Government, Lakeshore, and Manufacturing

LG Chem refunds $842K in stimulus funds to Department of Energy

February 14, 2013
| By Pete Daly |
TAGS LG Chem
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LG Chems refunds $842K in stimulus funds to Department of Energy

LG Chem Michigan Inc. has returned $842,189 to the U.S. Department of Energy for what the DOE calls “questionable labor costs incurred in the third quarter” at the Holland plant. A division of LG Chem of Korea, the company received a stimulus grant to make advanced batteries for electric vehicles, but did not begin production last year as planned.

In February 2010, LG Chem Michigan was awarded more than $150 million in American Recovery and Reinvestment Act funding through the DOE to cover half the cost of building a $304 million battery cell manufacturing plant in Holland, creating more than 440 jobs in the process.

According to a DOE memorandum dated Feb. 8, last Oct. 24, the DOE’s Office of Inspector General received a complaint that LG Chem had “misused Recovery Act funds,” because employees there “had little work to do and were spending time volunteering at local nonprofit organizations, playing games and watching movies at the expense of the federal government and taxpayers.”

LC Chem Michigan released a statement yesterday, which said the company agreed with the DOE conclusion that the labor costs DOE had reimbursed were not allowed under terms of the federal grant.

“LG Chem has accepted the government’s decision and has reimbursed the government for the full amount. LG Chem Michigan has also established internal safeguards to prevent this from happening again,” according to the statement.  It also says the company remains “fully committed to launching production at LG Chem Michigan’s facility in Holland” and noted that “LG Chem Michigan has invested $150M in the people that it has hired and in completing construction” of the plant.

Lakeshore Advantage, an economic development agency in Zeeland, played a role in helping bring LG Chem to Holland. Lakeshore Advantage president Randy Thelen said this morning he is certain LG Chem will produce batteries there.

“The market hasn’t developed as fast as anybody would have liked, so they’re wrestling with that, but, clearly, they are proceeding in that direction,” Thelen said.

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