An Inspector General’s report from the Department of Energy (DOE) recently revealed that the LG Chem auto battery plant in Holland, Michigan “inappropriately claimed and was reimbursed for labor costs that did not support the purpose/objective” of a government grant.
According to the IG’s office, this included the costs for staffers to perform “volunteer activities, play games and watch movies during regular work hours.”
The IG points the finger at LG Chem and DOE, saying Department officials did not establish appropriate oversight protections into the $142 million grant that was awarded to LG Chem to build the Holland plant.
Notably, LG Chem Michigan did not fully realize the grant’s target goals, and the Department did not always take sufficient action to ensure adequate oversight of project progress and, in turn, protect the taxpayers $142 million investment in the project. For instance, LG Chem Michigan officials told us that they made a decision to delay production of battery cells at the Michigan facility…
NETL officials commented that it was anticipated at the time the grant was awarded that the transition of production from non-U.S. sources to Michigan would occur; however, language requiring the shift in production had not been incorporated into the grant… until the shift in production takes place or some alternative use for the plant is developed, U.S. taxpayers will receive little direct benefit from a plant for which they provided up to half of the funding.
LG Chem told Michigan local television news that LG Chem workers play games and view films because the plant does not manufacture batteries for consumer use.
When General Motors decided to build the Chevy Volt, it triggered a competition between LG Chem and A123 Systems to produce batteries for the vehicle. LG Chem, a Korean firm, won the bid. A123, another beneficiary of government money, began to supply Fisker Karma with batteries in order to stay alive.
Fisker Karma was sold to a Chinese firm. The LG Chem factory would not have been built if GM had not chosen LG Chem to supply the Volt. In other words, the government subsidy would not have been needed.
The Department of Energy granted hundreds of millions of dollars that were meant for numerous plants, yet only received $800K back from the LG Chem plant.
Additionally, in February 2011, DoE predicted that GM would produce 120,000 Chevy Volts. GM said throughout 2011 that the demand for the Volt would grow rapidly when they ramped up production, and GM CEO Dan Akerson said in 2012 that the Volt would be selling over 3,000 units a month (which he claimed would end criticism of the Volt).