White House Pressure for a Donor?

The four-star Air Force general who oversees U.S. Space Command walked into a highly secured room on Capitol Hill a week ago to give a classified briefing to lawmakers and staff, and dropped a surprise. Pressed by members, Gen. William Shelton said the White House tried to pressure him to change his testimony to make it more favorable to a company tied to a large Democratic donor.

The episode—confirmed by The Daily Beast in interviews with administration officials and the chairman of a congressional oversight committee—is the latest in a string of incidents that have given Republicans sudden fodder for questions about whether the Obama administration is politically interfering in routine government matters that affect donors or fundraisers. Already, the FBI and a House committee are investigating a federal loan guarantee to a now failed solar firm called Solyndra that is tied to a large Obama fundraiser.

Now the Pentagon has been raising concerns about a new wireless project by a satellite broadband company in Virginia called LightSquared, whose majority owner is an investment fund run by Democratic donor Philip Falcone. Gen. Shelton was originally scheduled to testify Aug. 3 to a House committee that the project would interfere with the military’s sensitive Global Positioning Satellite capabilities, which control automated driving directions and missile targeting, among other things.

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, the officials said.

“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) said in an interview. “The only people who were involved in the process in preparation for the hearing included the Department of Defense, the White House, and the Office Management and Budget.”

Turner is chairman of the House Armed Services subcommittee that oversees Shelton’s space command and GPS issues; the panel is expected to explore the issues between LightSquared and the Pentagon at a hearing Thursday. Shelton is planning to give his belated testimony then.

The White House confirmed Wednesday that its Office of Management and Budget suggested changes to the general’s testimony but insisted such reviews are routine and not influenced by politics. And it said Shelton will be permitted to give the testimony he wants, without any pressure.

OMB “reviews and clears all agency communications with Congress, including testimony, to ensure consistency in the administration’s policy positions,” said White House spokesman Eric Schultz. “When an agency is asked by a congressional committee to testify, OMB circulates the agency’s proposed [draft] testimony to other affected agencies and appropriate [executive office of the president] staff. If a reviewer has a comment to the proposed testimony, that suggestion is typically conveyed to the agency for their consideration. When divergent views emerge, they are often reconciled through discussions at the appropriate policy levels of OMB and the agencies.”

The general’s office declined to comment, and LightSquared did not return calls seeking comment. Harbinger Capital Partners, Falcone’s investment firm, said it would provide a comment Thursday.

LightSquared has previously acknowledged it met with administration officials as it tried to shepherd the project, which is consistent with President Obama’s goal of trying to expand broadband wireless access nationwide.

“Because we are the only company on the horizon that can quickly help the federal government meet its stated objective of near universal wireless coverage for all Americans, it was natural that LightSquared have meetings with the administration,” company spokesman Terry Neal said recently. “LightSquared’s network promises to expand access to wireless broadband, increase competition in the marketplace, give consumers new choices, and, ultimately, lower prices. We acknowledge we wanted to discuss that with administration officials.”

Melanie Sloan, who runs the nonpartisan ethics groups Citizens for Responsibility and Ethics in Washington, said the emerging allegations about possible White House involvement in LightSquared’s matter seemed to mirror earlier allegations in the Solyndra case.

“With this new set of facts, it starts to sound like a pattern of the White House improperly pressuring people at agencies involving decisions that affect companies tied to donors and fundraisers,” Sloan said. “It’s always a problem when the White House is pressuring anyone’s testimony. I don’t care if you are a four-star [general] or a GS-15 [career employee], you should be giving your true opinion and not an opinion the White House is seeking for political expediency.”

Sloan recalled similar instances during the Bush administration, when officials were accused of trying to meddle with climate scientists’ testimony. “It doesn’t matter what party is in charge, money frequently trumps good policy in Washington,” she said.

At issue is a conditional Federal Communications Commission license granted in January to LightSquared to build cheap wireless capacity in a section of the wireless spectrum close to the GPS bandwidth. Harbinger Capital, the hedge fund belonging to Falcone, owns a majority stake in LightSquared.

The FCC license has come under scrutiny because technical experts have warned that LightSquared’s proposal to build tens of thousands of ground stations for a wireless network could drown out the GPS signal. On Tuesday, the FCC issued a public notice stating that LightSquared may not move forward on establishing its wireless service until further testing proves the GPS would not be harmed.

Turner confirmed that Shelton told his committee that LightSquared had obtained his earlier prepared testimony and that the general will be asked about the pressure from the White House at Thursday’s hearing. “We are going to ask Gen. Shelton that the testimony we are receiving is unaltered and unbiased,” he said. “We have to make certain our national security is protected without financial influence or interference.”

A U.S. government official who spoke on the condition of anonymity said the White House specifically asked Shelton to include a paragraph in his testimony that stated the military would continue to test the proposed bandwidth for ways LightSquared could still use the spectrum space without interfering with GPS. The proposed language for Shelton’s testimony also stated that he hoped the necessary testing for LightSquared would be completed within 90 days.

The White House has said it did not try to influence the licensing process for LightSquared at the FCC. Chairman Julius Genachowski also has said the White House never lobbied him about LightSquared.

Falcone, his wife, and the CEO of LightSquared, Sanjiv Ahuja, have given more than $90,000 to the Democratic causes since they applied for the license. Falcone also has made a smattering of donations to Republicans.

Republicans are now questioning whether the administration has been rushing approval of the project over the objections of experts ranging from GPS companies like Garmin to the military’s own advisory committee on satellites.

“The FCC’s fast-tracking of LightSquared raises questions about whether the government is rushing this project at the expense of all kinds of other things, including national security and everyone who uses GPS, from agriculture to emergency medical technicians,” said Sen. Chuck Grassley (R-IA). “Without transparency, and with media coverage of political connections in this case, there’s no way to know whether the agency is trying to help friends in need or really looking out for the public’s interest.”

In April, Grassley asked Genachowski to hand over all records of communications, including emails between Falcone and the FCC, and LightSquared and the FCC. Genachowski declined to turn over those records.

The Center for Public Integrity, a nonprofit investigative journalism outfit, published emails this week it had obtained showing meetings between White House technology advisers and LightSquared officials.