December 12 2012
Today, U.S. Bankruptcy Judge Kevin Carey approved the sale of government funded electric car battery manufacturer, A123 Systems. The deal must be approved by the Administration before being finalized.
In a Forbes article today, Nigam Arora raised several concerns about the acquisition that I have voiced here at IWF:
President Obama was determined not to let China run away with green energy technologies of the future…To help compete with China, the Obama administration gave $249 million to A123. Of course, the U.S. Treasury borrows billions from China. Money is fungible.
In an ironic twist, A123 filed for bankruptcy. In the bankruptcy auction, a Chinese conglomerate, Wanxiang Group beat American company Johnson Controls to buy A123 for $257 million. In a further ironic twist, Wanxiang generates large amounts of revenues from selling auto parts to General Motors and Ford.
Not only was taxpayer money spent to compete with China’s green energy technology, but when the Administration’s venture capitalism failed, the company and grants were acquired by a Chinese firm.
It gets more convoluted than that. Arora explains:
It is a triple irony. The U.S. borrowed money from China to subsidize a battery company to compete with state-subsidized Chinese battery companies. The American company gets bought out by a Chinese company for about the same amount of money that the U.S. government gave it. The U.S. still has to pay the money back to China. The Chinese company buying the American company makes a lot of money by providing auto parts for the cars that Americans drive.
This obviously is not how our government is supposed to operate and isn’t going to help get our economy back on track.