By Bloomberg
February 13, 2018

Millions of dollars of federal funds for a failed carbon capture and sequestration project were improperly spent on liquor, lobbying, and spas, according to a watchdog report released Tuesday.

Summit Power Group LLC, which was awarded $450 million in stimulus grants by the Energy Department under the Obama administration, spent $1.3 million on “unallowable costs” including spa service, alcohol, first-class travel, limousine services, catering on a private jet and travel expenses to attend a charity event, according to the department’s inspector general.

The company also paid $1.2 million to consultants who were lobbying on behalf of the company’s efforts to change law related to how grant funds are taxed, the report said.

The auditors said the Energy Department’s Office of Fossil Energy “had not always exercised sound project and financial management practices in its oversight of the project.”

“Given existing budget challenges facing the government, programs must ensure that the limited resources available are used to advance the mission of the department’s programs effectively and efficiently,” the report said.

The company, which filed for bankruptcy in October, had urged the Energy Department to continue its financial support for the $3.9 billion clean coal project in Penwell, Texas, even as the agency’s inspector general cast doubt on the viability of it.

The Energy Department terminated the Texas Clean Energy Project in 2016.

In a reply included with the Inspector General’s report, Steven Winberg, Energy’s assistant secretary for fossil energy, vowed to tighten project management and asked for the opportunity to review supporting materials from the audit regarding improper spending.

“However, given the bankruptcy,” Winberg wrote, “it seems highly unlikely that the company will have the financial resources to settle any unallowable assessments.”

Efforts to reach representatives of Summit were not immediately successful.

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