Overseas Private Investment Corporation's Management of Loans
NSIAD-88-161, May 6, 1988
Pursuant to a congressional request, GAO reviewed: (1) the Overseas Private Investment Corporation's (OPIC) loan approval, monitoring, and documentation procedures; and (2) OPIC actions on a loan it made to a Costa Rican corporation.
GAO found that OPIC: (1) as of March 31, 1988, had 75 active loans, with an outstanding balance of $48 million; (2) had 30 loans in delinquent status, accounting for $5.1 million in principal; (3) reviewed credit risk, technical expertise, management capability, marketing potential, collateral, development, U.S. foreign policy, and domestic benefits when assessing loan applications; (4) did not always adequately consider borrowers' financial performance; (5) generally kept well-organized and complete documentation on loans; (6) lacked policy guidance for assessing the impact of domestic benefits against credit risk; (7) did not perform an independent review of its loan approval and monitoring process; and (8) is implementing several recommendations a management consulting firm made regarding loan management, credit risk policy formulation, credit analysis support, loan approval, and post-disbursement oversight. GAO also found that OPIC: (1) determined that the Costa Rica loan was in default; (2) initiated foreclosure proceedings; (3) referred information regarding possible fraud by the borrowers to the Department of Justice; and (4) is attempting to locate potential purchasers for the mortgaged land.
- Review Pending
- Closed - implemented
- Closed - not implemented
Recommendation for Executive Action
Recommendation: The President, OPIC, should take steps to separate the post-disbursement oversight function from the preapproval process to ensure that objectivity is attained in managing the loan program.
Agency Affected: Overseas Private Investment Corporation
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.