As of August 2023, EXIM continued to monitor a prior years's transaction of two satellites for the government of Mexico, according to a GAO Report. . The first satellite, launched in December 2012, was a fixed-service satellite that went live in February 2013. The second, a mobile-service satellite, launched in October 2015 and became operational that December.
"The EXIM engineer subsequently determined that Mexico was in compliance with the bank’s dual-use policy," according to a GAO report.
EXIM’s Engineering and Environment Division, with assistance from the bank’s Office of the General Counsel, Office of Congressional and Intergovernmental Affairs, and Office of Policy Analysis and International Relations, is responsible for implementing EXIM’s dual-use authority. EXIM defines “defense article” and “defense service” on the basis of the end user, the nature of the item, and its use.
In 2015, EXIM revised its guidance for monitoring dual-use transactions in response to findings we reported in August 2014.6 Specifically, in response to our recommendation, EXIM’s revised guidance called for the EXIM engineer assigned to monitor the transaction to take the following actions:
Notify buyers. In advance of deadlines specified in EXIM’s credit agreements with buyers, the engineer is to remind buyers of the reports due to be submitted to EXIM. If a dual-use report becomes overdue, the engineer is to notify the buyer and alert EXIM’s Office of the General Counsel within 30 days of the date when the report or related information was due.
Document monitoring activities. The engineer is to keep a record of monitoring activities in an electronic folder, which is also to contain documents such as reports that the bank requires from the buyer. These required documents vary by loan agreement and may include progress reports on construction, testing, and delivery of financed exports; technical operating reports once the item is in use; and annual end-use certifications or reports. The annual end-use certification describes the civilian and military uses of the exported item and includes certification by the buyer that the item is being used primarily for civilian purposes.
Determine dual-use compliance. Within 120 calendar days of the beginning of each calendar year, the engineer is to determine whether information received during the previous year was adequate to demonstrate that the transaction complied or failed to comply with the dual-use policy in the previous year, as set forth in the financing agreement and EXIM’s charter.
If the engineer determines that the buyer is, or may be, out of compliance with the agreement’s dual-use requirements, the engineer must retain files documenting the referral of this determination to senior management and the Office of the General Counsel. In addition, the engineer must retain files documenting any follow-up correspondence with the buyer to confirm the actual end use of the exports.
As of August 2023, EXIM was monitoring the end use of a single transaction that it had continued to finance in fiscal year 2021. This transaction with the government of Mexico, comprising two satellites, was approved in 2012 and required documentation in 2023.
EXIM did not finance any new exports under its dual-use authority in fiscal year 2022, according to EXIM authorization data and EXIM officials. According to EXIM officials, no applications for dual-use projects reached EXIM’s Board of Directors for approval in fiscal year 2022 or in fiscal year 2023 as of June 2023. The board last approved a new dual-use transaction in fiscal year 2012.
Read the full report here.
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