Loans OK'd for companies with Mafia ties

The Overseas Private Investment Corp. has experienced its share of controversy.
WASHINGTON (AP) -- A government agency that helps U.S. businesses investing in developing countries has approved millions of dollars of loans to companies whose owners did business with Mafia figures and rebels in a bloody African conflict, records show.
The agency also awarded insurance to assist a company that is part of a Mexican energy conglomerate ordered by the Internal Revenue Service to pay more than $70 million in back taxes.
The Overseas Private Investment Corp., which operates with about $5 billion in reserves, says it conducts background checks before awarding loans or insurance. But the agency acknowledged it missed some negative information about its clients that The Associated Press found in a review of public records.
An OPIC spokesman said the agency checks some of the same public databases where the AP found the information.
For instance, the agency put on hold a $5 million loan to Globus International Resources Corp. "pending some further reviews" after the AP raised questions about evidence introduced in court showing Globus did business in the 1990s with Mafia figures who later were convicted of federal crimes.
Globus is not related to International Communications Systems Inc., which got an OPIC loan last year to market phone cards in Moldova under the brand name GlobUS.
Allegations
Globus gave hundreds of thousands of dollars' worth of shares to four Mafia stockbrokers and a mob-owned company between 1996 and 2000, according to court and Securities and Exchange Commission records.
Prosecutors alleged in 2000 that Globus was one of 19 companies that had their stock manipulated by the Mafia. The government never charged either Globus or its officials with crimes.
"Our due diligence didn't turn up anything like that," OPIC lawyer Eli Landy told AP. "This certainly raises a red flag."
An OPIC spokesman defended the agency's background checks. "We feel that the due diligence we do is very good and very thorough and we stand by that," Lawrence Spinelli said.
The chairman of the Senate Foreign Relations Committee is not so sure.
After the AP provided details of its findings to his office, Sen. Richard Lugar, R-Ind., wrote the agency's acting president, Ross Connelly, seeking more information on why OPIC agreed to provide assistance in these cases.
Past controversies
During its three decades of existence, OPIC has experienced its share of controversy.
In 2003, Congress ordered OPIC to be more open about its selection process and create a committee to bring together interested nongovernmental groups such as environmentalists and labor unions.
Doug Norlen, a member of that oversight panel, said OPIC still has significant improvement to make.
"They appear incapable of comprehending their own need for reform," said Norlen, an environmentalist. He said OPIC has "shabby due diligence" on issues such as corruption, human rights and environmental impact.
Congress created the agency in 1971 to give loans and insurance that were unavailable in the private sector to U.S. companies doing business in developing countries.
In its 34 years, the agency has provided more than $160 billion to such projects. Recipients have included ExxonMobil, Unocal and franchisees for Ruby Tuesday restaurants and Marriott hotels.