More Fraud From Obama's Energy DepartmentIs this the best use of our tax dollars?
House Committee on Oversight and Government Reform Chairman Rep. Darrell Issa (R-Calif.) is probing a $730 million conditional loan commitment to Severstal, a Russian company operating mainly in the steel and mining industry. Writing to Energy Secretary Steven Chu, the California Congressman questioned whether Severstal North America, a subsidiary of the powerhouse Russian manufacturer, should benefit from public financing to improve and expand facilities in Dearborn, Michigan.
The North American division of the company has struggled to penetrate the U.S. steel market, and it sold three of its U.S. mills in March. Consequently, Severstal North America received a conditional loan approval from the U.S. Energy Department in July to help retool and expand its factory in Dearborn.
Severstal is owned and controlled by Alexei Mordashov, who is worth $18.5 billion and is one of the wealthiest people in the world, according to Forbes magazine. In Issa’s letter, he asked Secretary Chu why taxpayer money is needed when "announcements made by Severstal during the loan consideration process indicated that the company had ample means to carry out the project."
Issa contended that the company already had plans to expand production "with apparently no need for federal financing." In fact, Severstal had already sold plants in Ohio, Maryland, and West Virginia, as part of a plan to shift operations to its Michigan facilities. "Given the immense wealth and power of Severstal’s CEO and the fact that the corporation had already made significant investments in the project, it is surprising that DOE would choose Severstal for a loan meant to spark new businesses and technologies within the automotive industry," Issa wrote.