The U.S. Small Business Administration(SBA) disbursed $1.3 billion of Economic Injury Disaster Damage Loans (EIDL) to foreign IP addresses in China, Cuba, Syria and countries listed as sponsors of terrorism by the State Department.
According to a report by the Council of the Inspectors General on Integrity and Efficiency(CIGIE), these loans were intended to sustain U.S. companies and provide relief to small businesses that suffered economic hardship as a result of the pandemic.
More than US$1.3 billion to foreign companies
Inspector General Hannibal Ware found that the SBA approved 41,638 applications out of 233,000 submitted. Of these, a portion were found to be fraudulent, amounting to US$1.3 billion. The report found that some of the beneficiary companies had foreign IPs. Some of the countries of the beneficiary companies are included in the State Department 's list of countries sponsoring terrorism , such as:
- Iran, which received almost US$166,000.
- Syria: $23,500.
- Cuba: $27,600.
Other foreign countries with IP addresses that received covid-19 relief loans are:
- Pakistan: $47 million.
- Mexico: US$158 million.
- China: US$1.58 million.
- Afghanistan: $1.58 million.
- Russia: $4 million.
- United Arab Emirates: $11 million.
- India: $144 million.
- Saudi Arabia: $ 2 million.
In spite of the controls, people were able to gain access to
The Office of Inspector General(OIG) noted that the agency implemented four levels of controls to prevent or reduce fraud from foreign countries. However, people with foreign IP addresses were able to access the application system:
The numerous requests sent from foreign IP addresses are an indication of a fraud that may involve international criminal organizations. The OIG has ongoing investigations into international organized crime operations that solicited and stole pandemic relief funds. SBA officials were aware of and are concerned about the potential for overseas fraud..
Reviews Just The News that Patrick Kelley, associate administrator of the SBA Office, wrote to Inspector Hannibal Ware to comment on the matter:
The $1.3 billion identified by the OIG that was given to companies with foreign IP represents less than 0.04% of the more than $342 billion approved by the SBA for EIDL lending by covid. It is important to remember that the Pandemic posed a national health and economic crisis of historic proportions. As a result, the initial focus of the SBA's covid relief programs had to be to provide financial assistance as quickly as possible to respond to the crisis.
The agency indicated that it would review its controls related to foreign IP addresses and "ensure that these controls are more effective in future disaster lending systems."
