Commercial Fishing Vessel:
Administration of the Colintino Rose II Loan Guarantee
RCED-89-105, May 3, 1989
In response to a congressional request, GAO reviewed the National Marine Fisheries Service's (NMFS) actions concerning its loan guarantee of a commercial fishing vessel, focusing on: (1) the approval of the original loan guarantee; (2) efforts to resolve the loan default; (3) the vessel's construction and whether it was fit for its intended purpose; and (4) NMFS disbursement of funds, including those for vessel repair.
GAO found that NMFS: (1) approved a loan guarantee for $875,000 to finance the vessel's purchase; (2) approved additional loan funds and then refinanced the original loan after the owners encountered loan repayment problems; (3) did not ensure that the original borrower met loan guarantee requirements; (4) did not document its consideration of alternatives to resolve the default; (5) did not ensure that the vessel was originally constructed according to specifications, and subsequently had to expend funds totalling $1.9 million for repairs and reconstruction; (6) did not document its internal controls over fund disbursements; and (7) improved its internal controls over regional loan-making decisions, but did not clarify the conditions under which a vessel must be surveyed.