No Batteries, Just Playtime: Another $150M Strike for Green-Tech Stimulus
In 2011, Solyndra filed for bankruptcy just two years after receiving a $535 million loan from the Department of Energy.
Now another green-jobs grant is under the microscope after the Department of Energy's inspector general confirmed reports that another recipient of stimulus funding wasted taxpayer dollars by letting employees play games and watch movies while basic project goals fell by the wayside.
In February 2010, LG Chem Michigan Inc., a subsidiary of the Korean corporation, was awarded more than $150 million in Recovery Act funding to help construct a $304 million manufacturing plant in Holland, Mich., for lithium-ion polymer batteries to be used in electric cars. The goal was to manufacture enough electric-car batteries to equip 60,000 vehicles annually by the end of this year.
The inspector general received a complaint from a local news investigation team in October 2012 alleging that stimulus funds were being misused. An investigation found this to be true.
"Through interviews with LG Chem Michigan management and other staff, we confirmed that employees spent time volunteering at local non-profit organizations, playing games and watching movies during regular working hours," states the report from IG Gregory H. Friedman, released just hours after President Obama called for more green-tech spending in the State of the Union.
"We were unable to calculate the exact loss to the Government because LG Chem Michigan did not track labor activities in detail. However, based on LG Chem Michigan employee revelations regarding work habits, we believe it is likely that the total amount of charges that included at least some non-productive work exceeded $1.6 million, about $842,000 of which was reimbursed by the Department in accordance with its cost-sharing arrangement for the project."
While employees were goofing off, the plant hadn't even reached the capability to manufacture batteries beyond test cells that couldn't be sold to the public. Company officials, though, told investigators that production hadn't begun "because demand for the Chevrolet Volt, the U.S. manufactured vehicle for which the plant was to produce battery cells, had not developed as anticipated."
Additionally, a project that was supposed to create more than 440 jobs didn't even reach half that goal.
LG Chem agreed to pay $842,000 back to the government. But, as the report states, "the audit surfaced issues relating to the management of this grant which transcend the reimbursed amount in importance."
“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," said House Science, Space, and Technology Committee Chairman Lamar Smith (R-Texas).
“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," he added. "The Obama administration must be held accountable for its excessive and irresponsible spending.”
Obama visited the LG Chem plant in July 2010, where he climbed into a Chevy Volt.
"The plant is the ninth of nine new advanced battery factories to start construction as a result of the $2.4 billion in Recovery Act advanced battery and electric vehicle awards the President announced last August," the White House said of the trip at the time. "The project is expected to create hundreds of construction and manufacturing jobs in Holland. Once fully operational, the Compact factory will produce battery cells to support 53,000 Chevy Volts a year."
“The workers at this plant, already slated to produce batteries for the new Chevy Volt, learned the other day that they’re also going to be supplying batteries for the new electric Ford Focus as soon as this operation gears up,” said Obama. “That means that by 2012, the batteries will be manufactured here in Holland, Michigan. So when you buy one of these vehicles, the battery could be stamped 'Made in America' -– just like the car.”
Just over 700 of the electric Ford Focus have been sold since the car went into production. At the Holland, Mich., event, though, Obama predicted big times for electric cars down the road.
The Energy Department's investigation began after a local TV station uncovered employees at the plant playing Monopoly and reading magazines -- and admitting this behavior had been going on for months.
"You can only do nothing for so long. There were days, sitting around all day doing nothing. ... I didn't play a whole lot of cards," said one worker, who added, "I bailed out of a sinking ship."