Thursday, June 16, 2011

The Closer You Look, The More Corruption You Find

The closer you look at LightSquared, that is.

In the last few days, I've posted a couple of times about how this company wants to build a nationwide broadband network that interferes badly with GPS.  The more I look into the company, the worse it looks.  The company is largely funded by the Harbinger Fund, a hedge fund/private equity firm that's putting up the capital to run the company until they can turn on the service and start making income (in itself, nothing wrong here - it's really very common).  Harbinger is a fund that has been around for quite some time, but is now putting almost all of its eggs in the LightSquared basket.

The national policy center asks, "Did Harbinger Hedge Fund Buy Influence With the White House?" 
None of Mr. Falcone's plans would be successful, however, unless he was successful in persuading the Administration and the FCC to intervene on his behalf.  And over the course of the past year, a series of odd decisions, questionable meetings and procedural anomalies at the Federal Communications Commission and White House highlight Mr. Falcone's growing influence in the hallways of government.
oh, there's more:
During FCC merger proceedings, parties typically file confidential materials that are protected from the public.  Under FCC rules, however, the public must be notified within 24 hours that a filing of confidential material was submitted into the record.  In this case, the FCC withheld Harbinger's letter and the merger conditions from public disclosure for more than a month.
and more:
On April 21, 2010 Senators Hutchinson, DeMint, Vitter and Brownback sent FCC Chairman Genachowski a joint letter with numerous inquiries regarding the Falcone transaction.[8]  On May 10, Genachowski replied with a non-responsive letter.   These correspondences were not posted electronically for weeks after they were filed.  In addition to violating FCC procedure and precedent, the FCC's actions in withholding these documents from public view directly contradicts Chairman Genachowski's promise to maintain an open and transparent process at the FCC.  (emphasis added - GB)

Yeah, just like the president got his award for transparency and openness in a closed door, private ceremony. 

And stuff that looks like it's just barely legal:

On September 30, 2009, one week after his September 2009 White House visit, Mr. Falcone contributed $30,400 to the DSCC -- the maximum legal individual contribution limit to a party committee. His wife, Lisa Falcone, contributed an additional $30,400 to the DSCC on the same day.  (LightSquared's new CEO Sanjiv Ahuja also contributed $30,400 to the DNC in September of 2010).[12]

Oh, and guess who else is involved?  C'mon.  Guess. 
In 2009, while some investors were asking for withdrawals, others were lining up to put money into Harbinger. They included Soros Fund Management, which during the past year became a significant new investor, say people familiar with the matter.  (emphasis added - GB)
Oh, this is going to go well.  GPS receivers are going to be rendered worthless, consumers will suffer, aviation will suffer, everyone will suffer except for the FCC guys who get some cash hidden somewhere for them, Falcone, Soros and some investors.  The gutsiest, ballsiest - yet stupidest - thing I read was from the guy who said the problem wasn't LightSquared - it was that GPS receivers were eavesdropping on LightSquared's frequencies (which haven't technically been allocated to them, yet)!
But Hays said GPS receivers are “eavesdropping on signals outside of where they are supposed to be” — in LightSquared’s space.
In granting the waiver, the FCC chose to issue a license modification for LightSquared because of what they term "unique" circumstances, instead of modifying its rules to apply to all providers-- essentially guaranteeing that Mr. Falcone, and only Mr. Falcone, receives this special treatment. (emphasis added - GB)
Must be nice to be able to afford to buy folks like Genachowski and the FCC.  If I had wanted to live in a Banana Republic, I would have moved.  Looks like one moved in here.

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