The Obama administration was warned as early as 2010 that electric car maker Fisker Automotive Inc. was not meeting milestones set up for a half-billion dollar government loan, nearly a year before U.S. officials froze the financing after questions were raised about the company's statements, newly released documents show.
An Energy Department official said in a June 2010 email that Fisker's bid to draw on the federal loan may be jeopardized for failure to meet goals established by the Energy Department.
Despite that warning, Fisker continued to receive money until June 2011, when the Energy Department halted further funding. The agency did so after Fisker presented new information that called into question whether key milestones - including launch of the company's signature, $100,000 Karma hybrid - had been achieved, according to a credit report prepared by the Energy Department.
The December 2011 credit report said "DOE staff asked questions about the delays" in the launch of the Karma "and received varied and incomplete explanations," leading to the suspension of the loan. Fisker had received a total of $192 million of the $529 million loan before it was suspended.
In the June 2010 email, Sandra Claghorn, an official in the Energy Department loan program office, wrote that Fisker "may be in limbo due to a lack of compliance with financial covenants" set up by the department to protect taxpayers in the event of default. Another document, from April 2010, listed milestones that Fisker had not yet met.
Aoife McCarthy, a spokeswoman for the Energy Department, said the June 2010 email was taken out of context.
"The document shows that one person at a meeting discussed the possibility that Fisker might not meet a financial commitment" required by the Energy Department,
McCarthy said in an email late Tuesday. The department received the needed certification five days later and subsequently made the loan payment, she said.
The Associated Press obtained the Fisker documents ahead of a House hearing scheduled for Wednesday on the federal loan to the troubled car maker, which has laid off three-fourths of its workers amid continuing financial and production problems.
The potential loss of $171 million would be largest loss of federal loan money since the 2011 failure of solar panel maker Solyndra. That company's collapse, which came despite a $528 million loan from the Energy Department, has triggered criticism of the Obama administration's green energy program. Fisker received money from a similar loan program started under the Bush administration.
The Energy Department seized $21 million from Fisker this month as it continued to seek repayment from the car maker for the 2009 loan. A payment from Fisker was due Monday but was not made, an Energy Department official said.
A top Energy Department official said the department acted "decisively" to protect taxpayers' interests since Fisker's financial woes became clear nearly two years ago. In testimony prepared for Wednesday's hearing before a House Oversight and Government Reform subcommittee, Nicholas Whitcombe, former acting director of the car loan program, said the department stopped payments to Fisker in June 2011 after the company failed to meet milestones required in the loan agreement.
Since then, "the department has continued to communicate with Fisker as it has sought to revise its business plan and achieve profitability," Whitcombe said in prepared testimony. The Energy Department is "committed to ensuring that the taxpayers' interests are protected to the maximum extent possible," he added.
But Rep. Jim Jordan, chairman of the Oversight subcommittee on economic growth and regulation, said it is hard to understand why the Energy Department ever thought Fisker was a viable company that should receive taxpayer money.
"The Obama administration owes the American taxpayer an explanation as to why this bad loan was made in the first place, and what they are going to do to minimize the loss that taxpayers face," said Jordan, R-Ohio.
http://www.cbsnews.com/8301-250_162-57581104/wh-knew-electric-car-maker-fisker-was-faltering-ap/
Who did not see this coming, it was only a matter of time.
An Energy Department official said in a June 2010 email that Fisker's bid to draw on the federal loan may be jeopardized for failure to meet goals established by the Energy Department.
Despite that warning, Fisker continued to receive money until June 2011, when the Energy Department halted further funding. The agency did so after Fisker presented new information that called into question whether key milestones - including launch of the company's signature, $100,000 Karma hybrid - had been achieved, according to a credit report prepared by the Energy Department.
The December 2011 credit report said "DOE staff asked questions about the delays" in the launch of the Karma "and received varied and incomplete explanations," leading to the suspension of the loan. Fisker had received a total of $192 million of the $529 million loan before it was suspended.
In the June 2010 email, Sandra Claghorn, an official in the Energy Department loan program office, wrote that Fisker "may be in limbo due to a lack of compliance with financial covenants" set up by the department to protect taxpayers in the event of default. Another document, from April 2010, listed milestones that Fisker had not yet met.
Aoife McCarthy, a spokeswoman for the Energy Department, said the June 2010 email was taken out of context.
"The document shows that one person at a meeting discussed the possibility that Fisker might not meet a financial commitment" required by the Energy Department,
McCarthy said in an email late Tuesday. The department received the needed certification five days later and subsequently made the loan payment, she said.
The Associated Press obtained the Fisker documents ahead of a House hearing scheduled for Wednesday on the federal loan to the troubled car maker, which has laid off three-fourths of its workers amid continuing financial and production problems.
The potential loss of $171 million would be largest loss of federal loan money since the 2011 failure of solar panel maker Solyndra. That company's collapse, which came despite a $528 million loan from the Energy Department, has triggered criticism of the Obama administration's green energy program. Fisker received money from a similar loan program started under the Bush administration.
The Energy Department seized $21 million from Fisker this month as it continued to seek repayment from the car maker for the 2009 loan. A payment from Fisker was due Monday but was not made, an Energy Department official said.
A top Energy Department official said the department acted "decisively" to protect taxpayers' interests since Fisker's financial woes became clear nearly two years ago. In testimony prepared for Wednesday's hearing before a House Oversight and Government Reform subcommittee, Nicholas Whitcombe, former acting director of the car loan program, said the department stopped payments to Fisker in June 2011 after the company failed to meet milestones required in the loan agreement.
Since then, "the department has continued to communicate with Fisker as it has sought to revise its business plan and achieve profitability," Whitcombe said in prepared testimony. The Energy Department is "committed to ensuring that the taxpayers' interests are protected to the maximum extent possible," he added.
But Rep. Jim Jordan, chairman of the Oversight subcommittee on economic growth and regulation, said it is hard to understand why the Energy Department ever thought Fisker was a viable company that should receive taxpayer money.
"The Obama administration owes the American taxpayer an explanation as to why this bad loan was made in the first place, and what they are going to do to minimize the loss that taxpayers face," said Jordan, R-Ohio.
http://www.cbsnews.com/8301-250_162-57581104/wh-knew-electric-car-maker-fisker-was-faltering-ap/
Who did not see this coming, it was only a matter of time.
