Senator: LG Chem may owe more

HOLLAND, Mich. (WOOD) - A U.S. senator is questioning whether LG Chem Michigan owes the federal government even more money after an audit confirmed that some workers were wasting company time.

The audit by the Energy Department's Office of Inspector General followed a Target 8 investigation that exposed some employees -- with little else to do -- were playing cards, board games, watching movies and volunteering at on-profits. The audit led the company to repay the federal government $842,000.

U.S. Sen. Claire McCaskill (D-Missouri), chair of the Subcommittee on Financial and Contracting Oversight, sent a letter to LG Chem Michigan Chief Financial Officer David Lee on March 8.

The letter asked Lee to explain how LG Chem has responded to "problems raised" in the federal audit and to review whether it should pay back even more to the federal government.

"Because the Inspector General did not review all of the labor costs submitted for reiumbursement by LG Chem, it is possible that the value of unallowable labor costs may be even higher," McCaskill wrote.

The audit covered only labor costs for the third quarter of last year. However, some employees told Target 8 that the game playing began months before that -- as early as February 2012.

McCaskill also questioned the entire $150 million grant.

"LG Chem has received more than $142 million, 94 percent of the available funds, without meeting any of the grant's objectives," she wrote.

The plant -- built to supply lithium-ion batteries for the Chevrolet Volt -- has hired less than half of the promised 440 employees and hasn't produced a single battery for sale.

McCaskill gave LG Chem until March 29 to provide answers.

LG Chem provided this statement regarding the letter:

"As reported, we have received a letter from Senator McCaskill requesting information about LG Chem Michigan in relation to the Department of Energy Inspector General’s report. We are reviewing the letter and will respond to Senator McCaskill in a timely manner.  As we have in the past with the DOE, we will cooperate fully and appropriately."

McCaskill has also asked Department of Energy Secretary Steven Chu to explain how his agency is trying to strengthen oversight of grants.

The Energy Department's National Energy Technology Laboratory, which managed the grant, "failed to identify LG Chem Michigan's questionable labor activities," McCaskill wrote.

The agency also didn't try to suspend federal grant payments and did not require LG Chem to "take corrective action" when the agency learned the plant was "not on track and appeared to be headed toward cost overruns."

In a press release, McCaskill said the findings that workers were using idle time to play games, watch movies and volunteer for local non-profits, "raises serious concerns about the Energy Department's grant management."

She also gave the DOE until March 29 to respond.