Battery Maker LG Chem Used Stimulus Money To Play Video Games
The purpose of the 2009 American Recovery and Reinvestment Act was simple enough: Save American jobs. While there are those who categorically denied the stimulus package helped, most economists agree it saved millions of jobs across the country.
It even worked in Michigan, although maybe not in a way that was actually beneficial to the overall economy.
A federal audit of battery maker LG Chem has found the company responsible for wasting a Department of Energy grant of $150 million, in addition to $175 million worth of state and local tax relief. The money was intended to help the manufacturer create a Michigan-based plant to build batteries for a fleet of electric cars.
It didn't make a single battery.
Instead, LG Chem paid $1.6 million to employees and asked them to volunteer for local organizations such as pet shelters, while those who stayed behind played video games and watched movies.
"Our review revealed that LG Chem Michigan inappropriately claimed and was reimbursed for labor charges incurred by a variety of supervisory and staff employees for activities that did not benefit the project," said Gregory Friedman, the U.S. Department of Energy inspector general, in a report by the Detroit Free Press.
"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," said Friedman, according to Forbes.
The company was forced to reimburse the federal government to the tune of $842,000. Obviously, that's not going to make up for all the money poured into the operation.
So what happened? LG Chem spokesman Randy Boileau told the Free Press that the company drew up its production strategy based on expected demand for General Motors' Chevy Volt electric vehicle. When sales for the Volt were only half of the expected 60,000, production was delayed as GM purchased batteries from LG Chem's South Korean plant.
"There hasn't been sufficient production demand to make LG Chem Michigan feasible," said Boileau.
LG Chem is not the only domestic battery maker to face tough times. Massachusetts-based A123 Systems declared bankruptcy in October 2012 after blowing similar amounts of federal dollars.
During LG Chem's groundbreaking ceremony, none other than President Barack Obama himself addressed the crowd that had gathered, predicting a bright future for the company in Michigan.
"This is a symbol where Michigan is going, it's a symbol of where Holland is going and where America's going," said Obama.
Let's just hope he's wrong about that one.
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