Harbinger Says Grassley Letter Was Off Base

Spokesperson for senator counters that he has the facts right

By John Eggerton -- Broadcasting & Cable, 2/1/2012 4:20:42 PM

LightSquared owner Harbinger Capital Partners Wednesday took strong issue with Iowa Republican Senator Charles Grassley's suggestion it had pressured the Senator to "pull punches" in his inquiry into LightSquared's FCC waiver to offer terrestrial wholesale wireless broadband, but the Senator was not backing off.

In a letter to Grassley dated Jan. 31, attorneys for Harbinger disputed various claims Grassley made in a letter to the company last week. In that letter, Grassley had said that that contact, comprising e-mails from both Harbinger principal Philip Falcone and a person, a "Mr. Ruelle," claiming to represent LightSquared, "intimated benefits for Grassley if he softened his inquiry of government approval of the project."

Harbinger attorney Mark Paoletta wrote the senator that his allegations were unsubstantiated, that the "person" did not speak for LightSquared or Harbinger, and that the senator's accounting of events was "inaccurate," including his suggestion that there had been a quid pro quo between a "purported" request that Grassley drop the investigation in exchange for a call center in Grassley's home state.

"It concerns me that Senate staff would propose such an unsubstantiated story without giving Harbinger and LightSquared an opportunity to address the allegations."(In B&C/Multi's story on the Grassley letter, Harbinger provided the following response: "Mr. Ruelle does not, nor has he ever, worked for Mr. Falcone, Harbinger or LightSquared as an employee or a consultant," said Harbinger spokesman Lew Phelps. "No one at Harbinger or LightSquared has had any discussions or negotiations with Mr. Ruelle with respect to approaching or contacting Sen. Grassley's office regarding an alleged quid pro quo, or a call center in Iowa, which in any event would be inconsistent with the LightSquared wholesale business model. If such conversations occurred, Mr. Ruelle was acting entirely on his own and without the knowledge, authority, or endorsement of Mr. Falcone, Harbinger or LightSquared.")

In Tuesday's letter, Harbinger turned the accusation back on Grassley's office. "The problematic presentation of events and conclusions in your letter, coupled with the fact that your staff suggested prematurely to Bloomberg News that they run a story based on them, have reinforced our concerns about the fairness of the inquiry into LightSquared."

Grassley's inquiry has effects beyond the issue of LightSquared's interference with GPS devices, the issue that prompted the senator to seek info on how the FCC waiver was obtained. Grassley has pledged to hold up the confirmations of the nominees of the two empty FCC commissioner seats until he gets answers to his questions at the FCC.

Paoletta said Harbinger was still interested in getting Falcone together with the senator to talk about his issues.

Grassley's office was sticking by his letter.

Contacted Wednesday, Grassley spokeswoman Jill Gerber said: "Sen. Grassley's letter was and is accurate and fully reflects the contact to his office and his subsequent efforts to seek the companies' perspective before sending his letter. Those efforts prior to the letter were not fruitful, and Harbinger's attorneys are misrepresenting the facts. Incredibly, Harbinger is just now confirming a relationship with and describing the details of interaction with Mr. Ruelle, after having issued a misleading statement to the press that made it appear there was no relationship."

"Now Harbinger says Mr. Ruelle had ‘numerous' contacts with Mr. Falcone, helped to arrange a meeting between Mr. Falcone and John Deere, and helped to arrange Mr. Falcone's appearance on Fox News. Why did the company indicate otherwise when asked by reporters in January? However, Sen. Grassley's focus is shedding light on why the FCC gave LightSquared the fast track for approval without adequate consideration to widespread interference with the GPS devices used by the military, aviation, consumers, and precision agriculture."

The FCC did condition its LightSquared waiver on resolving interference issues with GPS, and is currently awaiting a recommendation from the National Telecommunications & Information Administration on its recommendation following tests that showed there were still interference issues, though LightSquared disputes the validity of those tests. FCC Chairman Julius Genachowski said this week he was still waiting for NTIA's report, but that "in the interim and beyond we are not going to do anything that causes harmful interference. "

Grassley continues to seek info from LightSquared and the government. Gerber says the companies have not provided documents related to third-party contacts with consultants and lobbyists, and the FCC has provided "zero documents," she says.

The FCC did make some documents available online in response to FOIA requests, but did not provide documents directly to Grassley since he was not the chairman of one of its relevant oversight committees -- he is ranking member of one of them, the Senate Judiciary Committee. "Transparency about the FCC and this project is still completely lacking, despite strong public interest in the process and the outcome."

An FCC spokesman had no comment.