EXIM Supporter Investigated for Potentially Defrauding the Bank

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.

Learn More

GAO Finds Ex-Im Bank Lacks Comprehensive Fraud Prevention: CoA Renews Push to Abolish

The Export-Import Bank of the United States (“Ex-Im Bank”  or “Bank”) is a federal agency that provides financial credit to those who claim they are unable to obtain it privately. In reality, Ex-Im Bank offers taxpayer-guaranteed loans to politically-connected companies while leaving smaller companies at a competitive disadvantage. Last August, citing Ex-Im Bank as a form of corporate welfare, Cause of Action Institute advocated for its abolishment.

Now, a new Government Accountability Office (GAO) report finds that Ex-Im Bank lacks a comprehensive framework to deter fraud, needs comprehensive fraud risk management reform, and currently poses a significant risk of loss to taxpayers by failing to provide these adequate protections against fraud and abuse.

Between October 2016 to July 2018, the GAO conducted a performance audit of the Bank, surveying more than 400 employees about the organization’s fraud risk management capabilities. The GAO report concluded that:

“[T]he Bank has approached fraud risk management on a fragmented, reactive basis, and its anti-fraud activities have not been marshalled into the kind of comprehensive, strategic fraud risk management regime envisioned by GAO’s Fraud Risk Framework and its leading practices.”

The report found that employees were concerned about the lack of proactive measures being taken to combat and prevent fraud. The protocols in place focus on reacting after the fraud was committed, rather than preventing fraud from occurring. The GAO noted that the Bank was making efforts to reform its anti-fraud capabilities, but it was not clear whether improvements were keeping pace with expectations.

The GAO report surveyed employees and included the following comments and summaries about the Bank’s attitude towards addressing fraud:

  • “The Bank is more concerned with increasing sales than preventing fraud.”
  • “[The current division of responsibilities] is not the most effective way for the Bank to oversee fraud and fraud risk, as responsibility needs to be given to the teams on the front end—such as the individual relationship managers and loan officers—not on the back end.”
  • “[The current arrangement]seems to be more of an after-the-fact approach to potentially (if reluctantly) detecting fraud than any proactive encouragement to actively prevent fraud.”

These comments from Ex-Im Bank employees illustrate both a cultural challenge within the Bank and the Bank’s failure in constructing comprehensive reforms to prevent fraud. The GAO presented Ex-Im Bank with a list of recommendations to address its vulnerabilities and create a culture of prevention rather than reaction.

Given the Bank operates with taxpayer funds, these improvements are critical. In the words of a concerned Bank employee,  “More due diligence should be required in order to qualify for the U.S. government’s support.”

It is Cause of Action’s mission to advocate for a transparent and accountable government free from fraud and cronyism. The Ex-Im Bank is a key example where oversight and accountability are critical to ensuring its service to the public interest. For too long, the Ex-Im Bank has been linked to providing political favors for well-connected corporations and undermining fair market competition, and Cause of Action Institute will continue to advocate for ending the Bank and this form of corporate welfare.

Ethan Yang is a Research Fellow at Cause of Action Institute.

Top Export-Import Bank Official Deleted His Text Messages After We Asked For Them

WASHINGTON — As the Export-Import Bank fights to renew its charter this week, it will also have to contend with a new lawsuit we filed today after learning that a senior bank official destroyed federal records.

Through the Freedom of Information Act, our organization discovered that Ex-Im’s Chief of Staff, Scott Schloegel, deleted text messages he sent and received during the week of last year’s election.


On November 14, 2014, Cause of Action submitted a Freedom of Information Act request to Ex-Im. The request sought text messages, Blackberry messenger chats and SMS messages sent or received by top officials during the period of days between November 2, 2014 and November 8, 2014.

Ex-Im received our FOIA request on November 20, 2014, yet it did not respond to us until May 12, 2015, nearly six months later.

In its response, Ex-Im said, “the messages for Scott P. Schloegel were accidentally deleted on approximately January 1, 2015.” In one of the documents produced to us, Schloegel states in a signed declaration that he “deleted, by mistake, the messages on . . . [his] phone for the period in question.”

The date of Schloegel’s signed statement was March 27, 2015 — over four months after the Bank received our request for his records.

Due to Schloegel’s destruction of records, we have filed a legal complaint against the Bank. The complaint calls on Ex-Im, and the National Archives and Records Administration, to ask the Justice Department and/or Congress to initiate action to recover the deleted messages.

Cause of Action Executive Director Dan Epstein issued the following statement:

“The fact that a top official at the Export-Import Bank deleted his text messages several weeks after our organization asked to see them raises serious questions. Furthermore, it’s puzzling that it took the Bank another four months to let us know that this happened. The public deserves to know what their government is up to, and we will work tirelessly to continue to hold these federal agencies accountable.”

The full list of officials whose records we sought includes:

  • President and Chairman Fred Hochberg
  • Senior Vice President and Chief of Staff Scott Schloegel
  • Deputy Chief of Staff Gaurab Bansal
  • Senior Vice President of Communications Bradley Carroll
  • Senior Vice President of Congressional Affairs Erin Gulick