects in California in the waning days of the controversial Department of Energy’s loan program. The company then sold the projects to other, better-connected companies within hours of getting the guarantees.
And when I say better connected, I’m not talking transmission lines.
Which other companies you ask?
GE and NextEra Energy.
You might remember them because the executives from GE and NextEra sit on Obama’s jobs council.
This isn’t the first time that people with ties to Reid- and Reid himself- have been accused of dealing improperly in companies tied to the federal government.
A year ago, the Wall Street Journal reported that Reid energy-staffer Chris Miller doubled his money on a stock investment in a company that benefited by Reid’s support of legislation aimed at helping the company, apparently a common enough problem in Congress.
From the Wall Street Journal:
Mr. Miller isn't the only Congressional staffer making such stock bets. At least 72 aides on both sides of the aisle traded shares of companies that their bosses help oversee, according to a Wall Street Journal analysis of more than 3,000 disclosure forms covering trading activity by Capitol Hill staffers for 2008 and 2009.
Insider trading laws are only applicable to you, me and Martha Stewart.
As I noted in an earlier column, in 2008 one month before oil prices took an historic plunge, Senator Harry Reid (D-Healthcare) sold between $15,000 and $50,000 of energy holdings he owned in the Dow Jones Energy Index. In return, he purchased between $15,000 and $50,000 worth of healthcare holdings in the Dow Jones Health Care Index at a time when he was contemplating rewriting healthcare laws. Try convincing members of the public- or anyone outside the DSCC- that the sale and purchase of these indices were just coincidental.
If you’re a liberal, go tell this story to the Occupy Wall Street crowd but use Republican names and say the companies are in the oil patch. Let’s see what they have to say about then.
I’ll wait for you to report back to me.
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PS Part 2- The email function at the top of the page working again. Sorry it took so long. Let the Hate Mail begin!