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‘Crony capitalism:’ the RNC’s look at the case of Steve Westly

at 06:02 AM ET, 07/19/2012

“Meet Steve Westly. He raised over $500,000 for Obama's campaign. With Obama in office, Westly Group Investments have received 500 million taxpayer dollars. Westly was even appointed  to a top advisory role, influencing how federal taxpayer money was spent…Westly raised money for Obama, then got a half a billion taxpayer dollars. Obama’s friends are doing fine, but the middle class isn’t.”

--voiceover of new Republican National Committee ad, “The Obama Connection.”

We’re shocked, shocked that anyone thinks that big campaign contributors get special access to politicians.

 Just as “Big Oil” appeared to have special sway in the Bush administration, now too “clean energy” types appear to have special connections in the Obama administration. Is this a matter of coincidence … or “crony capitalism”?  Republicans have tried to make this charge an issue this week, and we have already examined one such example and found it wanting.

 Let’s play connect-the-dots in the case of Steve Westly.

 

The Facts

 The figures in this ad are relatively accurate. (Westly raised more than $500,000  for Obama, in 2008, according to Opensecrets.org.) Westly Group is a big player in clean technology, investing in companies that develop promising technologies. He also has not been shy about advertising his connections in the Obama administration, famously sending an email to top presidential aide Valerie Jarrett, warning that the president might be making a mistake in visiting Solyndra. (For all his apparent influence, his advice was not taken.)

Republicans certainly have a right to raise questions of conflict of interest and undue influence. ABC News and the Center for Public Integrity noted that most applicants fail to win funding from the Energy Department, whereas Westly’s firms appear to have a good success rate.   “Many [Westly] portfolio companies have been denied loans and grants,” said Westly spokesman Joel Berman. “However, we can't discuss specific instances for confidentiality reasons.”

 Still, some of the assertions in the ad go too far. For instance, two of the companies, Amonix and CalStar, started to receive Energy Department funding before Westley invested in them.

 Moreover, solar manufacturer Amonix initially got a grant under the Bush administration, with the promise of more — which was granted during the Obama years. Ironically, the Amonix solar plant in North Las Vegas abruptly shut down this week, 14 months after it opened to great fanfare. Amonix chief executive officer Brian Roberts was killed in a plane crash in Pennsylvania last year.

Meanwhile, virtually all of the $500 million mentioned in the ad stems from a government-backed loan to a company — electric auto maker Tesla, which received $465 million. Tesla was already a finalist in the Bush administration program to promote alternative energy vehicles, and was praised by then GOP presidential nominee John McCain as a “model of efficiency” during a 2008 campaign appearance. Whether a McCain administration would have approved the loan, of course, is unknowable.

 But the ad really begins to really veer into speculation when it asserts that Westly was “influencing how taxpayer money was spent” because he was on the Secretary of Energy Advisory Board (SEAB). The unpaid board meets from time to time, holding public sessions, with the agenda and minutes posted on the DOE Web site.

 The board does not have any authority over the department’s loan and grant programs, though of course it could affect policy though recommendations. The minutes of the most recent meeting, for instance, show that Westly chairs the building subcommittee, which is examining ways to improve the use of energy efficient building materials. CalStar, one of Westly’s investments, makes such materials.

“Steve was appointed to SEAB specifically to represent the venture capital industry. It would be very difficult, if not impossible, to find a venture capitalist with clean tech expertise but no investments in the space,” said Berman, the spokesman. “That is why Steve disclosed all Westly Group investments when he joined SEAB. He also carefully adheres to DOE’s conflict of interest protocols.”

He added that “the recommendations made by the subcommittee must be approved by a majority of the five members, before they are then sent to the full SEAB for consideration and approval. It is only after both steps have been taken that the recommendations will be shared with Secretary [Steven] Chu.”

Finally, the Tesla loan which forms the core of the RNC’s case was approved before Westly was appointed to the board, making the connection between the advisory role and the money received by his companies even more tenuous. The RNC has noted that emails suggest that Westly’s conflict of interest review took at least five months, though the documents are redacted.

“Westly never contacted DOE or the White House regarding loan or grant applications for Westly Group portfolio companies,” Berman said. “There is no evidence to suggest a connection between Mr. Westly’s roles as an investor, member of SEAB, and as a supporter of President Obama.”

 

The Pinocchio Test

 The RNC strains the dot-connecting with this scenario, especially by suggesting the Westly has been able to influence the direction of tax dollars to his companies. The ad does not quite say that, but it certainly leaves that impression.

 Should it be a surprise that clean-energy investors would flock to Obama because he promised to promote clean-energy investments — and then some of the investors’ companies would receive those funds? Is that a coincidence? Business as usual? Or something else?

We can understand why Westly may believe this attack is unfair, though appearance of big campaign dollars, followed by government grants or loans, may be troubling to voters.

In the end, the case the RNC video makes does not add up, yelling “fire” when it may, at this point, only be fog. Still, the case it makes --and the questions it raises — hold together a bit better than many other claims of “crony capitalism.”

 One Pinocchio

 

 


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    About the Blogger

    Glenn Kessler has covered foreign policy, economic policy, the White House, Congress, politics, airline safety and Wall Street.

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