Smith Outraged Over Waste of Taxpayer Dollars Found in IG Report

Feb 13, 2013

Washington, D.C. -- The Inspector General (IG) for the Department of Energy today issued a report that found the federal government wasted millions of dollars on a grant to a subsidiary of a Korean corporation that failed to meet basic project goals and spent taxpayer dollars paying employees to watch movies and play board games.

In 2009, the Department of Energy awarded LG Chem Michigan with $151 million of stimulus funding as part of the Obama administration’s strategy to spend billions of dollars on “green” technologies. The grant was intended to fund the start up and testing of a new production plant in Michigan for lithium ion batteries to be installed in electric vehicles. But according to the IG, the project failed to manufacture actual battery cells that could be used in electric vehicles and spent more than $1.6 million on non-productive work.  

The report comes just hours after President Obama called for even more spending on green technologies. Science, Space, and Technology Committee Chairman Lamar Smith (R-Texas) issued the following statement regarding the IG report:

Chairman Smith: “It is an outrage that American taxpayer dollars were given to a company that failed to reach basic project goals and paid employees to watch movies and play board games during work hours.  Unfortunately, this is not the first time we’ve seen this kind of waste and abuse from the Obama administration’s green jobs grant program.  In 2009, Solyndra received a $535 million loan from the Department of Energy. In 2011, the company filed for bankruptcy, resulting in the loss of hundreds of millions of taxpayer dollars.

“The President wants more money to fund more pet projects, but it is clear that his Administration has not been responsible with what they’ve already been given.  The Obama administration must be held accountable for its excessive and irresponsible spending.”

Highlights from the IG Report:

  • Only about 60 percent of the production capacity set forth in the grant agreement was constructed even though nearly 94% of the $151 million federal grant had been spent.
  • Even though the facility had produced a large number of test cells, the plant had yet to manufacture battery cells that could be used in electric vehicles sold to the public.
  • The grant was intended to fund the transition of battery manufacturing facilities from South Korea to Michigan beginning in 2012, but that didn’t happen.
  • Less than half the expected number of jobs had been created to support the project.
  • Half of the employees interviewed had participated in various activities at work that were not appropriate for reimbursement by the Department, including watching movies, and playing board, card and video games.
  • More than half of the employees interviewed had participated in various volunteer activities during normal work hours.
  • Even though there were indications early in 2012 that the project was not progressing as planned, the Department of Energy did not take any action to determine whether payments to LG Chem Michigan should be suspended until further review of the project. 

A copy of the IG’s report can be found here.