Fed money may benefit Russian-backed firm

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By Jerry Seper

Republican Sen. Richard G. Lugar, one of the deans of Congress, and his junior colleague, Democratic Sen. Evan Bayh, have been leading the charge to secure federal money for a company that wants to build the next generation of advanced lithium-ion batteries.

The Indiana lawmakers have secured $6.5 million in congressional earmarks for Ener1, Inc., and have talked up the company's efforts to secure a slice of nearly $3 billion in two Energy Department programs offering grants and loans as part of President Obama's stimulus package.

Their pitch sounds as American as apple pie: The New York-based company would create much-needed jobs in the nation's heartland and help jump-start production of energy-efficient hybrid and electric vehicles.

But there's one detail they don't mention.

Ener1 has substantial financial ties to Russian industrialist Boris Zingarevich, a wealthy timber magnate and longtime business associate of Russian President Dmitry Medvedev. Mr. Zingarevich is frequently listed among the powerful and influential businessmen known in Russia as oligarchs.

According to federal records, Mr. Zingarevich is the "provider of substantially all of the funding" for Ener1 and its wholly-owned subsidiaries. The companies he owns, controls or is associated with - including Bzinfin SA, an off-shore firm that holds 66 percent of the shares of Ener1's parent company - have the potential to exercise substantial sway over Ener1's operations, documents filed with U.S. securities regulators state.

Foreign ties

Rep. Duncan Hunter, California Republican and a member of the House Armed Services Committee, said there should "definitely be concern" about foreign-controlled or owned companies attempting to break into the lithium-ion market in the United States and using multimillion-dollar government loans and grants to aid their development and production.

"It also presents significant security concerns that need to be thoroughly examined before any decisions are made," said Mr. Hunter, a former U.S. Marine who served two combat tours in Iraq and one in Afghanistan. "Our nation's energy market should be reserved for U.S. companies and workers, especially now when we are looking to be a global leader in this technology."

Mr. Hunter's father, Duncan L. Hunter, who retired from Congress in 2008 after 28 years, steadfastly supported the development of the lithium-ion battery because of its military applications, but as chairman of the House Armed Services Committee, he advocated that the Defense Department purchase its needs from U.S. sources.