DETROIT- NOVEMBER 30: A General Motors Chevrolet Volt goes through assembly. (Image credit: Getty... [+]
Employees at LG Chem's automotive battery plant in Holland, Michigan played games, watched movies, and volunteered at other organizations, then billed the time to a U.S. Department of Energy stimulus grant, the government concludes in a report released today.
A battery supplier for the Chevy Volt, LG Chem continues to manufacture batteries in South Korea, the government asserts, although it could have met demand for Chevy Volt batteries using the built capacity of its Holland plant.
"LG Chem Michigan inappropriately claimed and was reimbursed for labor costs that did not support the purpose/objective of the grant, including costs for workers to perform volunteer activities, play games and watch movies during regular work hours," according to the report by the DOE's Office of the Inspector General.
The Inspector General blames both LG Chem and DOE officials, charging DOE with failing to write adequate oversight protections into the $142 million grant it awarded to LG Chem to build the Holland plant:
Notably, LG Chem Michigan did not fully realize the grant's target goals, and the Department did not always take sufficient action to ensure adequate oversight of project progress and, in turn, protect the taxpayers $142 million investment in the project. For instance, LG Chem Michigan officials told us that they made a decision to delay production of battery cells at the Michigan facility. LG Chem Michigan officials made that decision even though demand for the Chevrolet Volt averaged 1,955 vehicles per month in 2012. That volume could have readily been produced by using the then built-out capacity of the Michigan plant. NETL officials commented that it was anticipated at the time the grant was awarded that the transition of production from non-U.S. sources to Michigan would occur; however, language requiring the shift in production had not been incorporated into the grant. Thus, they asserted that the Department had no leverage to require the shift in production to the Michigan plant. Yet, until the shift in production takes place or some alternative use for the plant is developed, U.S. taxpayers will receive little direct benefit from a plant for which they provided up to half of the funding.
In October, LG Chem workers told a local television reporter they play games and watch movies because the factory has yet to produce a single battery for consumer use.
Although the government cannot force LG Chem to shift production to Michigan, it did convince the company to return half of $1.6 million in total labor costs billed for inappropriate activities. DOE estimated its loss at half because the two entities had agreed to share labor costs, but the Inspector General notes the amount actually billed to the government remains uncertain:
"We were unable to calculate the exact loss to the government because LG Chem Michigan did not track labor activities in detail," according to the report.
