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A Probe Not Taken

Congress should take a look at OPIC's taxpayer-backed sweetheart deals. We did.

As Republicans convene hearings on foreign contributions to the Clinton campaign, attention has drifted away from big domestic donors and what they might have gained from their investments -- apart from a coffee or a (reportedly bad) night's sleep at the White House.

And while everyone knows that political donors often "happen" to receive impressive diplomatic appointments, or their firms wind up with lucrative government contracts, Mother Jones has discovered an even more direct way the politically well-connected can cash in: multimillion-dollar overseas investments backed by taxpayer dollars. These private investments, set up through the government's Overseas Private Investment Corp., are often made in developing areas expected to become boom markets -- such as Eastern Europe, southern Africa, and India. "The idea behind the funds is to replace direct foreign aid," says Mildred Callear, OPIC's acting president.

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To do that, OPIC has launched 24 "private" investment funds that, on average, are matched 2-to-1 by OPIC in guaranteed loans. Many of these funds are insured against loss. As OPIC's then- president Ruth Harkin said in 1995, when the funds started taking off, "If you're an investor in an OPIC-supported fund, the worst you can do is get your money back at the end of 10 years."

For the past two decades, OPIC has been one of the government's best-kept secrets. Before Clinton, the agency was little more than a small insurance company for U.S. firms willing to set up shop in countries with unstable regimes or fledgling markets. As late as the Bush administration, the agency's venture funds totaled less than $100 million. By 1996, however, OPIC's investment funds had ballooned to $3 billion.

So who exactly gets in on these "private" deals? Even though these investors are in partnership with a government agency, OPIC maintains that revealing their names would violate both their privacy and the Trade Secrets Act. But a Mother Jones investigation of some of these equity funds suggests another possible reason for OPIC's silence: The funds appear to benefit not only corporate heavyweights, but also people linked to President Clinton and at least two Republican senators.

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