Kodak's $765 million government loan under investigation by same agency that approved deal, report says

  • Kodak's $765 million government loan is now under investigation by the very agency that helped create the deal.
  • The inspector general of the US International Development Finance Corp. told Sen. Elizabeth Warren the office is reviewing the sum, The Wall Street Journal reported on Monday.
  • Warren previously called on the Securities and Exchange Commission and the Pandemic Response Accountability Committee to investigate the Kodak loan.
  • The deal fell under intense scrutiny following its late July announcement and Kodak's subsequent stock rally. The SEC is currently probing the company's disclosure of the loan, and congressional committees are looking into the agreement between the Trump administration and Kodak.
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The very agency that helped grant Kodak a $765 million government loan is now investigating the deal following scrutiny from lawmakers and other offices.

The inspector general of the US International Development Finance Corp. told Sen. Elizabeth Warren on Thursday that the agency is conducting a review of the loan, a spokeswoman for the senator told The Wall Street Journal. Warren previously called for a probe of the deal, citing unusually high trading volumes of Kodak shares ahead of the loan's public announcement.

The loan was intended to help Kodak produce drug ingredients for combatting the coronavirus pandemic. The DFC was tasked with lending to firms with projects related to the health crisis.

The White House's announcement of the loan in late July boosted shares as much as 2,100% over the following two days. Kodak's stock price has since erased most of the gains as bodies including the Securities and Exchange Commission and congressional committees look into the loan and the company's related disclosures.

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Warren initially called on the SEC to probe "several instances of unusual trading activity prior to the announcement of the deal" in an August 3 letter. Kodak's trading volume surged to 1.6 million shares on the day before the loan's announcement, well above its average daily volume of 231,000 over the previous month.

The DFC froze Kodak's loan on August 7, saying in a tweet that "recent allegations of wrongdoing raise serious concerns."

The senator followed up her request with a letter to Michael Horowitz, the acting chair of the Pandemic Response Accountability Committee, in late August. The letter called for a new investigation into the Trump administration's decisions regarding the deal. Warren urged the committee, which monitors emergency spending of pandemic-related funds, to find the reason for the government's "botched" loan.

"The net result has been a waste of time, money, and resources, no progress whatsoever in the effort to mitigate the coronavirus disease 2019 (COVID-19) pandemic, and a host of questions about how and why the Trump Administration is handing out taxpayer funds and who is benefiting from these expenditures," Warren wrote in the letter.

Kodak traded at $6.26 per share as of 10 a.m. ET Tuesday, up 52% year-to-date.

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