Fisker Kept Taking Taxpayer Money Even After Defaulting On Their Loans
Here's a nice warm thought in case you're an American who filed your taxes recently: soon-t0-be-failed luxury hybrid manufacturer Fisker Automotive was allowed to receive loan money from the U.S. Department of Energy even after they violated the terms on multiple occasions, according to a new report.
A report by New York based researcher PrivCo and highlighted in this Automotive News story says the Energy Department knew around December 2010 that Fisker wasn't meeting the milestones set up for them to keep receiving taxpayer funds.
Although the report says Fisker had begun to default on those loans, the government didn't cut them off until June 2011 after the company drew down about $193 million.
That comes after the initial $529 million line of credit Fisker was given in 2009.
Why didn't the government cut Fisker off sooner? That's what the PrivCo chief wants to know as well. Here's what he told Automotive News:
"They made a mistake" in awarding the loan, PrivCo Chief Executive Officer Sam Hamadeh said. "Should they have fought this sooner? Obviously — as soon as it became evident that they had begun to default."
An Energy Department spokesman defended the decision to suspend payments to Fisker when they did. They have had to go to bat for the loan program, which has received a great deal of criticism following the failure of government-backed California solar cell manufacturer Solyndra:
The department acted responsibly by cutting off Fisker's access to its loan when it did, said Bill Gibbons, a spokesman.
"The Department of Energy stopped payment on the federal loan in 2011 after Fisker stopped meeting their milestones, and is committed to the best outcome for taxpayers," Gibbons said. "Despite Fisker's difficulties, our overall loan portfolio of more than 30 projects continues to perform very well, and more than 90 percent of the $10 billion loan loss reserve that Congress set aside for these programs remains intact."
Gibbons also told Bloomberg News that he believes elements of the PrivCo report are inaccurate, such as the assertion that Fisker defaulted in December 2010.
Fisker's first $20.2 million repayment to the Energy Department is due on Monday. After everything that's happened to them — from layoffs to lawsuits over unpaid bills and the departure of the man who started the company — that sounds quite unlikely.
One thing Fisker will have to deal with next week is a hearing in Washington regarding the loans they received by the government held by the House Oversight and Government Reform subcommittee.
Hopefully we'll learn more about Fisker's situation there, including exactly when they defaulted on their ones and exactly what is meant by "defaulting" versus "not meeting milestones."
Regardless, I doubt Fisker will come out of it looking very good.
Photo credit AP