The Daily Beast
The four-star Air Force general who oversees Air Force Space Command walked into a highly secured room on Capitol Hill a week ago to give a classified briefing to lawmakers and staff, and dropped a surprise. Pressed by members, Gen. William Shelton said the White House tried to pressure him to change his testimony to make it more favorable to a company tied to a large Democratic donor.
The episode —confirmed by The Daily Beast in interviews with administration officials and the chairman of a congressional oversight committee —is the latest in a string of incidents that have given Republicans sudden fodder for questions about whether the Obama administration is politically interfering in routine government matters that affect donors or fundraisers. Already, the FBI and a House committee are investigating a federal loan guarantee to a now failed solar firm called Solyndra that is tied to a large Obama fundraiser.
Now the Pentagon has been raising concerns about a new wireless project by a satellite broadband company in Virginia called LightSquared, whose majority owner is an investment fund run by Democratic donor Philip Falcone.
According to officials familiar with the situation, Shelton’s prepared testimony was leaked in advance to the company. And the White House asked the general to alter the testimony to add two points: that the general supported the White House policy to add more broadband for commercial use; and that the Pentagon would try to resolve the questions around LightSquared with testing in just 90 days. Shelton chafed at the intervention, which seemed to soften the Pentagon’s position and might be viewed as helping the company as it tries to get the project launched, officials said.
“There was an attempt to influence the text of the testimony and to engage LightSquared in the process in order to bias his testimony,” Rep. Mike Turner (R-OH) said in an interview. “The only people who were involved in the process in preparation for the hearing included the Department of Defense, the White House, and the Office Management and Budget.”
Turner is chairman of the House Armed Services subcommittee that oversees Shelton’s space command and GPS issues; the panel explored the issues between LightSquared and the Pentagon at a hearing Thursday.
On Thursday, LightSquared CEO,Sanjiv Ahuja told The Daily Beast that his company was not trying to use politics to affect the regulatory process and the firm’s goal was to expand broadband access across America.
“Any suggestion that we have run roughshod over the regulatory process is contradicted by reality: Our plans to begin implementing America’s first privately funded, wholesale, affordable, coast-to-coast wireless broadband service have been delayed for a year and we have been forced to commit more than $100 million to find a solution that will allow consumers to benefit from both our service and GPS,” Ahuja said.
“For a company that allegedly is ‘wired’ inside the Beltway, we’ve been unable to even get the House Armed Services Committee to allow us to have one representative today’s hearing — a hearing in which we are the subject,” he said.
Shelton finally gave his testimony Thursday, and made clear the Pentagon’s concern about LightSquared’s project.
The general told Turner’s committee that preliminary tests of a new LightSquared proposal to use only a portion of the band that it was licensed originally in 2004 would cause significant disruptions to GPS.
He said the GPS spectrum was supposed to originally be a “quiet neighborhood,” meaning that lower strength signals could exist near the GPS spectrum. Speaking of the LightSquared plan, he said, “If you put a rock band in the middle of that quiet neighborhood, that’s a different circumstance.”
The White House confirmed Wednesday that its Office of Management and Budget suggested changes to the general’s testimony but insisted such reviews are routine and not influenced by politics. And it said Shelton was permitted to give the testimony he wants, without any pressure.
OMB “reviews and clears all agency communications with Congress, including testimony, to ensure consistency in the administration’s policy positions,” said White House spokesman Eric Schultz. “When an agency is asked by a congressional committee to testify, OMB circulates the agency’s proposed [draft] testimony to other affected agencies and appropriate [executive office of the president] staff. If a reviewer has a comment to the proposed testimony, that suggestion is typically conveyed to the agency for their consideration. When divergent views emerge, they are often reconciled through discussions at the appropriate policy levels of OMB and the agencies.” The general’s office declined to comment.
LightSquared has previously acknowledged it met with officials from the White House Office of Science and Technology Policy as it tried to shepherd the project, which is consistent with President Obama’s goal of trying to expand broadband wireless access nationwide. That office has a mandate to meet with members of private industry.
Melanie Sloan, who runs the nonpartisan ethics groups Citizens for Responsibility and Ethics in Washington, said the emerging allegations about possible White House involvement in LightSquared’s matter seemed to mirror earlier allegations in the Solyndra case.
“With this new set of facts, it starts to sound like a pattern of the White House improperly pressuring people at agencies involving decisions that affect companies tied to donors and fundraisers,” Sloan said. “It’s always a problem when the White House is pressuring anyone’s testimony. I don’t care if you are a four-star [general] or a GS-15 [career employee], you should be giving your true opinion and not an opinion the White House is seeking for political expediency.”
Sloan recalled similar instances during the Bush administration, when officials were accused of trying to meddle with climate scientists’ testimony. “It doesn’t matter what party is in charge, money frequently trumps good policy in Washington,” she said.
Mr. Ahuja gave a little more than $30,000 to both the Democratic and Republican parties in the last two years. Mr. Falcone and his wife have gave more than $60,000 in 2009 to the Democratic Senatorial Campaign Committee. Mr. Falcone has also given a smattering of money to Republicans.
At issue is a conditional Federal Communications Commission waiver granted in January to LightSquared to build cheap terrestrial wireless capacity in a section of the wireless spectrum close to the GPS bandwidth. Harbinger Capital, the hedge fund belonging to Falcone, owns a majority stake in LightSquared.
“There was an attempt to influence the text of the testimony and to engage LightSquared in the process in order to bias his testimony,” said Rep. Mike Turner.
The FCC license has come under scrutiny because technical experts have warned that LightSquared’s proposal to build tens of thousands of ground stations for a wireless network could drown out the GPS signal. On Tuesday, the FCC issued a public notice stating that LightSquared may not move forward on establishing its wireless service until further testing proves the GPS would not be harmed.
Falcone says the FCC waiver was spurred by the demands of the wireless industry. “LightSquared wanted the waiver because some of its wholesale partners wanted the choice of being able to sell devices with either satellite only, terrestrial-only or combined satellite-terrestrial service,” he told The Daily Beast. “The waiver allows us to meet the specific needs of our customers — but it in no way affected the spectrum issue.”
Falcone added, “The GPS industry decided not to oppose us in the early 2000’s because they thought we’d never be successful. It was only after they realized we were not just a concept, but a viable technology with a viable business model, that they decided to oppose us. Meanwhile, LightSquared invested billions of dollars — that is money that comes from private individuals all over the country — based on the promise the FCC gave us under a Republican administration six years ago. The point is that any suggestion that the waiver created LightSquared out of thin air is both specious and absurd.”
Turner said Shelton told his committee that LightSquared had obtained his earlier prepared testimony. But Jeffrey J. Carlisle, Executive Vice President for Regulatory Affairs and Public Policy for LightSquared said Thursday that the company never received Shelton’s testimony scheduled for August 3.
A U.S. government official who spoke on the condition of anonymity said the White House specifically asked Shelton to include a paragraph in his testimony that stated the military would continue to test the proposed bandwidth for ways LightSquared could still use the spectrum space without interfering with GPS. The proposed language for Shelton’s testimony also stated that he hoped the necessary testing for LightSquared would be completed within 90 days.
The White House has said it did not try to influence the licensing process for LightSquared at the FCC. Chairman Julius Genachowski also has said the White House never lobbied him about LightSquared. Republicans are now questioning whether the administration has been rushing approval of the project over the objections of experts ranging from GPS companies like Garmin to the military’s own advisory committee on satellites.
“The FCC’s fast-tracking of LightSquared raises questions about whether the government is rushing this project at the expense of all kinds of other things, including national security and everyone who uses GPS, from agriculture to emergency medical technicians,” said Sen. Chuck Grassley (R-IA). “Without transparency, and with media coverage of political connections in this case, there’s no way to know whether the agency is trying to help friends in need or really looking out for the public’s interest.”
In April, Grassley asked Genachowski to hand over all records of communications, including emails between Falcone and the FCC, and LightSquared and the FCC. Genachowski declined to turn over those records.