Commercial Fishing Vessel

Administration of the Colintino Rose II Loan Guarantee Gao ID: RCED-89-105 May 3, 1989

In response to a congressional request, GAO reviewed the National Marine Fisheries Service's (NMFS) actions concerning its loan guarantee of a commercial fishing vessel, focusing on: (1) the approval of the original loan guarantee; (2) efforts to resolve the loan default; (3) the vessel's construction and whether it was fit for its intended purpose; and (4) NMFS disbursement of funds, including those for vessel repair.

GAO found that NMFS: (1) approved a loan guarantee for $875,000 to finance the vessel's purchase; (2) approved additional loan funds and then refinanced the original loan after the owners encountered loan repayment problems; (3) did not ensure that the original borrower met loan guarantee requirements; (4) did not document its consideration of alternatives to resolve the default; (5) did not ensure that the vessel was originally constructed according to specifications, and subsequently had to expend funds totalling $1.9 million for repairs and reconstruction; (6) did not document its internal controls over fund disbursements; and (7) improved its internal controls over regional loan-making decisions, but did not clarify the conditions under which a vessel must be surveyed.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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