August 20, 2020

Warren Requests CARES Act Oversight Committee Investigate Trump Administration's Decision to Award Kodak a $765 Million Contract as Part of COVID-19 Response

The "dumbest decisions made by executives in corporate history" resulted in an SEC investigation of Kodak and the Administration revoking the loan Deal with Kodak raises questions about corruption, nepotism, and mismanagement in the Trump administration's COVID-19 response

Text of letter to the Pandemic Response Accountability Committee (PDF) 

Washington, DC - United States Senator Elizabeth Warren (D-Mass.) formally requested that the Pandemic Response Accountability Committee (PRAC) conduct an investigation into the U.S. International Development Finance Corporation's (DFC) decision to award a $765 million taxpayer-funded loan to Kodak to produce generic pharmaceuticals, including the unproven and ineffective drug Hydroxychloroquine. Kodak had no pharmaceutical manufacturing experience -- and the loan was awarded through an opaque process and after an extensive and unprecedented lobbying effort by the company. 

Then it got worse. Kodak's chairman and another member of Kodak's board of directors purchased substantial amounts of company stock last month, ahead of the public announcement of the deal and at a time when Kodak and the Trump administration were negotiating the deal in secret. On August 3rd, Senator Warren called on the Securities and Exchange Commission (SEC) to open an insider trading investigation and the next day the SEC reportedly opened one. The Trump Administration then revoked the loan, with President Trump's White House trade advisor describing Kodak executives' behavior as "the dumbest decisions made by executives in corporate history." 

"The fiasco surrounding the decision to offer, then revoke, the Kodak loan also raises larger questions about corruption, nepotism, and mismanagement in the Trump administration's response to COVID-19," wrote Senator Warren. 

In the months prior to the loan's announcement, Kodak reportedly spent nearly $1 million lobbying members of Congress and the Trump administration - an "unprecedented" lobbying effort by the company. The CEO of the newly formed DFC, which President Trump tasked with aiding the nation in the crucial COVID-19 response, is Adam Boehler, a former college roommate of President Trump's son-in-law and White House adviser Jared Kushner. 

It is also unclear why in his Executive Order, President Trump chose the DFC, which was created in 2018 to address foreign policy and development issues, to be given this new loan authority. The mismanagement of the Kodak loan raises new concerns that the agency may be fundamentally unsuited to the task. 

It is vital that the U.S. take a more active role in the manufacturing of drugs domestically and rely less on foreign imports as a matter of national security. But rather than choose one of the many qualified and well-prepared biomedical companies in the U.S. to receive this loan, the DFC chose a company with no recent experience in producing these active ingredients. And it reportedly gave this loan to Kodak to produce Hydroxychloroquine (among other generic drugs) - a drug touted by President Trump despite the fact that there is no clinical evidence that it is a useful treatment for COVID-19.  

When Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, it gave the PRAC broad authority to review in the Trump Administration's response to the COVID-19 pandemic. Senator Warren urged the committee to investigate the circumstances of the botched $765 million Kodak loan, and review waste, fraud, abuse, and mismanagement pertaining to the loan.  She asked the investigation to include how and why Kodak was chosen as the first recipient of this kind of loan and why Hydroxychloroquine was included in the list of drugs to be produced, whether Kodak's lobbying efforts affected the decision, and whether any Trump Administration officials have conflicts of interest that may have affected the decision to provide the loan. She also asked the PRAC to determine whether any Trump administration officials aided or abetted insider trading or profiteering by Kodak executives or other officials and if there was any waste, fraud, abuse, or mismanagement in DFC's decision to provide the loan.