“Culture of Ethics” at Ex-Im Has Led to 46 Fraud Convictions in 5 Years

August 04, 2014

By Mallory Carr

A recent Congressional hearing revealed just how deeply corruption appears to run at the taxpayer-backed Export-Import Bank (Ex-Im), and the lengths to which the bank’s defenders will go to try and paper over the controversial bank’s problems.

Amid troubling reports of cash payments and kickbacks at the bank, and ongoing bribery investigations against four bank officials, the House Committee on Oversight and Government Reform held a hearing last Tuesday to examine the full extent of corruption at Ex-Im and to ask embattled Ex-Im Chairman Fred Hochberg for some answers.

Johnny Gutierrez, one of the four employees under investigation, is accused of taking bribes from Impex Associates, a company in Florida, in exchange for receiving Ex-Im financing. As the hearing revealed, the Impex scandal goes well beyond Gutierrez. Even after a lawsuit in 2006 was brought against Impex detailing how they were scamming the Ex-Im bank for taxpayer funds, the bank still gave the company seven different loans. This shows the banks complete and utter incompetence when it comes to preventing corruption and protecting the taxpayer.

Gutierrez isn’t the only employee on leave pending investigations. Three other individuals also face investigation in connection to bribery and corruption charges, involving two other companies. But when pressed for the names of the individuals and companies involved, Hochberg refused to name names – opting instead to put Ex-Im’s rapidly declining reputation before protecting the taxpayers from fraud.

Perhaps most troubling, however, is that these high-profile investigations may represent just the tip of the iceberg. Ex-Im has a history of corruption, which is not surprising given its mission. Since the entire purpose of the bank is to pick winners and losers, there is a huge incentive for bank officials to engage in the kind of alleged nefarious behavior that lawmakers are now investigating.

As a result, the widespread prevalence of fraud and corruption should not come as surprise. Although the Office of the Inspector General said there is no “systematic employee involvement in fraud schemes,” there’s plenty of evidence showing the bank does in fact have a corruption problem. Since 2009 alone, 46 people have been convicted of defrauding the bank and there have been 71 federal indictments.

Actual instances of fraud may be even higher given the low likelihood of Ex-Im employees being whistle blowers – and results from the federal employee viewpoint survey showed that only 42 percent of employees believe their bosses and supervisors maintain “high standards of honesty and integrity.”

At any other bank or taxpayer-backed institution, this would be considered an endemic problem – one requiring immediate attention and drastic action. Ex-Im has seen over the past five and a half years, on average, a new instance of fraud every six weeks. Yet Mr. Hochberg has yet to even admit there’s a problem.

When questioned about this troubling number, Hochberg replied nonchalantly that “it’s an area for improvement” and pointed to the myriad of ethics trainings the bank offers. Ex-Im can put on as many training sessions as they want, but that doesn’t change the fact that a large portion of their employees believe Ex-Im has unethical leaders, and it doesn’t change the inherently unethical nature of the bank’s work.

It’s long past time for Congress to stop supporting the defrauding of the American taxpayer, and allow the Export-Import Bank to expire.

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