While the U.S. Export-Import Bank has policies in place to monitor the end-use of defense articles and services it finances, they do not specify what the bank should do if it fails to receive the required documentation, according to a congressional watchdog agency.
Ex-Im Bank spells out requirements for dual-use exports, or products with potential use in either military or commercial applications, in its financing agreements with borrowers. These requirements generally include progress reports on construction and delivery, technical operating reports, and annual certifications and reports on end-use. The federal government seeks to prevent certain U.S.-made dual-use technologies from falling into the hands of its enemies.
As of July 31, the bank received most of the information it required in its credit agreements for three dual-use transactions it financed in fiscal year 2012, “but some of the information it received was late,” the Government Accountability Office said in its report
. Some of the late-confirmation details included progress reports for satellite transactions with the Mexican government’s Eutelsat and the annual certification and reports for certain dual-use exports to Cameroon.
GAO said when asked about the late or missing documents, Ex-Im Bank told the agency it made efforts to obtain them. However, bank officials "did not think the missing documentation risked the exports being used in a lethal manner or for primarily military purposes.” GAO warned Ex-Im Bank that it still had an obligation to collect these documents in a timely manner and verify the end-use of the exported technologies to these countries.
Ex-Im Bank financed the three dual-use export transactions in fiscal year 2012, after a nine-year hiatus. These exports were collectively valued at $1.03 billion. The bank, however, did not finance any exports under its dual-use authority in fiscal year 2013.
Going forward, GAO recommended Ex-Im Bank strengthen its guidance for monitoring end-use in cases where borrowers do not turn over the proper documentation within specified timeframes. Ex-Im Bank agreed with GAO’s recommendations and said it will revise its guidance.