Audit rips grant waste at LG Chem factory
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WASHINGTON -- An LG Chem battery plant in Michigan that received $150 million in U.S. Department of Energy grants used federal dollars to pay employees who played games, watched movies or did community service during work hours, a government audit says.
The audit, released last week by DOE Inspector General Gregory Friedman, says agency officials failed to manage the 2010 grant to the Holland, Mich., plant, owned by a unit of Korean electronics giant LG Chem.
Auditors concluded "the overall goals related to production of battery cells and the projected number of jobs created had yet to be met."
It is the latest black eye for the federal loan guarantee and grant programs, which were put in place several years ago to help electric vehicles become a commercial success.
Some government-funded projects have lived up to expectations, but others have fallen far short.
The $304 million plant in western Michigan has yet to produce battery cells for public sale. LG Chem told government officials the plant would create about 440 jobs, but hiring peaked at 215 early last year, and layoffs have cut the figure to 150.
General Motors was expected to buy batteries from the plant for use in the Chevrolet Volt. GM has continued to buy batteries from an LG Chem plant in South Korea, even though the Michigan plant could have met GM's needs, the audit says.
In a statement e-mailed to Automotive News, LG Chem said it accepts the government's findings. The company also said it is "acutely aware of the disappointment arising from the delays in our start of production." It added: "Nevertheless, we remain fully committed to launching production at [the] facility in Holland, Mich., and will use our best efforts to create additional new jobs and contribute to a more independent, sustainable energy future."
The payments by DOE for "nonproductive" activities totaled about $840,000, and LG Chem has reimbursed the agency in response to the audit, the report says.
You can reach Gabe Nelson at gnelson@crain.com.
