Kahuku Windfarm Loan Timed to Boost IPO, Avoid Jail

Kahuku Wind Power, LLC, a project of First Wind in Kahuku Oahu, HI, was granted a $117 million loan in July 2010, estimated to create a whopping 200 jobs. And then on February 3, 2012 this same project received a 1603 grant­ for over $35 million [docket #2594 –- $35,148,839].

Sadly, in August 2012 a fire that destroyed First Wind’s battery storage facility and sent toxic fumes into the air, left ratepayers in the dark over costs and safety. We should keep an eye on that one, however, there is more corruption to expose...

The First Wind plan was to secure taxpayer money and then go public. Now they achieved their first objective from the Bank of Obama –– since he took office (and as of 7/18/12), First Wind's projects have received over $452 million in grants through the Stimulus' 1603 Program.

First Wind's Stetson Wind Farm in Maine –– $40,441,471

Cohocton Wind Farm in New York, $52,352,334

Dutch Hill Wind Farm In New York, $22,296,494

Milford Wind Corridor Phase I In Utah; $120,147,809

Milford Wind Corridor Phase II In Utah, $80,436,803

Rollins Wind Farm In Maine; $53,246,347

Sheffield Wind Farm In Vermont, $35,914,864

Kahuku Wind Farm In Hawaii, $35,148,839

Steel Winds II Wind Farm In New York, $12,778,75

However, in November 2010, Bloomberg announced, “First Wind Holdings Inc., the operator of wind-energy projects backed by D.E. Shaw & Co. and Madison Dearborn Partners LLC, said it withdrew its initial public offering because of unfavorable market conditions” that’s code for “weak demand.”

Speaking of IPO's...

Within the House Oversight leaked emails that were unleashed late October 2012, you'll discover that these correspondences basically prove that the White House, Secretary Chu, and certain DOE officials lied about how they handled the green energy loans on various fronts –– a story I have emphasized in many of my recent green corruption posts.

In the 350+ page Appendix II, I discovered a series of intriguing emails dated in May 2010, where the DOE staff was discussing the Kahuku loan, just months prior to the final approval in July 2010. It seems that on May 12, 2012, LPO Credit Advisor James McCrea was concerned about the Loan Guarantee Program Office's "credit policies and procedures" –– so much so that he intensely clarified the importance of order, "...everyone needs to understand is all that has to go in order to put the transaction into the Federal accounting system which requires collaborating among OMB, Treasury, and parts of DOE with which you do not normally interact. To be clear, one of the reasons this is so carefully handled is that there are several penalties for a violation of the Antideficiency Act including jail time..." Later McCrea writes, "I know the processing is frustrating for First Wind. The deal will close when it is time."

Five days later, McCrea writes, "To fill Brian in, we have a pretty good mess on First Wind and it is looking like it is going to get a lot worse and quickly at that. Someone is pressing Jonathan [Jonathan Silver is the former Executive Director of the Loan Program Office] who is now pressing hard on the everyone as the sponsor has an IPO in the works. I have told Jonathan that the deal has huge issues and the sponsor's overriding is not helping at all and that further, the sponsor's pending IPO is irrelevant."

While there's no mention of where that pressure came from, the first-rate, high-powered political ties to First Wind are vast, starting with D.E. Shaw & Co, a New York-based investment firm –– "a $39 Billion Hedge Fund Giant" (also a First Solar investor), which so happens to be one of the three top contributors to Democrats –– is a backer of First Wind Holdings Inc. The founder David Shaw, is a two-time Obama bundler, who employed Larry Summers, and before heading to the Obama White House, as the top economic advisor, "Lawrence Summers received about $5.2 million over the past year in compensation from hedge fund D.E. Shaw,” as revealed by the Wall Street Journal, noting his "frequent appearances before Wall Street firms including J.P. Morgan, Citigroup, Goldman Sachs and Lehman Brothers." Towards the end of 2011, Summers left the Obama administration and rejoined the firm as a consultant.

As revealed by Peter Schweizer, “another 42 percent of First Wind is owned by Madison Dearborn Partners, an investment firm with close ties [and friend of] to then-White House Chief of Staff Rahm Emanuel. The founder of the firm, David Canning, had been a bundler for George W. Bush. But he switched sides in 2008 and gave heavily to Obama. Madison Dearborn gave more to Emanuel's congressional campaigns than did any other business.”

While the GOP found that "Julia Bovey, First Wind's Director of External Affairs, was formerly Director of External Affairs for Obama's Federal Energy Regulatory Commission (June 2009 to June 2010)," there is much bigger fish here. All government backed green comes with a slew of lobbyists, and First Wind is no different –– enter in Larry Rasky's Lobbying Firm with ties to the top.

Larry Rasky, "a longtime confidant and campaign strategist" of Vice President Joe Biden, was also a 2012 Obama bundler, and since Obama took office, "Rasky has visited the White House at least 21 Times," half of which were during the course of the DOE loan review process (Data.gov, Accessed 7/18/12). Moreover, we know that in 2009, about the time the 2009-Recovery Act passed, First Wind retained lobbyists Rasky Baerlein Strategic Communications as well as Brownstein, Hyatt et al, who is primarily a Democrat donor, with some Republicans in the mix –– and as of 2012, maintains the work of Rasky.

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