WASHINGTON – A Democrats-led subcommittee overseeing federal aid against the coronavirus requires five companies to repay loans that the panel said should have been made to small businesses.
The subcommittee headed by Representative James Clyburn, DS.C., sent letters to the companies on Friday as the first official action. The House voted last month to create the panel over objections from Republicans who say it is partisan and duplicates other surveillance efforts around the federal government.
The panel said the companies contacted have received loans of $ 10 million or more, are all public, have over 600 employees, and have a market value of over $ 25 million.
The letters were sent to EVO Transportation & Energy Services Inc., a transportation operator in Arizona; Gulf Island Fabrication Inc., a Texas-based manufacturer of energy vessels; MiMedx Group Inc., a Georgia-based biopharmaceutical company; Quantum Corporation, a video streaming and storage company based in Silicon Valley, California; and Universal Stainless & Alloy Products Inc., a Pennsylvania-based steel manufacturer.
The letters ask companies to respond by Monday and let the committee know if and when they are refunding the money. They say the law providing the aid was passed by Congress to be a lifeline for small businesses that might be forced to lay off employees or shut down altogether.
“We did not intend these funds to be used by large companies which have a substantial investor base and access to capital markets,” the Democrats wrote.
Nearly 50 state-owned companies have already pledged money to the government’s emergency lending program of more than $ 600 billion, with Treasury Secretary Steven Mnuchin threatening criminal charges for breaking the rules. The administration has given companies until May 14 to repay it without penalty.
The Small Business Administration also said it would verify every loan over $ 2 million and, if any issues were found, would withhold the program’s offer to cancel the loan.
The SBA watchdog, meanwhile, found in a report released Friday that the agency’s rules for the program are mostly in line with the mandate of humanitarian aid legislation, but not in all cases. areas. Those who failed to meet targets prioritize underserved and rural markets, under what conditions loans can be canceled, advice on loan deferrals and loan registration, according to the office’s report. SBA Inspector General, Hannibal “Mike”. Ware.
In one example, the report states: “Because the SBA has not provided advice to lenders on prioritizing borrowers in rural and underserved markets, these borrowers – including rural, minority and women-owned businesses – may not have received the loans as expected. “
Several Democratic senators had called for the report to help ensure that “small businesses get the money they need and are treated fairly” by lenders.
A recent Associated Press investigation found that at least 147 state-owned companies received $ 555 million in potentially repayable loans. Some had market values well over $ 100 million, and many had executives making millions each year.
The five companies the Democrats contacted have received $ 10 million in loans, and most have market values well above $ 25 million. EVO Transportation & Energy Services, for example, has a market cap of $ 161 million and its shares are up 180% in 2020.
MiMedx Group Inc. said on Friday that it would repay the loan. None of the other four companies immediately returned a request for comment.
Republicans on the committee did not sign the letters and criticized Democrats for sending them.
“It is scandalous and telling that the first action committee the Democrats have taken is to blindly send letters of harassment to individual companies that have followed the law to keep their workers on the payroll,” said the Louisiana Representative Steve Scalise, the top GOP member on the panel and House Republican No. 2.
Scalise said the panel should work “on a bipartisan basis to help families return to work safely and begin to hold China accountable for the devastation it has wrought on the American people.”
Meanwhile, members of a separate, bipartisan congressional oversight committee said on Friday they had started reviewing actions by the Treasury and Federal Reserve to lend money to companies under the economic bailout law – even though the panel does not yet have a chair.
The Rescue Assistance Act dictates that House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell appoint the group’s leader, but they have yet to do so.
The statement came as the commission was required to issue a report 30 days after the first payment under the law.
“While we will not be releasing a report today, we are working to meet our responsibilities even in the absence of a staff, budget and chair, and intend to release one. soon, “said the four commissioners.
The four members who have been appointed so far are Sen. Pat Toomey, R-Pa., And Representatives Donna Shalala, D-Fla., And French Hill, R-Ark., As well as the former Democratic aide to the Bharat Ramamurti Senate.