Commercial Fishing Vessel:
Administration of the Colintino Rose II Loan Guarantee
RCED-89-105: Published: May 3, 1989. Publicly Released: May 3, 1989.
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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.
Recommendations for Executive Action
Status: Closed - Implemented
Comments: Policy to ensure that all significant servicing actions were documented was implemented in late November 1989.
Recommendation: The Assistant Administrator for Fisheries, NMFS, should direct the Chief, Financial Services Division, to ensure that justifications of the actions selected to resolve default situations are documented.
Agency Affected: Department of Commerce: National Oceanic and Atmospheric Administration: National Marine Fisheries Service
Status: Closed - Implemented
Comments: Program guidance was revised and issued.
Recommendation: The Assistant Administrator for Fisheries, NMFS, should direct the Chief, Financial Services Division, to clarify the regulations by stipulating in program guidance the conditions under which it is appropriate to obtain a certified architect's or engineer's certification.
Agency Affected: Department of Commerce: National Oceanic and Atmospheric Administration: National Marine Fisheries Service
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