Hedge fund titan Phil Falcone is one of the biggest funders of LightSquared, a telecom company that wants to implement a nationwide satellite phone network.Falcone, the founder of Harbinger Capital Parnters, has a lot invested in LightSquared with a significant portion of his hedge fund’s portfolio riding on it.
Falcone’s hedge fund has already lost investors who don’t believe in his 4G wireless dream.
LightSquared, a Virginia-based start-up, has received support from the Obama administration for its nationwide broadband initiative.
However, LightSquared’s business is still on hold because it has to receive Federal authorization.
That’s because the Pentagon has raised concerns about the LightSquared venture possibly interfering with the satellite GPS system that the U.S. military uses.
Four-star Air Force General William Shelton recently dropped a bit of bombshell on the Falcone-backed project, officials told The Daily Beast.
In a classified briefing, Shelton apparently revealed that the White House asked him to change two things in his testimony.
From The Daily Beast:
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.
However the content of the general’s testimony is unknown. So the requested changes might just have been to add that the White House has a policy to add more broadband for commercial use, for example. So this might be a bunch of hoopla about nothing.
We’ll find out.
Some people are suspicious.
“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) told The Daily Beast.
Turner, who serves as the chairman of the House Armed Services subcommittee, told The Daily Beast that the only people involved in Shelton’s testimony preparation were the Department of defence, the White House and the Office Management and Budget.
His Congressional panel now wants to know if the White House pressured the general to materially change his testimony. That’s the question.
This news comes shortly after a Congressional committee and the FBI are probing a federal loan that provided a $535 million to the now-bankrupt solar company Solyndra that had ties as a large Obama fundraiser.
In addition, conservative activists have been jumping all over this news calling it “the next big Obama scandal” highlighting the president’s ties to major Wall Street donors.
Some have speculated that Shelton was “pressured” to make his testimony more favourable because Falcone has been a big Democratic donor.
According the report, the White House acknowledged that its Office of Management and Budget suggested changes to Shelton’s testimony, but it also said those changes were not influenced by politics.
While Falcone has donated to Democrats, he’s also given to several Republican candidates as well.
If, however, this turns out to be something big and LightSquared doesn’t succeed, it will no doubt be a major blow to Falcone.
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