The Foreign Corrupt Practices Act enforcement agencies bring enforcement actions against companies in which the allegations often include lack of due diligence or risk management in connection with certain transactions.
As explained on its website, the Export-Import Bank of the United States (EXIM) “is the official export credit agency of the United States. EXIM is an independent Executive Branch agency with a mission of supporting American jobs by facilitating the export of U.S. goods and services. Because it is backed by the full faith and credit of the United States, EXIM assumes credit and country risks that the private sector is unable or unwilling to accept. The agency’s charter requires that all transactions it authorizes demonstrate a reasonable assurance of repayment; EXIM consistently maintains a low default rate and closely monitors credit and other risks in its portfolio.”
The Office of Inspector General (OIG) of EXIM “routinely shares information with EXIM on fraud risks.”
According to this recent OIG report:
“The Office of Inspector General (OIG) identified an instance in which the Export-Import Bank of the United States (EXIM) appeared not to act on fraud-related information OIG provided concerning a program participant. Specifically, OIG identified in 2022 that Trafigura, a Swiss commodities company, was the subject of corruption-related investigations by the United States and a foreign government. OIG referred this information to EXIM’s Office of General Counsel …
EXIM’s referral specifically noted that Trafigura was a participant in an application that had been filed for an EXIM insurance policy. Despite this referral, EXIM’s Board of Directors approved two insurance policies involving Trafigura in July 2023, which created up to $360 million in exposure. Trafigura plead guilty in U.S. District Court on March 28, 2024, for violations of the Foreign Corrupt Practices Act, specifically conspiracy t0 violate anti-bribery provisions in Brazil. (See here for the prior post).
Separate corruption charges are under consideration against Trafigura in Switzerland.
OIG is making EXIM aware of the above facts and intends to initiate additional oversight related to EXIM’s due diligence and risk management practices in FY 2025.”
According to the OIG report:
“On July 13, 2023, EXIM’s Board of Directors approved two transactions involving Trafigura. Specifically, the Board approved two Financial Institution Buyer Credit (FIBC) policies that allowed Trafigura to purchase liquefied natural gas from U.S. exporters. Each FIBC policy had a payment limit of $180 million, resulting in the potential for up to $360 million in total exposure to EXIM. In announcing the approval, EXIM noted that the transactions would enable Trafigura to sell U.S. liquefied natural gas primarily to European buyers seeking to identify alternate sources of gas following Russia’s invasion of Ukraine.”
In releasing its report, OIG also took issue with EXIM withholding information citing an exemption under the Freedom of Information Act. The OIG disagreed with EXIM’s position, but released the report with EXIM’s requested redactions because OIG believed “it would be imprudent to further delay publication of this report given its important subject matter related to fraud referrals.”
