Tag Archives: John McCain

BP Collecting Millions In Government Stimulus Funds

The federal government is giving a joint venture involving oil giant BP millions of dollars in stimulus money to build a power plant on farmland near the tiny Kern County town of Tupman, even as the company faces heavy government pressure and a criminal probe into the Gulf of Mexico oil spill.

“If I was the government right now, I would not give BP $300 million to do anything.”

Tom Frantz

BP is benefiting from a $308 million federal grant over several years for the cutting-edge power plant on cotton and alfalfa fields seven miles from the western edge of Bakersfield. More than half of the money, $175 million, is coming from stimulus funds. The rest is coming from another federal program.

The stimulus portion alone ranks as the second biggest award in California to a corporation and among the largest in the country benefiting private interests, according to data reported to the government by stimulus recipients, the California Watch reports.

The U.S. Department of Energy announced the grant last year to Hydrogen Energy California, a joint partnership of BP and the multinational mining firm Rio Tinto, and has paid out $13.6 million so far.

The money continues to flow even as the Obama administration bills BP for the massive costs of the oil spill.

“If you’re trying to get money out of them, why are you giving them money?” said Tom Frantz, a local environmental advocate and part-time almond farmer who opposes the power plant.

“If I was the government right now, I would not give BP $300 million to do anything.”

A power plant involving a BP joint venture would be built near the town of Tupman.

A power plant involving a BP joint venture would be built near the town of Tupman.

The stimulus award highlights the disconnect that occurs when the government gives grants and contracts to companies it has fined or prosecuted.

BP, for example, had been fined hundreds of millions of dollars and pleaded guilty to criminal environmental violations before the Gulf spill and before receiving stimulus money.

The involvement of BP in this stimulus project also poses a sticky political calculus, pitting anger at BP against the desire to create jobs and advance alternative energy.

The White House and some congressional critics of BP also support “clean coal” projects like the one this stimulus money will advance.

Critics of the stimulus bill, Sens. John McCain, R-Ariz., and Tom Coburn, R-Okla., issued a report Tuesday that highlighted the Hydrogen Energy plant as one of 100 stimulus projects that waste taxpayer money, stating “BP may have found itself staring down huge financial losses over the past several months, but executives can take solace knowing that a stimulus windfall will help offset them.”

The grant appears to be the only significant stimulus award for BP. A review of the $219 billion in stimulus funds awarded nationwide did not turn up any other major grants to the company.

A spokeswoman for the power plant partnership distanced the project from BP.

“Most people understand that Hydrogen Energy California LLC, and not BP, is the entity that received a DOE (Department of Energy) grant after a competitive solicitation that was conducted, evaluated and awarded in 2009,” Tiffany Rau wrote in an e-mail.

“DOE reimbursements provide cost sharing in HECA’s (Hydrogen Energy California’s) expenses – no money is flowing to BP.”

Hydrogen Energy California is a 50/50 partnership owned by BP and Rio Tinto and registered to a BP address. The project’s manager, as well as Rau, came to the project from BP.

At a public hearing last fall, when a local landowner asked about potential disasters the plant could cause, Gregory Skannal, who worked at BP before becoming the project’s health, safety, security and environmental manager, addressed the question: “One of our parent companies is BP,” he said. “And in that same vein, we do have resources internal to the company that provide security assessments. And those are the resources that we will be relying on in supporting us and doing those assessments to determine vulnerabilities, security measures and consequences.”

BP declined to comment for this story, but departing CEO Tony Hayward had stated in 2007, when announcing the joint venture, that “projects such as these have the potential to help deliver the carbon emission reductions which companies and countries around the world are now seeking. This will only be possible if companies work together and work alongside governments.”

Read the full story at CaliforniaWatch.org.

Related by the Econotwist:

New CEO Isn’t the Long-Term Answer at BP, Expert Says

Readers Response: The BP Conspiracy

Statoil May Buy BP Assets, Expert Says

Fears Of Oil Spill Consequences Subside, CDS Spreads Show

BP Rules Out Issuing New Shares

Response To The BP Derivatives Story

So, You Thought BP Was An OIL Company?


Enhanced by Zemanta


Filed under International Econnomic Politics, National Economic Politics

The Truth, Some Truth And Something Like The Truth

All top executives at Goldman Sachs have Tuesday made their testimonies before the Senate members of the U.S. Congress – including CEO Lloyd Blankfein. They all did their best to defend themselves against the legislation brought against them. Here’s the full transcripts of all the prepared statements, and video recordings of the U.S politicians questioning of the Goldman-leaders.

“What you perceive, your observations, feelings, interpretations, are all your truth. Your truth is important. Yet it is not The Truth.”

Linda Ellinor

The CEO of Goldman Sachs testily defended his company’s ethics and business practices during the nation’s financial crisis on Tuesday, saying customers who bought securities from the Wall Street giant came looking for risk “and that’s what they got.”

“Unfortunately, the housing market went south very quickly,” Lloyd Blankfein told skeptical senators on an investigatory panel. “So people lost money in it.”

He was the final witness in a daylong hearing on Goldman Sachs’ behavior, which resulted in a government civil fraud charge earlier this month.

Five present and two former Goldman officials held their ground in hours of contentious testimony, unflinchingly defending their conduct and denying that the Wall Street investment bank helped cause the near-meltdown of the nation’s financial system.

Sen. Carl Levin, D-Mich., the panel’s chairman cited a “fundamental conflict” in Goldman’s selling securities and then betting against the same securities — and not telling the buyers.

“They’re buying something from you, and you are betting against it. And you want people to trust you. I wouldn’t trust you,” Levin told Blankfein.

Blankfein denied such a conflict. “We do hundreds of thousands, if not millions of transactions a day, as a market maker,” Blankfein said, noting that behind every transaction there was a buyer and a seller, creating both winners and losers.

Here’s the full prepared testimonial of  Lloyd Blankfein.

The following Goldman executives was called in on the carpet before the Senate in today’s hearing:


Chairman and Chief Executive Officer


Former Partner, Head of Mortgages Department

Prepared testimony


Former Managing Director, Structured Products Group Trading

Prepared testimony


Managing Director, Structured Products Group Trading

Prepared testimony


Executive Director, Structured Products Group Trading

Prepared testimony


Executive Vice President and Chief Financial Officer

Prepared testimony


Chief Risk Officer

Prepared testimony

All testimonies provided by Zero Hedge.

The senators asking questions was: Carl Levin Chairman (D-MI), Thomas R. Carper (D-DE), Mark L. Pryor (D-AR), Claire McCaskill (D-MO), Jon Tester (D-MT), Tom Coburn Ranking Member (R-OK), Susan M. Collins (R-ME), John McCain (R-AZ), John Ensign (R-NV).

“I’ve Been Targeted”

Embattled Goldman Sachs Executive Director Fabrice Tourre who was sued by the SEC for fraud told the Senate subcommittee today that he will defend himself in court against the suit.

I deny — categorically — the SECs allegation, Tourre said at a hearing of the Permanent Subcommittee on Investigations. I will defend myself in court against this false claim, he said, adding that a deal at the center of the suit was not designed to fail.

Tourre, 31, and six other current and former Goldman Sachs employees will testify before lawmakers about the firms mortgage-securities business in the years leading up to the economic collapse of 2009.

Inside Goldman Sachs

Here’s the morning report from ABC News, featuring clips from Lloyd Blankfein’s testimony:

The Essential Background Material:

Fitch: The Long-Term Goldman-Effect
Will The Goldman-Case Kill The OTC Market?
Conquering The Devil
Goldman’s Collateralized, Securitized And Synthesized Fraud
Obama: “It Is Time”
Goldman Sachs Charged With Fraud – Here’s The SEC filing
Two Thirds of Americans Support Stricter Financial Regulations
Living In A Derivative World

The H5F-TV Toolbar; built-in radio- and TV channels, news ticker and email notifier.

Reblog this post [with Zemanta]


Filed under International Econnomic Politics, National Economic Politics

U.S. Stimulus Program Pours Millions Into Wine Train Project

The Anchorage-based company Suulutaaq have won a $54 million federal contract to build a new railroad bridge and other structures for the famed Napa Valley Wine Train tourist attraction without competitive bidding. According to a report submitted by Suulutaaq late last year, the $54 million project had so far created 12 jobs – in Alaska.

“It’s an ideal stimulus project. Shovel-ready, green, and it provides jobs.”

Jill Techel

In December, U.S. Senators John McCain, R-Ariz., and Tom Coburn, R-Okla., issued a report listing the Wine Train among 100 stimulus projects that they derided as “silly and shortsighted” and a waste of money.

The corporate shareholders live in tribal villages in the outback of western Alaska, investigative reporter Lance Williams writes in his latest article about the project at californiawatch.com.

The CEO is in South Carolina, where his prior multimillion-dollar venture – a dot-com for sail boaters – collapsed in bankruptcy.

But the main action today is in Napa, where, without competitive bidding, this unusual construction company won a $54 million federal contract to build a new railroad bridge and other structures for the famed Napa Valley Wine Train tourist attraction.

This is the world of Anchorage-based Suulutaaq Inc. Because the company was founded by Alaska natives, it enjoys special access to federal contracts.

That’s how it obtained one of the biggest federal stimulus contracts in California – a key segment of a U.S. Army Corps of Engineers’ flood-control project on the Napa River.

Army and Napa city officials say they’re pleased with Suulutaaq’s work on what they describe as an environmentally friendly project to curtail devastating winter flooding. It’s an ideal stimulus project, says Napa Mayor Jill Techel: “shovel-ready, green, and it provides jobs.”

But in December, U.S. Sens. John McCain, R-Ariz., and Tom Coburn, R-Okla., issued a report listing the Wine Train among 100 stimulus projects that they derided as “silly and shortsighted” and a waste of money.

The lawmakers also suggested the project wasn’t doing much for the economy. According to a report submitted by Suulutaaq late last year, the $54 million project had so far created 12 jobs. Officials involved with the project say that more recently roughly 40 workers have been on the scene, and they hope the project will ultimately create up to 200 jobs.

A Walnut Creek construction executive whose firm built a prior phase of the flood-control project said the government likely overspent by millions when it negotiated a contract with Suulutaaq rather than seeking competitive bids.

Meanwhile, investors aggrieved over the bankruptcy of the South Carolina dot-com called Sailnet said they were surprised to learn of former CEO Samuel Boyle’s new job as CEO of Suulutaaq. Boyle did not mention having construction experience or ties to Alaska tribes, they told California Watch. Some said Boyle’s involvement in Suulutaaq boded ill for the Alaska firm.

“My comment to anybody connected to this thing – if Sam Boyle is involved, watch out,” said Arizona venture capitalist Kent Mueller, who said he lost more than $1 million in Sailnet. Based on that experience, “I would not invest a nickel with this guy,” Mueller said.

Suulutaaq officials declined to be interviewed. In response to written questions, the company issued a statement saying that taxpayers were getting a “fair and reasonable” price on the project. The statement said that although Boyle lacked “specific construction experience,” he had “invaluable business experience” to make the Napa project a success.

But the company declined to answer most questions about the project, saying the information was confidential. It rebuffed a query about whether Suulutaaq employed lobbyists by asserting that the question “has potential undertones of a race-based presumption.”

Boyle also declined to be interviewed. In a statement, he wrote that the dot-com’s bankruptcy was “a tragedy” for which he was not responsible because he had left the company by the time it occurred.

Emerging players

Suulutaaq is one of dozens of Alaska Native corporations that have emerged as players in federal contracting via measures crafted in the 1980s and 1990s by former U.S. Sen. Ted Stevens, R-Alaska, a powerful lawmaker whose career ended with a contracting scandal.

For decades, the U.S. Small Business Administration has run a preferential contracting program to aid disadvantaged businesses. Qualifying firms can get federal contracts worth up to $5.5 million by negotiation, rather than competitive bidding.

The Stevens measures gave corporations that were set up by Alaska Natives special access to the program – with no cap on the size of contracts they can obtain. The share of federal contracts going toward Alaska Native corporations has grown rapidly. It was $508 million in 2000 and $5.2 billion in 2008, records show.

Advocates say the program has provided crucial economic development for impoverished Alaskan tribes. It’s a way of redressing centuries of grievous wrongs against them, they say.

But critics have complained that the no-bid contracts provide relatively few jobs and little investment income to the tribes while costing taxpayers a fortune.

“Alaska Native corporations don’t have to prove that they’re socially or economically disadvantaged,” U.S. Sen. Claire McCaskill, D-Mo., said at a 2009 hearing. “They don’t have to be small businesses. And they can receive no-bid contracts worth billions of dollars.”

The companies employ few Alaska natives and “rely heavily on non-native managers,” McCaskill claimed. Thus the firms create relatively few jobs for the people they are supposed to benefit, she argued.

McCaskill also contended that some of the companies “may also be passing through work to their subcontractors.” In those cases, the companies were collecting a profit simply because they had special access to federal contracts, not because they were performing actual work, she said.

McCaskill proposed putting a cap on the no-bid contracts, but the measure stalled in the face of intense lobbying by tribal corporations.

Read the full article here.

Reblog this post [with Zemanta]


Filed under National Economic Politics