Our friends at Commonwealth Magazine have put out an intriguing ‘Back Story’ regarding Evergreen Solar. But their article rests on a few shaky assumptions.
First, they try to frame the discussion as a ‘Romney invested’ versus ‘Patrick invested’ story. To be sure, both were Governor when investments were made in Evergreen Solar and both bear some responsibility as leaders. But there’s a material difference between a $2.5m commitment by a single quasi-public entity controlled by a board (with a majority appointed by the Governor, although its not clear if Romney controlled those appointments when the investment was made) and a $50m+ series of commitments across six state agencies and quasi-publics that was quarterbacked by the Secretary of Economic Development.
I’m not really wild about the state being involved in either transaction, but I consider them different.
Next, Commonwealth appears to blend the responsibilities of private capital and taxpayers dollars. They note, somewhat puzzlingly, that
As the Evergreen saga illustrates, picking corporate winners isn’t easy. Critics of the Patrick administration say the state doesn’t have the expertise to make such investments, but Massachusetts wasn’t the only Evergreen investor to get burned. It’s difficult to pinpoint who lost money betting on the Evergreen stock, but filings indicate companies with plenty of high-priced expertise, including Legg Mason, Fidelity Investments, and Wellington Management, had losses.
Well sure, private asset managers lost money. But they lost private money and that’s not really our concern. And if they lost money consistently, the market would put them out of business.
Taxpayer dollars surely must be held to a different standard.
The Evergreen Solar affair continues to raise a number of interesting questions that we’ll be working on:
– What level of scrutiny and due diligence did the state put into the Evergreen Solar transaction?
– What type of qualifications did those doing the analysis have? How does that compare with the private sector?
– Given all the different types of investments it engages in, how is it possible to understand whether the Renewable Energy Trust is performing well? (Oh, and whatever became of its investment with a private VC firm (that’s intimately connected with Evergreen Solar)? No record of it on a state website.)