Cause of Action Institute recently received documents indicating that a repeat customer and vocal supporter of the Export-Import Bank of the United States (“EXIM”) allegedly defrauded the bank. EXIM, which is tasked with assisting the financing of U.S. exports, has gained a reputation for favoring certain companies over others, which is exemplified by its nickname “the Bank of Boeing” for its preferential treatment of the airline. Recent reports from the Government Accountability Office and the EXIM Inspector General (”IG”) have also shown a disconcerting susceptibility to fraud.
Using the Freedom of Information Act, Cause of Action acquired an EXIM IG investigation report that details how Ruff Wear, a company which develops and manufactures performance gear for dogs, allegedly fleeced EXIM and American taxpayers.
Ruff Wear—which was featured on the U.S. Chamber of Commerce’s “Faces of Trade” campaign to reauthorize EXIM’s mandate in 2015—has received at least $1 million in loan guarantees from the EXIM in every year since 2012 according to USAspending.gov. In May 2014, Ruff Wear filed a claim for six unpaid invoices under a transaction insured by the EXIM Bank between Ruff Wear and the Danish company Original Dog Gear. Ruff Wear filed the claim for $133,563.20 and received a payment from the EXIM of $117,296.56 on July 11, 2014.
Global Recovery Group (“GRG”), a collections agency contracted by the EXIM Bank, was assigned to recover the paid claim amount from Original Dog Gear. GRG discovered that before the EXIM Bank paid the $117,296.56 claim to Ruff Wear, Ruff Wear had already settled a civil suit with Original Dog Gear in Oregon State Court regarding the same unpaid invoices. The case was settled on April 4, 2014, more than a month before Ruff Wear filed their claim with the EXIM Bank.
For reasons that are unclear, Ruff Wear declined to provide a copy of the settlement agreement when asked by GRG, which appears to be part of the reason the IG opened an investigation. The IG took the allegations so seriously, in fact, that it contacted the United States Attorney’s Office (“USAO”) in the District of Oregon and the USAO “issued a grand jury subpoena on October 29, 2018, in an attempt to obtain the details of the settlement in question.” Unfortunately, the decision-making process in the IG report to not pursue this matter in criminal or civil court is entirely redacted. It’s unclear from the IG report what, if any, action EXIM took after Ruff Wear filed a claim for funds relating to unpaid invoices that had already been settled in court.
Even for an agency as maligned as EXIM, this lack of accountability is shocking. Given that EXIM products are guaranteed by the taxpayer, the EXIM bank has a responsibility to inform the public of where their money is going. But that did not happen in this case. Ultimately, the Assistant United States Attorney did not take any legal action. They declined to pursue criminal charges, and “did not believe a civil case was prudent.” Instead, “alternative remedies” were sought. This case illustrates the susceptibility to fraud and lack of accountability at EXIM, an agency that has already established a reputation for favoring cronies. EXIM’s mandate is set to expire this September; it should not be reauthorized.
Zeke Rogers is a Research Associate at Cause of Action Institute.
Read more of CoA Institute’s work on EXIM:
- June 3, 2019: GAO Report Finds EXIM Potentially Provides Billions in Financing to Companies with Delinquent Federal Debt
- May 9, 2019: CoA Calls on IG to Investigate Use of Government Owned Vehicles at EXIM Bank
- August 8, 2018: GAO Finds Ex-Im Bank Lacks Comprehensive Fraud Prevention: CoA Renews Push to Abolish
- August 2, 2017: It’s Time to End Ex-Im Bank’s Taxpayer Subsidized Corporate Welfare
- June 24, 2015: Top Export-Import Bank Official Deleted His Text Messages After We Asked For Them
