LG Chem repays $842K in federal funds

as many as 100 of its employees were paid for with those federal grant dollars. In its latest report, filed at the end of last year, it reported 76 jobs were created by the DOE grant.

In that same report, the company stated: "Start of has been delayed due to the slow market."

Two sources in the plant told Target 8 that the DOE showed up in early November, interviewing workers and checking records, including time slips.

The auditor questioned them about how they're spending their time, including their work for the non-profits.

The sources say the company in early November ordered an end to that non-profit work.

Based on interviews with employees, auditors wrote that "we believe it is likely that the total amount of charges that included at least some non-productive work exceeded $1.6 million" during the third quarter of 2012.

LG Chem reimbursed the government $842,000 of that. That reimbursement was based on the assumption that "LG Chem complied with the terms of its grant to share costs on an equal basis, an aspect that we did not confirm."

"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," the audit report states.

Auditors said that 16 of the 26 employees they interviewed had "participated in various volunteer activities during normal work hours in recent months." Some volunteered one day, while others volunteered five days a week.

They found that the volunteer work began around August 2012 and continued until November.

"While our interviews demonstrated that these activities had taken place, we were unable to quantify the number of days spent on volunteer work because the company did not track labor activities to this level of detail."

Also, the report says, 13 of the 26 workers 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."

They found this started before the volunteer work and continued "until just before the time of our review."

However, the auditors weren't able to "quantify" the amount of time watching movies and playing games "because the company did not track labor to this level of detail."

"Finally, the audit surfaced issues relating to the management of this grant which transcend the reimbursed amount in importance," auditors wrote.

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U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy response to the Inspector General's report:

"The Office of Energy Efficiency and Renewable Energy (EERE) appreciates the opportunity to respond to this audit report:

EERE's investment was to partially fund an advanced battery manufacturing facility, and it’s simply unacceptable that any of those funds were used to pay for other work in the community, or for any other purpose. Immediately upon learning of these allegations, EERE took swift action to stop further payments, secured a refund for taxpayers on $842,189 in questionable costs, and report the matter to the Department's Inspector General. In addition, EERE is taking a series of steps to strengthen project management in the future, including a reorganization within EERE, an updated grants management process, increasing the number of site visits each year to large projects, and centralizing the review of project invoices. A more complete summary of these actions is below.

While the demand for electric vehicles hasn't grown quite as quickly as expected and there will likely be some more challenges in the next few years, electric drive vehicle sales tripled last year and are expected to continue growing rapidly. EERE's investment in this battery manufacturing facility – matched dollar for dollar by LG Chem Michigan Inc. – is helping to put Michigan and the United States in a prime position to capture a rapidly growing global market. This is part of an overall effort to make sure that America's auto manufacturing base continues to adapt to the most innovative technologies, deliver the gasoline-saving vehicles that consumers increasingly want, and to continue to grow the manufacturing sector in the United States.  

While the Department has no tolerance for and moved swiftly to correct this case of inappropriate billing, it's also critical that the United States continue to compete aggressively for the clean energy jobs and industries of the future. Ultimately, the choice comes down to whether the United States should lead what will become an enormously valuable and growing market, or whether we will give up this industry because sales 'only' grew 200 percent last year. Emerging technologies and industries often face struggles early on, but the race will be won by those who remain focused and committed to the end goal."