A Center for Public Integrity and ABC News investigation found that green energy companies that received tax payer backed loans from the Obama administration, gave it’s top executives six-figure bonuses before filing for bankruptcy.
In March 2010 Beacon Power Corp., a Massachusetts energy storage company, paid out cash bonuses of $259,285 to three executives, Securities and Exchange Commission records show.
Last October, Beacon Power filed for Chapter 11 bankruptcy.
Ener1 subsidiary EnerDel, maker of lithium-ion battery systems, landed a $118.5 million energy grant in August 2009. Corporate parent Ener1 paid $725,000 in bonuses to three executives, including $450,000 to then-CEO Charles Gassenheimer. In 2010 Vice President Joe Biden toured a EnerDel plant in Indiana and championed its taxpayer-supported expansion as one of the “100 Recovery Act Projects That Are Changing America.”
This January, Ener1 filed for Chapter 11 bankruptcy protection.
At least two other firms that received Energy Department funding, one a $500,000 grant, the other a $535 million loan guarantee, handed out large bonuses to executives and later went bankrupt.
When asked about the pay outs by CPI and ABC News, the Department of Energy said it is troubled by the practice and intends to convey that message to loan recipients.
“We don’t begrudge companies or their executives for their success, but it is irresponsible for executives to be awarded bonus compensation when their workers are losing their jobs. We take our role as stewards of taxpayer dollars very seriously, and as such, we will make clear to loan recipients our view that funds should not be directed toward executive bonuses when the rest of the company is facing financial difficulty.” said department spokeswoman Jen Stutsman.
The nonprofit Citizens Against Government Waste counts nearly 20 government-backed energy companies that have run into financial trouble ranging from layoffs to losses to bankruptcies. An outside consultant hired by the White House said the Energy Department’s loan pool includes $2.7 billion in potentially risky loans and suggests the agency hire a “chief risk officer” to help minimize problems.
“Giving a bonus to the executives under these circumstances is rewarding failure with our money with no chance of getting it back,” said Leslie Paige, spokeswoman for the nonpartisanCitizens Against Government Waste.’
Solyndra, the first recipient of an Obama green energy loan, was among the companies to dole out thousands in executive payments, in its case, just months prior to its late August collapse and early September bankruptcy.
In interviews, executives with companies that got tax payer backed loans defended the payments as proper. Some said bonuses were granted for work done in a previous year, before financial problems had fully developed, and that the executive cash infusions were sometimes linked to broad corporate milestones.
One company executive said the Energy Department explicitly allows for federal funds to be used to pay out executive bonuses.
“Any company that’s going into bankruptcy or any executive that ran a company into bankruptcy shouldn’t be getting bonuses in the first place,” said Sen. Charles Grassley, R-Iowa, former chairman of the Senate Finance Committee. “In the case where there might be federal grants or federal loans, I would be very concerned.”
Grassley added: “The purpose of our grants for energy or almost any other grant of government is for the purpose of innovation. It’s not for the purpose of feathering the nest of a private company executive.”
In recent weeks, several other companies backed by DOE dollars have encountered deep financial woes.
At least six more Energy Department loan and grant recipients, from electric car maker Fisker Automotive to electric-car battery maker A123 Systems to Colorado-based Abound Solar,have laid off workers or suffered financial troubles.
“There were going to be some companies that did not work out,” Obama told reporters in October, after Solyndra’s meltdown. “All I can say is the Department of Energy made these decisions based on their best judgments.”
Rest assured that those decisions were not at all politically motivated.