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Green cronies

Posted By Russ Roberts On March 7, 2012 @ 1:37 pm In Crony Capitalism,Politics | Comments Disabled

Green cronies come in two flavors–the energy sector and the financial sector. Here’s the headline from the ABC News website [1]:

Green Firms Get Fed Cash, Gives Execs Bonuses, Fail.

Just like the financial sector except in the financial sector they don’t always fail. But it’s the same deal. Use other people’s money to enrich yourself.

Here’s how the story opens:

President Obama’s Department of Energy helped finance several green energy companies that later fell into bankruptcy — but not before the firms doled out six-figure bonuses and payouts to top executives, a Center for Public Integrity and ABC News investigation found.

Take, for instance, Beacon Power Corp., the second recipient of an Energy Department loan guarantee in 2009. In March 2010, the Massachusetts energy storage company paid cash bonuses of $259,285 to three executives in part due to progress made on the $43 million energy loan, Securities and Exchange Commission records show. Last October, Beacon Power filed for Chapter 11 bankruptcy.

EnerDel, maker of lithium-ion battery systems, landed a $118.5 million energy grant in August 2009. About one-and-a-half years later, Vice President Joe Biden toured a company plant in Indiana and heralded its taxpayer-supported expansion as one of the “100 Recovery Act Projects That Are Changing America.”

Two months after Biden’s visit, EnerDel corporate parent Ener1 paid $725,000 in bonuses to three executives — including $450,000 to then-CEO Charles Gassenheimer, who led Biden on the tour. This January, Ener1 filed for Chapter 11 bankruptcy protection.

How do we stop this?

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