Published June 30, 2012
The decision this week by the host committee of the Democratic National Convention to scrap a major event has sparked new concerns about the committee’s financial situation -- including a $10 million line of credit and a utility company’s connection to the deal.
Stimulus-backed Duke Energy Corp. last year agreed to guarantee the line of credit for the party affair. This decision was a big help for the organizers, as the credit line was required by the Democratic National Committee. But it also came with a risk for Duke Energy's shareholders.
If the host committee defaults, the shareholders, and not ratepayers, would be on the hook for the loss.
“It’s clear the convention is facing some economic uncertainty,” said Tom Borelli a senior fellow at the conservative FreedomWorks, who complained that the deal has left shareholders at risk even though they did not make the decision to guarantee the credit line.
That call was made by CEO Jim Rogers. Rogers is also a leading fundraiser for the Sept. 4-6 convention in Charlotte, N.C.
But Duke Energy spokesman Tom Williams said Duke Energy has “no concerns” about the money being repaid.
A Charlotte in 2012 spokeswoman also told FoxNews.com on Wednesday the group has not yet used the line of credit, but that it exists for its intended purpose – “to use if we need it and pay back.”
She also said fundraising efforts are on track and reiterated that logistics, including access to public transportation, was the reason for moving the opening day event from the Charlotte Motor Speedway to downtown.
The announcement, though, about plans to move opening day events follows a report that the host committee has so far raised only $10 million -- roughly $26.65 million less than required in its contract.
Borelli also expressed concern about the credit deal and the connections among related parties, which he says smack of “crony capitalism.”
Beyond Rogers having already raised a reported $52 million for the host committee, the energy company received $200 million in Obama administration stimulus money in May 2010.
In addition, Fifth Third Bancorp., parent company of the bank extending the credit, received $3.4 billion during the height of the financial crisis from the federal government’s $700 billion financial industry bailout.
Rogers also is listed as a member of Fifth Third’s board of directors.
The $36.65 million goal at the Democratic convention is for convention costs including accommodating the media and making improvements to the Time Warner Cable Arena where President Obama is scheduled to give his acceptance speech when officially nominated to be the party’s presidential candidate.
Borelli and others are not implying that Rogers and Duke Energy are doing something illegal. But they think the company -- which has raised $405,000 for Democrats so far this election cycle -- is indeed looking for political favor.
David Swindell, a University of North Carolina policy expert, previously told the Charlotte Observer such support can only help the utility in seeking energy subsidies from the Obama administration.
Borelli points out Rogers lobbied unsuccessfully in support of the administration’s failed cap-and-trade legislation and claimed he would continue to foster a relationship with the administration should Obama win re-election.
“I think he’s trying to suck up,” Borelli said.
Williams, though, said the decision for the company to be the guarantor was an effort to bring the convention to Charlotte to generate economic opportunity. And he argued the company made a similar but more preliminary attempt in 2000 to bring the Republican National Convention to the city.
Shelton Ehrlich, a stockholder in Duke Energy, which has coal-fired plants, said Rogers’ support of cap-and-trade legislation is the consequence of political pressure, and a mistake, perhaps in hindsight.
The legislation “would destroy a good number of jobs,” said Ehrlich, also an engineer. “Nobody could have assumed an Environmental Protection Agency that would ban new coal plants and shut down those that needed improvement.”