Battery maker A123 got U.S. funds as it sought bankruptcy

Fri Nov 16, 2012 4:18pm EST
 

By Ayesha Rascoe

WASHINGTON (Reuters) - The Obama administration provided struggling battery maker A123 Systems Inc with nearly $1 million on the day it filed for bankruptcy, the company told lawmakers investigating its government grant.

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 $115.8 million 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.   Continued...