Cuba Was First Customer For U.S. Export-Import Bank; Still Owes US$36.3 Million. Will It Ever Be Repaid? Is U.S. Government Trying?

“President Franklin Roosevelt created a Second Export–Import Bank of Washington with Executive Order 6638 on March 9, 1934, with the specific goal of aiding trade with Cuba. The Bank's first transaction was a $3.8 million loan to Cuba in 1935 for the purchase of U.S. silver ingots…. The fist of five loans extended for Cuban coinage over a five-year period.”

Export-Import Bank Of The United States (EXIM Bank)
Washington DC

22 September 2020: “This is the final response to your Freedom of Information Act (FOIA) request to the Export-Import Bank of the United States (EXIM Bank). We received your request in our FOIA Office via E-mail on July 31, 2020. You requested the following information: “The exposure by EXIM to the Republic of Cuba. This includes: 1) total debt 2) total interest 3) total including interest 4) why EXIM does not show interest calculation in the 2019 report data and 5) the EXIM exposure by company.”

We conducted a comprehensive search of the files within the Office of the CFO, Division of the Treasurer and the Office of the Chief Risk Officer for records that would be responsive to your request. These are the components within EXIM Bank in which responsive records could reasonably be expected to be found. The search produced the attached record. After carefully reviewing the responsive document, we have determined that it is releasable in its entirety; no deletions or exemptions have been claimed. For your convenience, we are attaching the documents to this message as a PDF file. For your information, Congress excluded three discrete categories of law enforcement and national security records from the requirements of the FOIA. See 5 U.S.C. §552(c) (2006 & Supp. IV 2010). This response is limited to those records that are subject to the requirements of the FOIA. This is a standard notification that is given to all of our requesters and should not be taken as an indication that excluded records do, or do not, exist.”

“EXIM’s Cuba portfolio:
1) Total Debt: $36.3 million
2) Total Interest: $18.0 million
3) Total Debt Including Interest: $54.3 million
4) EXIM does not count interest due toward its exposure. Exposure amount includes only undisbursed and outstanding principal balances.
5) The breakdown of exposure by primary borrower- Primary Borrower Exposure (USD Millions): Cia Cubana Primadera Sa $1.20 Cuban Electric Co $18.74 Cuban Telephone Co $16.29 Juan Segismundo Pons Cuesta $0.01 Trafico Y Transporte Sa $0.03”

From Other Research:

As of 2019, the Republic of Cuba exposure to the Export-Import Bank of the United States (EXIM) is US$36,266,581.00

As Of 1982 “List Of Major U.S. Suppliers Under Delinquent Credits To Cuba”

Credit No. 493- Cuba
Allis Chalmers Mfg. Co.
American Meter Co.
Anaconda Wire & Cable Co.
Babcock & Wilcox
Canada Wire & Cable Co.
Combustion Engineering-Superheater Co.
Ebasco International Corp.
Esambia Treating Co.
Hall Mark Electric Sales Co.
International General Electric
International Standard Electric Co.
National Valve & Manufacturing
Rockwell Manufacturing Co.
United Fruit Co.
U.S. Pipe & Foundry
Westinghouse Electric International Corp.
Worthington Pump & Manufacturing

Credit No. 791- Cuba
Butler Pan-America Co.
Combustion Engineering Inc.
International General Electric
Jackson & Church Co.
Wallboard Dryer Co.

Credit No. 828- Cuba
Brown Trailers, Inc.
Clark Equipment Co.

Credit No. 960- Cuba
International Standard Electric Corp.
Kellogg Switchboard & Supply Co.

Credit No. 1021- Cuba
Crown Machine & Tool Co.

14 July 1982
United States House of Representatives
Subcommittee on Administrative Law and Governmental Relations
Committee on the Judiciary
Washington DC

Hearing- Debt Collection Act of 1981

The Honorable Sam Hall (chairman)
Mr. Charles E. Lord, Vice Chairman and First Vice President, Export-Import Bank of the United States
Mr. Warren Glock, General Counsel, Export-Import Bank of the United States
Mr. James Hess, Acting Treasurer-Controller, Export-Import Bank of the United States

Mr. Glick: Loans that were made to Cuba were pre-Castro loans. There were made between the period of 1951 and 1958. There is no dispute about those debts being due, but when the revolution occurred, those properties were expropriated by the Castro government and they have refused to pay that debt. We still harbor hopes of some day collecting that debt.

Mr. Hess: The Cuba debt today is US$36.3 million in principal, and the delinquent interest is currently US$44.2 million, for a total of US$80.5 million.

Mr. Hall: US$80.5 million. Is that a transaction that occurred identical to the procedures as we mentioned in the Boeing transactions? Was there some local or domestic corporation that sought to do business with Cuba?

Mr. Glick: The loans were made in the same way, directly to purchasers in Cuba. What we were financing were exports of U.S. manufactured goods from the United States, but the loans were made to Cuba entities.

Mr. Hall: Were they made to the country or to private entities in Cuba?

Mr. Glick: One loan was made to Compania Cubana de Electicidad, which was a government entity, and electricity operation in Cuba; one was made to the Cuban Telephone Company; and another was made to a wholly private company, Compania Cubana Premadera S.A., which is a private paper manufacturing company. Then there are a few smaller ones.

Mr. Hall: What domestic corporation was involved in that”

Mr. Glick: I do not have with me the names of the U.S. suppliers. We can furnish that.

*******

Mr. Hall: Did the government guarantee that loan?
Mr. Lord: The Cuban Government”
Mr. Hall: Yes.
Mr. Lord: Two of the entities were government entities, government-owned corporations, so it was the credit of the government.

25 March 1968
Subcommittee on the Committee on Appropriations
United States House of Representatives
Washington DC

Harold F. Linder, President and Chairman of the Board of Directors, Export-Import Bank of the United States

Mr. [Otto] Passman (Chairman): None of the loans is being repaid.
Mr. Linder: None.
Mr. Passman: I suppose it is the policy of the Castro government that the people not pay on these loans?
Mr. Linder: I think it is. He has taken over these properties. Mr. Sauer has been down there and tried to persuade him to make payments. He simply is not going to do it. At least he is not going to do it at this point. Maybe the day will come when he is out and there will be recognition by the United States and we will have a chance of getting some of our money back.

Annual Report of the National Advisory Council on International Monetary and Financial Policies, for the period July 1, 1970, to June 30, 1971

Cuban debt- about US$45 million- represents mainly delinquent installments on loans made by Eximbank in the 1950’s to U.S. subsidiaries which were subsequently expropriated by the Cuban Government.

EXIM was organized originally as a District of Columbia banking corporation by Executive Order 6581 from Franklin D. Roosevelt on February 2, 1934, under the name Export–Import Bank of Washington. The stated goal was "to aid in financing and to facilitate exports and imports and the exchange of commodities between the United States and other Nations or the agencies or nationals thereof", with the immediate goal of making loans to the USSR and Latin America.

Roosevelt created a Second Export–Import Bank of Washington with Executive Order 6638 on March 9, 1934, with the specific goal of aiding trade with Cuba. The Bank's first transaction was a $3.8 million loan to Cuba in 1935 for the purchase of U.S. silver ingots. The First and Second Export–Import Banks were combined in 1936 when Congress transferred the obligations of the Second Export–Import Bank to the first. Congress continued the bank as a government agency, using a series of laws between 1935 and 1943 to make it subordinate to various government departments.

The Export–Import Bank of the United States (abbreviated as EXIM or known as the Bank) is the official export credit agency (ECA) of the United States federal government. Operating as a wholly owned federal government corporation, the Bank "assists in financing and facilitating U.S. exports of goods and services". EXIM intervenes when private sector lenders are unable or unwilling to provide financing, equipping American businesses with the financing tools necessary to compete for global sales. EXIM's aim is to promote U.S. goods and services at no cost to U.S. taxpayers, protecting “made in America” products against foreign competition in overseas markets and encouraging the creation of American jobs. Its current chairman and president, Kimberly A. Reed, was nominated by President Donald J. Trump on January 16, 2019, and sworn in on May 9, 2019.

Founded in 1934, the Export–Import Bank was established by an executive order organized by President Franklin D. Roosevelt under the name Export–Import Bank of Washington. The stated goal was "to aid in financing and to facilitate exports and imports and the exchange of commodities between the United States and other Nations or the agencies or nationals thereof." The Bank's first transaction was a $3.8 million loan to Cuba in 1935 for the purchase of U.S. silver ingots. In 1945, it was made an independent agency in the Executive Branch by Congress. It was last chartered for a three-year term in 2012 and in September 2014 was extended through June 30, 2015.

Congressional authorization for the bank lapsed as of July 1, 2015. As a result, the bank could not engage in new business, but it continued to manage its existing loan portfolio. Five months later, after the successful employment of the rarely used discharge petition procedure in the House of Representatives, the U.S. Congress reauthorized the bank until September 2019 via the Fixing America's Surface Transportation Act signed into law on December 4, 2015, by President Barack Obama. In December of 2019, President Donald Trump signed the Export-Import Bank Extension into law as part of the Further Consolidated Appropriations Act, 2020 (P.L. 116-94) which authorized the bank until December 31st, 2026.

Over the years, the Export–Import Bank helped finance several historic projects including the Pan-American Highway, the Burma Road, and post-WWII reconstruction.