The Obama administration provided struggling battery maker A123 Systems Incorporated with nearly $1m on the day it filed for bankruptcy, the company told lawmakers investigating its government grant, Reuters reported on Friday.
The company, which makes lithium ion batteries for electric cars, filed for Chapter 11 bankruptcy protection last month after a rescue deal with Chinese auto parts supplier Wanxiang Group fell apart.
That same day, October 16, A123 received a $946,830 payment as part of its $249 million clean energy grant from the Energy Department, the company said in a letter, obtained by Reuters, to Republican Senators John Thune and Chuck Grassley.
In the letter, dated November 14, A123 said the October payment was the most recent disbursement it had received from the government, with an additional $115.8m still outstanding on the grant.
Thune and Grassley have pressed the Energy Department for more details about its funding of A123 as the company has faltered.
“The Department of Energy needs to answer for why it appears to put federal grants on auto-pilot to the detriment of U.S. taxpayers,” the two senators said in a statement. “This can’t stand.”
A123 said it may still need to use the rest of its grant money if it decides to update or expand its current manufacturing capacity.
“The Energy Department takes its responsibility to be good stewards of the taxpayers’ money very seriously,” a department spokesman, Bill Gibbons, said in a statement.
Under the department’s grant program, companies receive funds only after work is completed toward the ultimate goal of a grant.
Gibbons said the department’s investments have helped to build US advanced battery manufacturing, supported American workers and ensured the country can compete in a fiercely competitive global market.
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‘A123 got US funds as it sought bankruptcy’