WASHINGTON (Reuters) - Two U.S. senators on Tuesday questioned whether battery-maker A123 should receive the rest of its government grant in light of a deal with a Chinese firm to invest hundreds of millions of dollars in the faltering company.
A123 announced last week that China's Wanxiang Group Corp plans to spend up to $450 million to help keep A123 afloat, while giving the Chinese company the chance to take a controlling stake in the U.S. green tech company.
A123 was awarded a $249 million grant as part of an Obama administration program that sought to expand U.S. advanced battery manufacturing for electric and hybrid cars. It has received about half of the grant so far.
"Billions of U.S. taxpayer dollars have flowed to foreign companies through the Recovery Act, and we are concerned that the recent announcement could lead to even more taxpayer dollars going overseas," Republican Senators John Thune and Chuck Grassley wrote in a letter to Energy Secretary Steven Chu on Tuesday.
The proposed deal between A123 and Wanxiang has drawn the attention of critics of the Obama administration's green company investments. Opponents are asking whether the deal amounts to the U.S. government bankrolling the transfer of sensitive technology into Chinese hands.
Thune and Grassley's letter marks the first official congressional inquiry into the matter.
The Obama administration, which had hailed A123 as a model for revitalizing the U.S. manufacturing sector, said last week that none of A123's grant would be allowed to fund any facilities abroad.
(Reporting by Ayesha Rascoe; editing by John Wallace)
