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The Obama administration as well as automakers Fiat and Chrysler said Tuesday that there is a substantial possibility Fiat would back out of a government-financed deal to acquire Chrysler if the Supreme Court delays approving a final deal past June 15.Solicitor General Elena Kagen said that the lawyers for the Indiana pensioners' brief encouraging the court to take its time in considering a Fiat-Chrysler deal "would result in irreparable harm to the Debtors and the public interest," while the car companies said it could result in a liquidation of Chrysler.Indiana state officials argued in a brief filed earlier Tuesday that there's no rush for the court to consider the stay on a final deal issued by Justice Ruth Bader Ginsburg on Monday night after Fiat's CEO told Bloomberg News the company would "never" back out of a deal with the U.S. to acquire Chrysler.Kagen, filing on behalf of the U.S. government, disputed that notion on Tuesday afternoon."Applicants’ prediction is not well founded: if the sale is not consummated by June 15, there is a substantial possibility that Fiat will abandon the transaction or insist on materially different terms as a condition of its participation," Kagen said in the government's brief. "And even if Fiat were ultimately willing to consummate the sale on the existing terms after June 15, the delay occasioned by a stay would result in irreparable harm to the Debtors and the public interest."
This struck me as a little odd given the definitive nature of this statement, which seems to clearly contradict the sense of urgency that has been fostered by Chrysler and it’s benefactors in the Administration. Perhaps it can be explained by the fact that Fiat is receiving a 20% equity stake in a restructured Chrysler while contributing nothing (that’s right - $0). But I wondered whether there still might be more to this. Especially in light of a report in the Wall Street Journal over the weekend that claimed that the Obama Administration had forced the Fiat deal on Chrysler. Despite reservations on the part of Chrysler management regarding Fiat’s financial condition, and Fiat’s failure to disclose information that had been requested. According to the WSJ report, an unnamed Chrysler advisor even went so far as to express concern that the perception might ultimately be that they “were in bed with a shady partnerâ€, meaning Fiat.There is more truth to this statement than perhaps he knew, and it apparently applies not only to Fiat but to those in the Administration behind this deal as well. It turns out that back on December 22, right before Christmas, the U.S. Justice Department reached a settlement of sorts with Fiat and a group of affiliated companies. Fiat apparently had been under DOJ investigation for their participation in the UN “Oil for Food†scandal dating back to the early to mid 90’s. I called this a “settlement of sorts†because in actuality it is a deferred prosecution agreement, where the DOJ filed but deferred prosecution against Fiat on charges including wire fraud, falsification of books and records, and conspiracy to commit said crimes.In exchange for Fiat signing a “Statement of Facts†admitting to and accepting responsibility for these crimes, and remitting a penalty of $7 million to the U.S. Treasury, the DOJ agreed to defer any further prosecution for a period of 3 years. Importantly, during this 3 year period Fiat is required to “cooperate fully with the Department and any other authority or agency, domestic or foreign, designated by the Department†in allowing the U.S government full access to their books and other financial records to verify that no further corrupt or fraudulent activity has taken place. If, and only if, they are deemed to have been in full cooperation with no additional violations has the DOJ
goodvia hotair.com:http://hotair.com/archives/2009/06/09/politicizing-the-doj-bushobama-tag-team-edition/We're giving Chrysler to a company that made money with a terrorist-sponsoring dictator with American blood on his hands just so that company can keep Chrysler looking shiny for the vote-whores in DC.
This deal is looking more crooked all the time. I can not see how selling Chrysler to a company that is in bad shape and closing plants is going to help. http://in.reuters.com/article/innovationNews/idINTRE54J00420090520
Apparently it got a pass from the Supremes after all. Which raises the question, just how damn' good is secured debt from here on out? This resolution has to have an adverse effect on credit markets down the road somewhere.
Fiat Accompli
