- Senate Energy and Natural Resources Committee Ranking Member John Barrasso of Wyoming slammed the Department of Energy’s (DOE) Loan Program Office (LPO) for its questionable due diligence processes and its relationship with Li-Cycle, a battery recycling company that is now in poor financial condition and facing a class action lawsuit.
- Barrasso, who has been demanding answers from Shah and the LPO for weeks, made his comments after the Daily Caller News Foundation reported that the LPO had reached a conditional loan agreement with the company months after it had allegedly began to defraud its investors.
- “The DOE Loan Programs Office under Jigar Shah is rushing to shovel out taxpayer money to green energy projects on the verge of failure. The Loan Programs Office is ineffectively vetting companies before announcing a commitment of hundreds of millions of dollars. It is inexcusable,” Barrasso told the DCNF.
Senate Energy and Natural Resources Committee Ranking Member John Barrasso of Wyoming ripped a crucial office driving the Biden administration’s green energy finance push for reaching a conditional commitment to issue a massive loan to an embattled battery recycling company.
Barrasso has already pressed the Department of Energy’s (DOE) Loan Programs Office (LPO) and its director, Jigar Shah, for answers about the office’s due diligence standards and ethics safeguards for several weeks before the Daily Caller News Foundation reported that the LPO had approved a massive loan to Li-Cycle at the same time that it was allegedly defrauding its investors. Barrasso, the third-highest ranking member of the Senate Republican caucus, told the DCNF that he would welcome a more comprehensive review of the LPO’s due diligence procedures, and that he is alarmed by the apparently inadequate due diligence that the LPO conducts.
“The DOE Loan Programs Office under Jigar Shah is rushing to shovel out taxpayer money to green energy projects on the verge of failure. The Loan Programs Office is ineffectively vetting companies before announcing a commitment of hundreds of millions of dollars. It is inexcusable,” Barrasso told the DCNF. “For months, I have been pressing the Department of Energy for answers on their deeply flawed approval process. The agency is dodging these critical oversight measures.” (RELATED: ‘Yes Or A No?’: Josh Hawley Picks Apart Energy Dept Loan Official Over Alleged Conflicts Of Interest)
We’re thrilled to welcome Jigar Shah to the Department of @Energy! He will lead the Loan Programs Office to deliver on the Biden Administration’s bold agenda to create a clean energy future for the American people. https://t.co/L8Y2ZmkJcr pic.twitter.com/T1dvnFl5dv
— U.S. Department of Energy (@ENERGY) March 3, 2021
Shah’s office finances green energy investments with loans that private market lenders would not issue, according to its website. The LPO received a major cash infusion from the Inflation Reduction Act, President Joe Biden’s signature climate bill, and it now has hundreds of billions of dollars at its disposal.
Li-Cycle’s Rochester, New York, facility was one of the projects that Shah’s office agreed to support, but the company announced on Oct. 23 that it was halting construction on the project. The company is now in dire financial shape, with its stock trading at around 70 cents per share and down by about 85% year-to-date, according to data available on Google Finance.
The DCNF reported Thursday that the LPO had reached a conditional commitment to provide Li-Cycle, a battery recycling company, a $375 million loan to help build its key facility in Rochester, New York. The two sides agreed to the conditional commitment in February 2023, after the LPO completed its due diligence process; the commitment stipulated that Li-Cycle would be able to access the money upon reaching certain future milestones that it has not yet achieved, according to its third quarter earnings report.
Li-Cycle was allegedly defrauding its investors by withholding information or making false statements about the mounting costs of the Rochester facility as early as June 2022, according to a class action lawsuit it now faces in the U.S. District Court for the Southern District of New York.
“LPO conducts rigorous due diligence that is comparable to, if not more stringent than, what might be done in the private sector,” Shah stated in co-authored written testimony to the Senate Committee on Energy and Natural Resources on Oct. 19, four days before Li-Cycle announced the construction pause. “For all potential project sponsors and borrowers, LPO employs robust Know Your Customer policies, background checks, and other measures to ensure a clear understanding of the potential borrower.”
Notably, Shah reportedly attempted to convince Li-Cycle’s CEO Ajay Kochhar to apply for a loan from the LPO in September, months after the alleged fraud began, even though Kochhar was reportedly hesitant to do so because he feared that his firm would be unable to pay it off, according to The Wall Street Journal.
“Senator Barrasso would welcome a more comprehensive review of the LPO’s due diligence process,” a Barrasso spokesperson told the DCNF. Barrasso had already demanded answers from Shah about his office’s activities and procedures on multiple occasions before the DCNF published its report focusing on Li-Cycle.
In an Oct. 25 letter, Barrasso requested that Shah “elaborate on the procedures and criteria that the LPO employs in determining the suitability of a company for a loan,” clarify whether or not the LPO has an internal credit review board and how Shah justifies his advocacy for a loan to a company like Li-Cycle.
Barrasso has also demanded answers from Shah about his continued affiliation with the Cleantech Leaders Roundtable, a green energy trade group that has seen its influence and revenues surge since Shah took over at LPO. In an Oct. 19 letter, he requested that Shah explain clearly his relationship with the trade group and any measures in place to ensure that trade group members do not receive preferential treatment, among other points.
The White House, DOE and Li-Cycle all did not respond immediately to requests for comment.
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