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GOP Critics Urge Treasury-Led Panel To Block Sale of Stimulus-Funded Firm

Republican senators said Monday they expect the Obama administration to consider possible security risks related to the weekend sale to Chinese investors of a bankrupt U.S. battery company that received stimulus funding.

Sens. John Thune, R-S.D., and Charles E. Grassley, R-Iowa, said the interagency Committee on Foreign Investment in the United States, which must approve sales that could transfer control of U.S. companies to a foreign entity, should consider whether the sale of the advanced battery maker A123 Systems to Wanxiang Group compromises “American military and energy security.”

“Given the important national security interests at stake, we expect a full review of the bankruptcy transaction by the Treasury Department,” Thune said in a statement.

The two have pressed the Obama administration for months on A123, which in 2009 was awarded a $249 million stimulus grant — only about half of which was drawn — to build an advanced battery factory in Michigan.

But the firm struggled for profitability, in part because of less-than-expected demand for electric vehicles powered by its lithium-ion batteries. In October, it filed for Chapter 11 protection, prompting criticism from some Republicans of the tens of billions of clean-energy funding included in the economic stimulus. Notably, however, Michigan Republicans joined Democrats in backing the company’s loan application.

An Energy Department spokesman did not immediately respond Monday to a request for comment. At the time of A123’s bankruptcy filing, the Energy Department defended its stimulus investments in battery manufacturing, contending that they had nurtured a new domestic industry that previously had existed primarily abroad.

Stimulus backers note that, unlike the products of failed solar-panel maker Solyndra, A123’s products continue to have value — a point proved by the sale to Wanxiang. News reports indicated that the $256 million deal did not include components of A123 that dealt with the Defense Department.

Grassley and Thune nonetheless questioned whether classified information may be at risk from the deal, as well as whether the U.S. taxpayer funds spent on A123 “will end up in Wanxiang’s pockets.”

Rep. Paul Broun, R-Ga., called it “exceedingly frustrating” that U.S.-funded research would benefit Chinese firms. “It is a dirty cycle; we borrow money from China, use it to fund [research and development] in America, and then watch as the benefits of that research are reaped on foreign soil,” he said in a statement.

The deal will still need approval by CFIUS, which is led by Treasury Secretary Timothy F. Geithner and includes the heads of the departments of Justice, Homeland Security, Commerce, Defense, State and Energy.

Grassley in a statement called the review process “the last hope for ensuring some regard for U.S. interests.”

Acting on the panel’s advice, President Barack Obama in September blocked the sale of an Oregon wind farm to a Chinese-owned company, citing national security concerns arising from its proximity to a military base.

Such disputes, though, are typically resolved before they reach the president’s desk.

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