Bob Hawke-backed satellite firm in US political stoush

Bob Hawke-backed satellite firm in US political stoush

A bankrupt Australian satellite company once promoted by former Prime Minister Bob Hawke is at the centre of a political fight in the United States, with Republicans arguing the US-government bank that financed the Melbourne firm has exposed taxpayers to losses and should be shut down.
Small-government Republicans in Congress advocating to close the Export-Import bank seized on NewSat's failure as the latest piece of evidence to support their ideological battle to terminate the government-backed lender.
US conservatives previously expressed dismay at Ex-Im loaning $US694 million to Australia's richest person, Gina Rinehart, to finance Hancock Prospecting's Roy Hill iron ore project. They claim the taxpayer-backed bank is handing out "corporate welfare".

ASX-listed NewSat has been trying to become the first Australian private sector player to launch a satellite into space. The project is known as Jabiru-1.
Ex-Im in 2012 authorized a $281 million loan facility to help NewSat purchase a satellite from US aerospace group Lockheed Martin.
In April, NewSat entered administration, after major lender, Europe's COFACE, withdrew funding.
Republican lawmakers on Wednesday criticised Ex-Im Chairman Fred Hochberg for financing the Australian firm.


"You've lost $US100 million and you've given a several-hundred-million-dollar windfall to Lockheed Martin at the expense of the taxpayer," Republican Representative Mick Mulvaney told a congressional committee hearing.
Mr Hochberg replied that Ex-Im's involvement was secured by NewSat and it was in negotiations to find a buyer.
"We are working with Lockheed and other creditors to find a solution so we actually do not suffer a loss in this case," Mr Hochberg said.
Mr Hawke, prime minister from 1983 to 1991, endorsed NewSat on its way to raising more than $500 million from investors. Mr Hawke reportedly signed on as a consultant in 2011, in return for a monthly retainer and 375,000 shares in the company.

An investigation by Fairfax Media earlier this year uncovered serious problems within NewSat, including alleged conflicts of interest, questionable related party transactions, poor governance and undisclosed lawsuits at the company.
NewSat Limited has filed for bankruptcy in the US state of Delaware. PPB Advisory was appointed administrator and McGrathNicol the receiver.
The Ex-Im Bank, established in 1934, is a US government export credit agency offering direct loans, loan guarantees and insurance to overseas buyers of US exports where the private sector is unwilling to.
In return for loans, foreign borrowers such as NewSat and Hancock Prospecting promise to hire American companies to help with their projects.

The taxpayer-backed bank is due to expire on June 30 and will not be allowed to grant new loans, unless Congress authorises its extension.
Critics argue the bank mainly helps huge US multinationals such as General Electric, Caterpillar and Boeing.
A block of anti-establishment, Tea Party aligned conservatives are agitating for Ex-Im to be shuttered. It has put them at odds with traditional pro-business establishment Republicans who, along with the Obama administration, support Ex-Im being renewed to help American companies win contracts overseas.
The arm wrestle is symbolic of the Republican Party's identity wars and the creeping influence of the anti-establishment wing.
Several Republican presidential candidates including Jeb Bush, Marco Rubio, Rand Paul, Scott Walker and Ted Cruz all against reauthorisation of Ex-Im Bank.
Dan Holler, communications director at the conservative think tank Heritage Action for America which has been leading the charge against renewing Ex-Im said NewSat's demise "begs the question why private sectors banks were skittish".
"Did they know something Ex-Im did not?  At the very least it serves to highlight these deals are far from risk free."
Mr Holler was previously critical of Ms Rinehart's loan.
With Reuters