Granholm’s Energy Department ignored warning about conflict of interest in $14B of loans given to Michigan energy companies

Former U.S. Energy Secretary Jennifer Granholm awarded $14 billion in below-market loans to Michigan energy companies before leaving office, despite an Energy Department alert about conflicts of interest.

Inspector General Teri L. Donaldson warned Granholm’s undersecretary for energy infrastructure in December that the Energy Loan Programs Office was administering more than $385 billion in new loans without an effective system to manage conflicts of interest.

“This poses a significant risk of fraud, waste, and abuse,” Donaldson wrote. “The projects funded with this authority, which involve innovations in clean energy, advanced transportation, and tribal energy are inherently risky in part because these projects may have struggled to secure funding from traditional sources such as commercial banks and private equity investors.”

DTE Gas Clean Energy will get $1.64 billion from the Energy Department’s Loan Program Office. DTE Electric Clean Energy will get $7.17 billion, Consumers Energy Clean Energy will get $5.23 billion. AEP, an Ohio-based company, will get $1.6 billion for transmission projects across several states, including Michigan.

Granholm’s former campaign benefactors in the energy industry received hefty loans even though the inspector general warned against the move, The Washington Free Beacon reported.

“The Federal Government prohibits conflicts of interest to safeguard the taxpayers against self-dealing, collusion, and fraud by Government officials and Government contractors,” Inspector General Donaldson wrote.

Donaldson wrote that taxpayer funds are often treated like Monopoly money. “For this reason, implementing and overseeing robust conflict of interest protections is a critical role for Federal officials.”

The department did not respond to a request for comment.

DTE Energy and CMS Energy, of which Consumers Energy is a business unit, have a government-supported monopoly in Michigan. The for-profit energy companies received more than $14 billion from the federal Energy Department in December.

Michigan Potash Company LLC will receive a conditional loan guarantee of up to $1.26 billion, according to separate announcement from the energy department.

When Granholm was governor, she awarded the chemical company Dow $108.3 million in state financial incentives. Granholm announced the payout in February 2010.

As governor, Granholm was term-limited and left office in January 2011. She was appointed to Dow’s board of directors in March of that year, according to Business Wire. At the time the position paid between $150,000 and $200,000 annually, according to MLive. She left the board in October of the same year, Business Wire reported.

Granholm also came under fire as energy secretary for failing to divulge her husband’s ownership of stock in Ford Motor Co. She violated stock disclosure laws nine times in one year by failing to report stock transactions within 45 days, according to a 2022 CNBC report.

In August 2023, the U.S. House Science, Space and Technology Subcommittee and the Subcommittee on Oversight and Investigations sent a letter to Granholm about the violations.

Rep. Jay Obernolte, R-California, chairman of the investigation committee and then-Rep. Brandon Williams, R-New York, sent a letter to Granholm, citing a “well-documented culture of disregard for standard public disclosure requirements” at the department.

The letter came after the department announced a $9.2 billion loan commitment to a joint venture between Ford and a Korean battery company. The two Republicans demanded the Energy Department develop better processes for compliance with ethics and disclosure requirements.