‘Quintessential Insider Deal’: Taxpayers Finance Family Ties of 2 Failing Green Companies
Posted Friday, July 22, 2016 From – The Daily Signal – by Kevin Mooney
Grassroots conservative activists who run a reboot of Ronald Reagan’s political action committee want to know why the government allows one failing company to buy another failing company while both get taxpayer subsidies.
They also want to know why corporate executives with friends in high places have not been subjected to more scrutiny after receiving a multimillion-dollar compensation package at a time when their company remains heavily subsidized at taxpayer expense.
“This is the quintessential insider deal,” one taxpayer advocate said in an interview with The Daily Signal.
Citizens for the Republic, a nonprofit, grassroots lobbying group, posed the two questions in a July 15 letter to members of the House and Senate as the lawmakers left Washington for summer recess.
The group calls on Congress to investigate the CEO and the chief technology officer of SolarCity, a renewable energy company based in San Mateo, California. The two SolarCity executives happen to be brothers; Lyndon and Peter Rive also happen to be first cousins to Elon Musk, chairman and co-founder of SolarCity.
Musk is also chairman and founder of Tesla Motors Inc., an electric car company based in Palo Alto, California. In June, Tesla Motors offered to buy SolarCity.
Musk is the largest shareholder in both companies, according to Securities and Exchange Commission filings.
The proposed $2.8 billion deal would provide Musk and his cousins, the Rive brothers, with an additional $700 million in Tesla stock, according to media reports.
Musk anticipates a “supermajority of shareholders” will approve his bid, The Wall Street Journalreported. The 45-year-old business mogul was expected to unveil a new master plan for the combined companies as early as this week.
“Elon Musk has been getting bailout after bailout to prop up his companies that never succeed,” Diana Banister, partner in Shirley & Banister Public Affairs and executive director of Citizens for the Republic, told The Daily Signal in an interview, adding of Musk:
Why is the government bailing him out and giving him taxpayer money when last year he said he doesn’t need subsidies? Musk is bailing out his own company with taxpayer dollars. That’s how much of a racket this is. Musk is getting subsidies for one company and then using those subsidies to bail out another company that’s also subsidized.
Questioning Compensation Packages
Its letter to Congress is an extension of Citizens for the Republic’s Sunlight Project, set up in 2015 “to monitor and expose corruption and cronyism at the nexus of government and business.”
Sunlight Project keeps tabs on Musk’s corporate enterprises at the Stop Elon From Failing Again website, unveiled in June. The site says it is devoted to “challenging the waste, fraud, and abuse of taxpayer money by the failures of Elon Musk.”
The Daily Signal obtained a version of the July 15 letter addressed to Sen. Lamar Alexander, R-Tenn., a member of the Senate Appropriations Committee. It reads in part:
As heads of grassroots organizations devoted to fiscal responsibility and government accountability, we urge Congress to launch an immediate investigation of Lyndon Rive, the chief executive officer of SolarCity, and his brother Peter Rive, the company’s chief technology officer, for their $128.9 million cumulative compensation package while the company is simultaneously receiving more than half a billion dollars in federal direct grants and just as much, if not more, from state and local governments.
The letter is signed by Banister and Craig Shirley, her partner in Shirley & Banister Public Affairs and chairman of Citizens for the Republic, which is a nonprofit under 501(c)(4) of the tax code. Shirley is the author of a book on Reagan’s unsuccessful 1976 campaign for the White House.
David Williams, president of the Taxpayers Protection Alliance, and Seton Motley, president of Less Government, also signed the letter.
Reagan originally established Citizens for the Republic in 1977, three years before he won the presidency. Conservative activists rebooted the political action committee in 2010, with Banister and Shirley as board members.
‘Taking a Hard Look’
With Congress on recess, the PAC has not received any official response to its letters regarding Musk and the Rive brothers.
Banister, however, said she received encouraging feedback from a few key lawmakers, including Sen. Orrin Hatch, R-Utah, chairman of the Senate Finance Committee, and Rep. Jeb Hensarling, R-Texas, chairman of the House Committee on Financial Services.
Banister said she sees an opportunity for lawmakers to revisit and review the merits of the Solar Investment Tax Credit if they press ahead with investigations into the Rive brothers and their compensation package.
“Once congressional investigations get started, they could possibly start a conversation about public policy reforms that could better protect taxpayer interests,” Banister said. “This means taking a hard look at the Solar Investment Tax Credit.”
The tax credit was extended as part of the 2015 omnibus spending package that passed Congress late last year. The PAC’s letter says:
The solar leasing industry is propped up by the Solar Investment Tax Credit, which subsidizes every panel that they lease. The [credit] was intended to provide subsidies for the growth of renewable technology, but we are concerned that it is being used to pad the paycheck of solar executives, like the Rive brothers.
The letter claims SolarCity “lost more than 50 percent of its value” over the past year, but persists because of government subsidies and the intervention of Musk.
“Doesn’t this all seem a little incestuous and little corrupt?” Banister asked. “I’d say it’s actually extremely corrupt, and it’s time for Congress to start paying attention.”
The Daily Signal contacted both Tesla Motors and SolarCity, inviting both companies to comment on the letter calling for congressional investigations. Tesla has not yet responded.
In an email, Will Craven, SolarCity’s director of policy and electricity markets, said the “compensation numbers” are “tied to ambitious goals that will take years to achieve, and will only be paid out should SolarCity hit those goals, for example a stock price of $400 per share.”
Craven also referred to a blog post from Lyndon Rive, SolarCity’s CEO, addressing the compensation issue. In it, Rive writes:
My own compensation is based on this principle: If SolarCity does not significantly increase value for shareholders and employees and deliver a better experience for customers, then I do not deserve more than my base salary, and that’s the only pay I will receive.
“If this wasn’t a green energy company, you would have both Democrats and Republicans screaming about this,” Williams, the Taxpayers Protection Alliance president, told The Daily Signal, adding:
This is the quintessential insider deal. But because this involves green energy you have the left overlooking corporate welfare and corporate favoritism because it’s something they like. But if it involved a big bank or some other company, the left and the right would be up in arms about this.
Tesla is the subject of a Securities and Exchange Commission investigation of the fatal crash of its Model S car. The driver was using the car’s autopilot when it crashed.
The investigation appears to be focused on finding out whether the crash was material to Tesla’s $2.3 billion secondary offering May 18, a few weeks later.