DOE “Green” Loan to Russian Steel Tycoon Under Scrutiny
October 26, 2011 - 7:47 pm
Another controversial U.S. Department of Energy “green” loan is coming under scrutiny.
Last July the Obama administration issued a $730 million low interest “green” loan to Russia’s second largest steel company, whose chief executive is a Russian tycoon personally worth $18 billion and who has close ties to Russia’s Vladimir Putin.
An influential House oversight chairman is now questioning why taxpayer funds from the Department of Energy are being used to assist the highly capitalized foreign-based steel company.
The DOE renewable energy loan was awarded this summer to Severstal North America to produce high strength steel at its Dearborn, Michigan facility. Steel is not in short supply in the United States and current U.S. steel plants are operating under capacity.
The DOE loan is part of a controversial $40 billion renewable energy loan program organized under its Advanced Technology Vehicle Manufacturing Program called ATVM. The program is supposed to help financially starved companies in the green auto manufacturing field by providing taxpayer-supported low interest loans.
In a letter to Energy Secretary Steven Chu obtained by PJ Media, Rep. Darrell Issa (R-CA), chairman of the House Oversight and Government Reform committee has asked the Secretary to provide information to justify his department’s decision to issue the loan to the Russian firm. Issa said that Severstal appears to have “ample means to carry out the project” on its own without U.S. funds.
The firm is a subsidiary of OAO Severstal led by Russian oligarch Alexei Mordashov. Mordashov is one of the richest men in Russian. In 2011 Forbes ranked Mordashov as the 29th wealthiest man in the world. He officially was an official delegate for Vladimir Putin when he first ran for President in 2004.
The decision to issue a below market loan to Severestal appears odd. Prior to the government loan the firm had sold its steel plants in Ohio, West Virginia, and Maryland, reaping at least $1.2 billion. The ATVM program is designed to help companies involved in green cars or in the auto component industry. Severstal is a steel company not involved in either field.
It is also the second time in a week that a DOE loan has surfaced that financed foreign companies. The Finnish company Fisker received a $500 million loan for it’s all-electric sports car in that Norwegian country. Congressional investigating committees are looking into this Obama loan.
The ATVM program has also come under fire for its loans to auto manufacturers Tesla Motors for $465 million loan for a NASDAQ company owned by a Democratic donor and whose financier is was a $500,000 campaign bundler for President Obama as previously reported by PJ Media. Today Presidential Republican candidate Mitt Romney called for an investigation into both Tesla and Fisker.