Here is another SLUSH FUND that needs to shut down.
Export-Import Bank Financing Company in Helicopter Sale Whose CEO Was Charged with Bribery

$32M in financing approved for the export of three AgustaWestland helicopters

Westland helicopter / AP

BY: Andrew Evans
July 12, 2013 2:37 pm

The United States Export-Import Bank has extended financing to support the sale of helicopters made by an Italian company whose head was arrested earlier this year on charges of bribery.

Export-Import (Ex-Im) Bank president Fred Hochberg announced on Twitter Tuesday that the Ex-Im board approved $32 million in financing to support the export of three AgustaWestland helicopters to Brazil. Ex-Im spokesman Phil Cogan said this financing will take the form of a loan guarantee backing another lender.

AgustaWestland, based in England, is a subsidiary of the Italian aeronautics manufacturer Finmeccanica, in which the Italian government holds a 30 percent stake. It has a manufacturing plant based in Philadelphia, where the helicopters will be manufactured.

The CEOs of Finmeccanica and AgustaWestland were arrested in February on bribery charges related to the sale of several helicopters to the Indian government. They were both subsequently fired.

Both men went on trial in June. Their arrest warrants described a culture of bribery and corruption permeating the “company philosophy.”

Ex-Im authorized financing for the deal despite the arrests. Several AgustaWestland competitors had backing from their own national export credit agencies, allowing Ex-Im to step in with financing to help secure the deal.
According to its charter, Ex-Im supports American jobs by helping companies export American-made products. In the AgustaWestland deal, Ex-Im is financing the American-made parts, while financing from the Italian export credit agency is supporting the Italian-made parts, Cogan said.

Cogan said there was no bribery involved in this deal, although he added that there is no way to completely rule out that possibility. He said Ex-Im goes through a thorough due diligence process with every deal to make sure that the parties are reliable.

During this due diligence process, Ex-Im looks into the background of the parties and tries to learn how the deal came together, another bank official said. Ex-Im also gets sworn statements from the parties involved in the deal assuring them that they were not involved in bribery.

The purpose of the investigation is to determine the parties’ “present responsibility,” according to the official.

All government agencies have to determine if an outside group they are working with, like a contractor, is “presently responsibility,” meaning they will fulfill their obligations and hold to ethical standards.

If Ex-Im or another government agency has doubts about a company’s present responsibility, the agency can “suspend” them while they do investigate further. In order to suspend a company, the agency has to go through an internal adjudication process that allows the company to respond, the Ex-Im official said.
Additionally, Ex-Im has to do business with the company unless it is found not to be presently responsible, meaning that in order to halt a deal, Ex-Im has to go through the adjudication process, the official said.

The official added that Ex-Im operates under a presumption of innocence unless proven guilty, making it difficult to suspend a company temporarily even if its top officials have been arrested on corruption charges.

Multiple outside lawyers confirmed to the Washington Free Beacon the Ex-Im official’s account of the rules governing the suspension process, although one noted that much is left to the discretion of the agency officials.

One lawyer added that the arrest of top company officials could be grounds for a suspension, although subsequently firing the officials, as Finmeccanica and AgustaWestland did, could mitigate the damage to the company and prevent a suspension.

“As previously reported, AgustaWestland is cooperating with the authorities reviewing the matter,” the company said in a statement. “AgustaWestland remains confident that its anti-corruption controls are adequate and that it is qualified to serve as a responsible contractor throughout the world.”

AgustaWestland also released a statement soon after the arrests announcing steps it was taking to strengthen its internal controls.

This deal will not be the first time that Ex-Im has financed the export of AgustaWestland helicopters. The bank supported the sale of four helicoptersmade in Philadelphia to Trinidad and Tobago in 2009.

Ex-Im’s financing of the AgustaWestland means that it is supporting a competitor to American-owned helicopter manufacturers like Sikorsky. Ex-Improvided financing for the export of Sikorsky helicopters earlier this year. A Sikorsky representative declined to comment on this competition.

“The ownership of the company is irrelevant,” Cogan said, adding that only the creation of jobs for Americans is relevant.

Conservative policy groups and lawmakers have attacked Ex-Im in the past, arguing that it constitutes a form of corporate welfare and skews the free market.
The House of Representatives reached a last minute deal to reauthorize the bank in May of last year. The deal extended the bank’s charter and increased the amount it can finance, but it also required the Treasury Secretary to initiate talks with foreign government to reduce protectionist financing that supports their own companies.

Ex-Im has consistently denied the charge of serving as a form of “corporate welfare.”

The bank’s charter prohibits it from displacing the private financing market. It can only step in with financing where private financiers will not assume the risk associated with the export or where foreign governments’ subsidies are reducing American companies’ competitiveness abroad.

Ex-Im’s critics contend that its financing makes the government, and ultimately the American taxpayer, liable for risky business ventures. They draw a parallel between Ex-Im and Fannie Mae and Freddie Mac, which securitized home mortgages and ultimately ended up costing the government billions of dollars in the wake of the 2008 housing market crash.

The bank has noted that it turns a profit each year, reducing the federal deficit, and that it has a very low default rate. The bank has also argued that it has a much more diverse investment portfolio than Fannie and Freddie, providing a buffer against a downturn in any one sector.

Critics remain unconvinced, however. Forty-four percent of Ex-Im’s fiscal year 2010 financing went to airline manufacturer Boeing, which competes with the heavily subsidized European airline manufacturer Airbus.

Ex-Im has come under scrutiny for its ties to political donors, as well. Hochberg, for example, has been a major donor to Democratic candidates since 2007.

http://freebeacon.com/export-import-...-with-bribery/