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Table of Contents

 3 President’s Letter 

 6 Investing to Support U.S. Foreign Policy 

 8 Extending the Reach of U.S. Small Business 

 10 Building the Housing Markets that Build Economies 

 12 Helping Africa to Attract the Investment it Needs 

 14 Leading U.S. Investment Into the World’s Emerging Markets

 16 Laying the Groundwork for Economic Growth

 18 2005 Investment Activities

 24 OPIC Countries and Areas 

 27 Financial Statements

 42 OPIC Board of Directors

 43 OPIC Executive Staff

 44 Photography Credits 

 
2 2005 ANNUAL REPORT

UnlockingPOTENTIAL,

so that it opens the door to growth

that is shared widely, is the very best

definition of development.

 
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I

President’s Letter

am honored to be writing to you, in my fi rst annual report as President 

and CEO of the Overseas Private Investment Corporation, that OPIC’s 

commitment to its developmental mission remains as strong as ever. We 

partnered with American investors to seek out projects that maximized 

both their benefi ts to local communities and their potential to stimulate 

economic growth — all in the most challenging and traditionally underserved 

markets across the globe. In 2005, OPIC worked as it was intended, and worked 

extraordinarily well.

This year the agency provided fi nancing, guaranties and political risk insurance to 99 new projects in 46 countries around the world, with commitments 

totaling $1.4 billion. OPIC projects in turn raised living standards in their host 

countries, enabling ordinary citizens to summon their entrepreneurial talents in 

meaningful ways, often for the very fi rst time.

Unlocking potential, so that it opens the door to growth that is shared widely, 

is the very best defi nition of development. In its role as a self-sustaining government agency that supports U.S. investment in emerging markets, OPIC is truly 

unique. It has extraordinary potential to do good. We realized our own potential 

to an unprecedented degree, as demonstrated by the many positive developmental benefi ts our projects delivered.

• OPIC supported U.S. foreign policy by facilitating investment in strategically 

important nations, especially those at the front lines of the international war 

on terrorism. On behalf of our respective governments, OPIC and the Iraqi 

fi nance ministry signed a new bilateral agreement formally making all of 

OPIC’s services and support available for projects in Iraq. This fi rst-ever investment incentive agreement undertaken by OPIC in Iraq should pave the way for 

increased U.S. business activities in the Iraqi economy. In a year that brought 

elections, a new constitution, and expanding markets, OPIC was proud to play 

a role in Iraq’s return to international commerce and its entry into the community of democratic nations.

• OPIC increased participation of U.S. small businesses in international 

commerce. Besides providing higher total dollar support in direct loans or 

insurance for small businesses competing overseas, the agency continued to 

improve the way it delivers services to small business. Fundamental changes 

included a shift from fi nancing based on collateral to fi nancing based on cashfl ow analysis, restructured fees, and reduced documentation requirements. OPIC 

called on the private sector to join a new Enterprise Development Network and 

assist the agency in administering $100 million in OPIC fi nancing specifi cally 

earmarked for U.S. small and medium-sized enterprises. I can tell you from my 

fi rst-hand experience as an OPIC customer whose company purchased political 

risk insurance, that businesses appreciate working with an effi cient, user-friendly 

government agency that understands their needs.

 
4 2005 ANNUAL REPORT

• OPIC helped to expand home ownership across the world by supporting 

projects that create mortgage markets where none existed, fund construction 

of affordable housing, and bring the dream of home ownership within reach of 

more people. In 2005, we supported the fi rst securitization platform in Central 

America; by providing access to U.S. capital market funding, we helped 1,500 

Guatemalans to purchase homes. We supported the Bush Administration’s 

African Mortgage Market Initiative with a commitment for long-term mortgage 

funds in Zambia, enabling the construction of 5,000 low-cost homes. In South 

Africa we fi nalized a unique project that links mortgage guaranties and AIDS 

treatment funding, so that as many as 350,000 home buyers who may later test 

HIV-positive will not lose their homes over missed mortgage payments. OPIC 

also made its fi rst commitment to an affordable housing fund, which will invest 

$130 million in several projects with a goal of developing more than 80,000 

affordable homes in Latin America.

• OPIC directed substantial investment to the least-developed and traditionally 

underserved markets. In 2005, OPIC placed particular importance on channeling private capital to projects in Africa, where nations facing critical economic 

development needs have attracted relatively little foreign direct investment 

(FDI). While continuing to focus on projects that develop transportation 

infrastructure, energy resources, local industries, and affordable housing in the 

sub-Saharan region, OPIC also turned its attention in 2005 to North Africa 

and the Middle East — a region that receives just over one percent of all the 

FDI fl owing to developing countries. To try to turn that situation around, OPIC 

hosted Expanding Horizons in North Africa, a trade and investment conference 

in Morocco, which introduced more than 250 participants to the region’s improving investment climate, potential returns, and available support from OPIC, 

multilateral institutions, and other government agencies.

• OPIC served as a catalyst for investment in emerging markets where the 

private sector would not or could not act alone. Whether in post-war central 

and southeastern Europe, the former Soviet Union states, remote areas of Latin 

America, or just across the border in Mexico, there are developing markets 

where many projects came about only because OPIC was available to encourage 

the investment of private capital with fi nancing that complements, rather than 

competes with, support from the private sector. OPIC also played a signifi cant 

role in bringing scarce equity capital into emerging markets. OPIC is now one 

of the largest capital providers to emerging markets private equity funds, with 

$505 million of commitments to six funds in 2005. OPIC’s expanded on-lending 

framework agreements with National City Bank, Wachovia Bank, Citigroup, 

and other leading fi nancial institutions, for example, have generated strong 

developmental benefi ts in host countries by leveraging private capital, increasing bank-market liquidity, and transferring banking skills and assets.

• OPIC provided the foundation for meaningful development in host countries 

by supporting projects that are highly developmental, provide necessary infrastructure, or — in areas recovering from the ravages of war or natural disaster 

— rebuild the infrastructure on which growth depends. OPIC’s participation in 

energy, shipping, and transportation projects in Kosovo, Serbia, and the Congo 

were only the most recent examples of the agency’s tradition of seeking maxi-

 
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mum developmental benefi t for every dollar invested. With another year’s experience in applying our developmental impact scoring matrix, we have increased 

our ability to measure both the expected and delivered benefi ts of the projects 

we support.

I am proud of OPIC’s accomplishments in 2005, and excited by the prospect of 

expanding on them. OPIC’s developmental mission, now demonstrably part of 

every project we undertake, will continue to guide us, helping to unleash the 

transformative power of the free market in even more emerging markets.

Looking ahead, we will work in closer collaboration with other agencies to continue to refi ne the government’s support of economic development, identifying 

projects that extend their benefi ts to the widest possible audiences. As President 

Bush has pointed out, economic development is perhaps the best tool to promote 

rule of law and international security. I look forward to working with my colleagues in the Executive Branch to make this creative collaboration a reality.

We will continue to ensure not only that we undertake development broadly, 

but properly. That is why OPIC recently created an Offi ce of Accountability, 

which reviews OPIC’s compliance with environmental, social, worker rights, and 

human rights policies and procedures and provides a forum for local communities to voice their concerns about OPIC-supported projects. The offi ce enhances 

OPIC’s effectiveness by assuring that its problem-solving and compliance review 

functions are fair, objective, and transparent.

And we will continue to strive to meet the needs of our clients. This includes 

effective outreach, innovative products, and the most effi cient process possible. It 

is what our clients have come to expect from us and we can do no less.

Economic development — undertaken responsibly and with the support of 

American businesses, large and small — is OPIC’s mission. It also happens to 

represent one of the great challenges of the 21st century, and, ultimately, the best 

path to a better world. I look forward to working with OPIC management and 

staff, other trade-related agencies, Congress, and our partners in the private sector, to widening that path, so that more may walk it.

Robert Mosbacher, Jr.

President and CEO
6 2005 ANNUAL REPORT

As an instrument of U.S. foreign policy, OPIC has a special obligation to direct investment into

projects that further America’s strategic objectives to support good governance and free markets.

Clearly, the nation’s current top priority is winning the international war on terrorism. OPIC supports

that goal by financing or insuring developmental, reconstruction, and humanitarian projects in

host countries at the front lines in this conflict.

OPIC’s efforts to encourage greater U.S. investment in Pakistan have paralleled that country’s improving investment climate, evidenced by strong economic growth and political stability. In 2005,

OPIC leaders traveled to Pakistan to sign an agreement providing up to $75 million of a $100

million Citigroup lending facility to be lent to businesses located in Pakistan. The new guaranty

supplements an existing $75 million OPIC investment guaranty with Citigroup that has been fully

used to support loans to local businesses. OPIC also committed $35 million to a $150 million

fund focused on investments in Pakistan and South Asia. U.S. investors are starting

to recognize the potential of the Pakistani market. OPIC is confident their interest will be

rewarded by positive returns.

Investing to SUPPORT

 U.S. Foreign Policy
*

*

*

* Information has been Redacted in accordance with the two principled exceptions 

of the Foreign Aid Transparency and Accountability Act (FATAA) of 2016; 

including the health and security of implementing partners, as well as national 

interest of the United States.
8 2005 ANNUAL REPORT

Extending the REACH

 of U.S. Small Business

The developing world needs the entrepreneurial know-how and economic power of U.S. small business.

Unleashed overseas to generate jobs, revenue, and innovations just as they do here at home, U.S. small

businesses can deliver the developmental benefi ts of private-sector investment, employment, and

ownership to individuals and nations around the world.

But small businesses have to overcome big challenges in trying to enter international markets. It can be

diffi cult for small business owners to identify opportunities in foreign lands or to qualify for the fi nancing

and insurance to pursue them.

That’s where OPIC comes in. OPIC offers fi nancial products and services that enable small businesses to

extend their horizons. In 2005, U.S. small businesses received $558 million in OPIC loans, guaranties,

or insurance for 81 projects in a wide range of industries in every corner of the globe. Through its highly

successful Small Business Center, expanding OPIC Partners Program, and outreach efforts to women and

minority-owned small businesses, the agency continues to seek and encourage qualifi ed businesses to

apply for OPIC services and support.

10 2005 ANNUAL REPORT

Building the Housing Markets that

BUILD Economies

It is virtually impossible for a developing nation to build a free market economy without a healthy and

functioning private housing industry. Home ownership is a key component of economic development

not only because adequate housing is a basic human necessity, but because home equity serves as

collateral to start small businesses. That’s been proven in country after country throughout the world.

Unfortunately, in many developing nations, mortgage fi nancing remains in short supply. Nations in

transition to market economies may not yet have in place the legal framework for private home

ownership and fi nancing. Their economic volatility makes it diffi cult for workers to meet regular

mortgage payments. And the lack of local loan management experience or processing infrastructure

increases transaction costs and risks for potential private investors.

All of which is why OPIC works so hard to fi nd and support projects designed to address housing

shortages, provide housing-related construction and jobs, and create viable housing markets.
*

*

* Information has been Redacted in accordance with the two principled exceptions of the

Foreign Aid Transparency and Accountability Act (FATAA) of 2016; including the health

and security of implementing partners, as well as national interest of the United States.
12 2005 ANNUAL REPORT

Africa is at once a continent of unlimited economic need and an emerging market of unlimited potential.

Per capita income continent-wide is lower today than it was in 1980. The region’s share of world

output and world trade has trended downward for three decades. And based on political risks, either

real or imagined, Africa attracts far less than its appropriate share of foreign direct investment.

That’s why it remains an OPIC priority to support and increase the private investment that is essential

to the growth of African economies.

In truth, Africa is already ripe with attractive investment opportunities. The U.N. Conference on Trade

and Development reported average returns of 29 percent for foreign companies investing in Africa

in the 1990s. To make more businesses aware of this potential, OPIC in 2005 expanded its efforts to

promote investment-led development throughout the entire continent.

t e In es e

Helping Africa to ATTRACT

the Investment it Needs

14 2005 ANNUAL REPORT

OPIC’s mission is to mitigate political risks and build private sector confi dence for investing in new,

developing, or transitioning markets. Through direct loans, insurance contracts, and sponsored equity

funds, OPIC helps to mobilize private capital and human resources that would not otherwise be

committed to projects that would not otherwise happen.

Of even greater long-term importance than any individual project, OPIC helps host countries make

themselves more attractive to private investment by linking the availability of OPIC support to the fostering of market-oriented environments of good governance, fair competition, and economic incentives.

In the end, this process is about the realization of economic potential. Countries stand at different points

of the economic spectrum, some well aware of their best prospects and boasting an entrepreneurial

energy to match, others only starting to feel their way. But they all share a desire to succeed — and the

assurance that OPIC is committed to help.

Leading U.S. Investment Into the World’s

EMERGING Markets

16 2005 ANNUAL REPORT

Because OPIC’s core mission is to promote private U.S. investment that contributes to economic development in the world’s less-developed countries, the projects OPIC chooses to support are no random

matter. With an eye to maximizing its developmental reach, OPIC works hard to select projects likely

to serve as foundations for long-term growth — particularly those that help to strengthen and expand

host-country economies.

To support that focus, OPIC evaluates and scores every proposed project in 26 key areas across three

broad categories that objectively quantify its expected contribution to host-country development. A

project must score at least 40 on the matrix to be considered developmental and clearly eligible for

OPIC support; a score of 100 or more qualifi es a project as highly developmental. OPIC’s goal is for all

projects in any one year to average 100. Bringing us ever closer to that goal, OPIC projects supported

in 2005 averaged an impressive 93.3 on the agency’s developmental scoring matrix.

for

Laying the

GROUNDWORK

for Economic

 Growth

18 2005 ANNUAL REPORT

2005 Investment Activities 

AFRICA AND THE MIDDLE EAST

ALGERIA

GE Ionics, Inc. Fixed Rate Funding & Liquidity, Ltd. (HWD 

SPA) 

Reverse osmosis water desalination plant $200,000,000 Finance

ANGOLA

Sabena Yohannes Afritrack Angola LDA Housing materials manufacturing 

& supply

$5,679,000 Insurance

BENIN

Steadfast Insurance Company West African Gas Pipeline Company Limited Natural gas pipeline $2,500,000 Insurance

BOTSWANA

Westwood International School 

Foundation

Westwood International School International school expansion $6,000,000 Finance

CAMEROON

Hubert Kepseu Finesse Group, LLC Water bottling facility $330,000 Finance

Hurbert Kepseu Finesse Group, LLC Water bottling facility $118,530 Insurance

CHAD

International Rescue Committee International Rescue 

Committee, Inc.

Humanitarian services $130,680 Insurance

CONGO, DEMOCRATIC REPUBLIC OF

International Rescue Committee International Rescue Committee, Inc. Humanitarian services $3,333,047 Insurance

Number One Contracting Corp. Ministry of Finance of the Democratic 

Republic of Congo

Road rehabilitation & resurfacing $977,931 Insurance

Number One Contracting Corp. Ministry of Finance of the Democratic 

Republic of Congo

Road rehabilitation & resurfacing $3,911,718 Insurance

Number One Contracting Corp. Ministry of Finance of the Democratic 

Republic of Congo

Road rehabilitation & resurfacing $6,300,000 Insurance

Number One Contracting Corp. Ministry of Finance of the Democratic 

Republic of Congo

Bid bond/Road rehabilitation & resurfacing $360,000 Insurance

CONGO, REPUBLIC OF

Seaboard Overseas, Ltd. Minoterie du Congo, S.A. Flour mill & animal feed facilities operation $4,207,644 Insurance

ETHIOPIA

International Rescue Committee International Rescue 

Committee, Inc.

Humanitarian services $738,011 Insurance

GHANA

Citibank, N.A. Millicom Ghana Limited* Private telephone service $15,000,000 Finance

Steadfast Insurance Company West African Gas Pipeline Company Limited Natural gas pipeline $45,000,000 Insurance

GUINEA

International Rescue Committee International Rescue 

Committee, Inc. 

Humanitarian services $756,711 Insurance

IRAQ

Baltimore Dredges, LLC Ministry of Water Resources (MWR) Bid bond/Dredging equipment $198,000 Insurance

Citibank, N.A. Trade Bank of Iraq Issue fi nancial guaranties to confi rm letters of credit $52,500,000 Finance

Cooperative Housing Foundation Iraq Middle Market 

Development Foundation 

Loans to middle-market enterprises $46,000,000 Finance
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ISRAEL

Citibank, N.A. The Israel Electric Corporation Limited Offshore natural gas pipeline $320,000,000 Insurance

KENYA

Jopa Villas, LLC N/A Housing $14,500,000 Insurance

NIGERIA

American International School of Abuja American International School of Abuja School $5,000,000 Insurance

Board of Directors of American International 

School of Abuja

American International School of Abuja Expansion of the Pre-K thru 12th grade campus $3,250,000 Finance

Paul C. Morgan/Deamar Group, LLC Deamar Nigeria, LLC Bread fl our & bran mill $6,770,000 Finance

ThirdWave Networks Holdings, Inc. Sirius Wireless, Ltd. Fixed, wireless, broadband telecommunications network $7,637,000 Finance

RWANDA

Alfred G. Kalisa Bay Contractors and 

Builders, Inc. 

Purchase bank headquarters building $10,000,000 Finance

SIERRA LEONE

International Rescue Committee International Rescue Committee, Inc. Humanitarian services $1,922,992 Insurance

TOGO

Steadfast Insurance Company West African Gas Pipeline Company Limited Natural gas pipeline $2,500,000 Insurance

TUNISIA

American Cooperative School of Tunisia 

ACST Association

The American Cooperative School of Tunisia School $10,000,000 Insurance

UGANDA

International Rescue Committee International Rescue Committee, Inc. Humanitarian services $932,028 Insurance

WEST BANK AND GAZA

The Aspen Institute Middle East Investment Initiative Investment in small & medium-sized enterprises 

in West Bank and Gaza

$55,000,000 Finance

ZAMBIA

Houses for Africa, Inc. HFA Zambia Limited 5,000 low/middle-income houses $46,300,000 Finance

AFRICA AND THE MIDDLE EAST 

REGIONAL

Emerging Markets Partners EMP Africa Fund II, L.P. Private equity fund $100,000,000 Investment Funds

Ethos Private Equity, Ltd. Ethos Private Equity Fund V Private equity fund $150,000,000 Investment Funds

ASIA AND THE PACIFIC

AFGHANISTAN

*

* Information has been Redacted in accordance with the two principled exceptions of 

the Foreign Aid Transparency and Accountability Act (FATAA) of 2016; including 

the health and security of implementing partners, as well as national interest of the 

United States.
20 2005 ANNUAL REPORT

INDIA

Ashok Vasudevan, Meera Vasudevan, Hans 

Taparia et al.

Preferred Brands International, LLC (WBC) Expansion of plant manufacturing “Tasty Bite” food 

products

$4,777,500 Finance

INDONESIA

Francisco Gali, Jr PT. Tucan Pumpco Services Indonesia Oil & gas services business $4,500,000 Finance

GE Energy Rentals, Inc. PT Trans-Pacifi c Petrochemical Indotama 

JI, TG

Mobile generators $1,056,627 Insurance

International Rescue Committee International Rescue Committee, Inc. Humanitarian services $1,457,757 Insurance

Robert Totah PT. Padi Murni Indonesia Greenfi eld rice milling & drying plant $14,500,000 Finance

PAKISTAN

Acumen Fund, Inc. Pakistan Mortgage Guaranty Trust Guarantee low-income mortgages through local banks $3,750,000 Finance

Cooperative Housing Foundation Emerging Markets Consulting (Private) Ltd. Funding of paid-in-capital for micro-fi nance bank $6,500,000 Finance

Sweetwater International, Inc. Sweetwater Pakistan (Private) Limited Manufacturing of water-treatment equipment $3,000,000 Finance

PHILIPPINES

GE Energy Rentals, Inc. FABMIK Construction & Equipment Co., Inc. Mobile generators $1,395,000 Insurance

SOUTH KOREA

Nam Koo Kim Majestic Group Korea, Ltd. Franchising of Ruby Tuesday restaurant in South Korea $1,500,000 Finance

THAILAND

International Rescue Committee International Rescue Committee, Inc. Humanitarian services $339,213 Insurance

ASIA AND THE PACIFIC REGIONAL

Actis Capital, LLC Actis South Asia Fund 2, L.P. Private equity fund $35,000,000 Investment Funds

Clearwater Capital Partners, LLC Clearwater Capital Partners Investments 

II, L.P.

Debt equity fund $20,000,000 Investment Funds

Olympus Capital Holdings, Asia Asia Development Partners II, L.P. Private equity fund $50,000,000 Investment Funds

Financial Intermediary Asia Development Finance, LTD Financial Services — Investment Funds

EUROPE AND THE NEW INDEPENDENT STATES

AZERBAIJAN

Baku Oil Tools, Ltd. Baku Oil Tools, Ltd. Oil well perforating equipment $540,000 Insurance

GEORGIA

Jenik Radon Georgian Leasing Company, LLC Lease fi nancing $45,000 Insurance

Scott A. Sarran Georgian Leasing Company, LLC Lease fi nancing $67,500 Insurance

HUNGARY

iEurope Fund, LLC; Paul Cheng & Rajiv 

Kapoor

Asylum Telecom, LLC Internet broadband communications service $1,500,000 Finance

KAZAKHSTAN

National City Bank JSC Bank Turan Alem* Expand the retail & consumer lending activities $25,000,000 Finance

Susanne L. & Justin D. Pelham-Webb TNT Productions International, Inc. Exhibition stands for international trade shows $100,000 Finance

Wachovia Bank JSC Bank Turan Alem* Fund retail loan portfolio $25,000,000 Finance

KOSOVO

Florin Krasniqi Triangle General Contractors, Inc. Expansion & operation of 8.3 MW hydropower facility $5,500,000 Finance

Triangle General Contractors, Inc. Khozner HPP Power plant $1,000,000 Insurance

MOLDOVA

Western NIS Enterprise Fund Procredit, S.A. Expansion of micro-lending program $3,000,000 Finance
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POLAND

Tad Niedzielski, Anthony Zmuda & Andrzej 

Kurdyla

Sunday Hotels International Group, LLC Franchise of Super 8 hotels to independent hotel 

owners

$650,000 Finance

Polish Enterprise Fund, LLC Medycyna Rodzinna S.A. Network of private health care clinics $5,500,000 Finance

Richard G. Taylor & John W. Taylor Taylor Prunes SP. ZO.O. Prune processing facility $400,000 Finance

ROMANIA

Sanjay and Nita Bhasin S.C. Empire Tower S.R.L. Offi ce building $2,160,000 Insurance

RUSSIA

ACD Research, Inc. Samara Oblast Medical equipment $46,727,203 Insurance

Agribusiness Partners Int’l/The US Russia 

Investment Fund

OAO Polygrafoformlenie (WBC) Expansion of packaging materials manufacturer (WBC) $9,750,000 Finance

Vladimir & Arlys Gribovsky V G Enterprises, Inc. Meat processing facility for wholesale market $1,500,000 Finance

Alexander G. Kogan c/o IPD Sales & 

Marketing, LLC

OOO “Air Structures American Technologies” Production & sale of air-supported structures & 

buildings

$1,950,000 Finance

Samuel B. Lipman Stromyn Breeders, LLC Poultry broiler parent breeding facility $3,000,000 Finance

Morgan Stanley, Inc. OOO Morgan Stanley Bank Bank $40,500,000 Insurance

National City Bank OJSC Sibacadembank* Expand consumer lending portfolio $14,000,000 Finance

New Siberian Restaurants, LLC New York Pizza Co., Ltd. Expansion of food-related business:

restaurants, catering, etc.

$5,000,000 Finance

James M. Quinn Hermitage Hospitality Franchising Limited Cendant hotel brand franchises; management of hotels $2,800,000 Finance

Radio Communications International Corp. ZAO Ms-Spetstelekom Terrestrial trunked radio communications network $6,000,000 Finance

Russian Ventures, LLC ZAO SK “Aston” Residential & commercial real estate $10,000,000 Insurance

Siberian Frontier Farms, LLC Siberian Farms, LLC Dairy farm $4,500,000 Insurance

The U.S. Russia Investment Fund ZAO Deltaleasing (WBC) Equipment leasing to SMEs $9,750,000 Finance

VG Enterprises, Inc. ZAO VG Enterprises, Inc. Meat processing plant $1,530,000 Insurance

SERBIA AND MONTENEGRO

DynCorp International, LLC Javno Preduzece <<Aerodrom Beograd>> Bid bond/Cargo facility/industrial park $990,000 Insurance

Motorola Israel, Ltd. Ministry of Interior Affairs of the Republic 

of Serbia

Radio communications network $2,400,000 Insurance

TURKEY

Mark H. Butler,Yasha Butler & Tayyibe 

Eren Butler

M/N Butler Mimarlar Arastirma Tasari ve 

Yapi Ltd. Sti.

Hotel $3,015,000 Finance

Mark Butler M/N Butler Mimarlar Arastirma Tasari ve 

Yapi Ltd. Sti.

Hotel $395,550 Insurance

Tayyibe Eren Butler M/N Butler Mimarlar Arastirma Tasari ve 

Yapi Ltd. Sti.

Hotel $197,775 Insurance

Yasha Butler M/N Butler Mimarlar Arastirma Tasari ve 

Yapi Ltd. Sti.

Hotel $197,775 Insurance

National City Bank Oyak Bank A.S.* Small & medium-sized business loan portfolio $10,035,000 Finance

National City Bank Turk Ekonomi Bankasi A.S.* Consumer loans $30,150,000 Finance

Wachovia Bank Akbank T.A.S.* Fund residential mortgage portfolio $30,000,000 Finance

Wachovia Bank Finansbank A.S.* Fund operations of natural gas lines $12,000,000 Finance

Wachovia Bank Oyak Bank A.S.* Fund residential mortgage loan portfolio $25,000,000 Finance

Wachovia Bank Turkiye Garanti Bankasi A.S.* Fund residential mortgage & retail loan portfolio $30,000,000 Finance

UKRAINE

*

*Information has temporarily been redacted, including to protect the safety of implementing partners.

*Information has temporarily been redacted, including to protect the safety of implementing partners.
22 2005 ANNUAL REPORT

UZBEKISTAN

Erik Brooks Owen Malika Barikhasi, LLC/Malika Hotel Bukhara Hotel - Bukhara $211,500 Insurance

EUROPE AND THE NEW INDEPENDENT 

STATES REGIONAL

Bedminster Capital Management, LLC Southeast Europe Equity Fund II, L.P. Private equity fund $90,000,000 Investment Funds

LATIN AMERICA AND THE CARIBBEAN

ANTIGUA AND BARBUDA

Stewart Information International, Inc. Government of Antigua and Barbuda Modernization of land registry & property tax system $669,375 Insurance

ARGENTINA

Philip C. Martinez Finca Calle Larga, Calle Larga Vieja Vineyard & plum orchard $126,000 Insurance

Philip C. Martinez Finca La Cruz Vineyard & plum orchard $90,000 Insurance

BRAZIL

Elaine M. Beidatsch Ruralfone do Brasil, Ltda. Telecommunications $11,250 Insurance

Michele D. Bomont Ruralfone do Brasil, Ltda. Telecommunications $45,000 Insurance

Donald, Jane, Travis, Lance, Justin & 

Tyler Bruch

Bruch Side Farms Agropecuaria do Brazil, 

Ltda. 

Purchase of land to grow rice, beans & sorghum $1,000,000 Finance

GMD Solutions, Inc. Ruralfone do Brasil, Ltda. Telecommunications $18,000 Insurance

Paladin Realty Partners, LLC Amebrasil Construcoes Limitada Development, construction & sale of houses/commercial units$5,000,000 Finance

Port Security International, LLC Teconvi, S.A. Scanning equipment & services $5,000,000 Insurance

Robin Foor Ruralfone do Brasil, Ltda. Telecommunications $45,000 Insurance

COLOMBIA

Barriefi eld, Inc. Leawood Investments, Inc. Production of fresh cut fl owers $20,000,000 Finance

Citibank, N.A. ISAGEN S.A. Power generation $310,000,000 Insurance

Sharon Parks Gurtler & Charles D. Parks Parko Services, S.A. Expansion of oil production $1,350,000 Finance

K&M Engineering and Consulting Corp. Aguas de Manizales, S.A., E.S.P. Bid bond/Environmental study for water treatment plant $163,566 Insurance

COSTA RICA

Colite Outdoor, LLC Colite Costa Rica, S.A. Commercial billboard leasing $94,863 Insurance

Lemna International, Inc. Condominios Riverside Etapa II, S.A. Construction of residential & commercial condominiums $6,677,000 Finance

Ervin F. Portman Weststar Precision, Inc. Manufacturer of precision tools & parts $500,000 Finance

ECUADOR

Citibank, N.A. Rey Banano del Pacifi co C.A.* Expansion of banana plantation $15,000,000 Finance

EL SALVADOR

Colite Outdoor, LLC Colite El Salvador, S.A. Commercial billboard leasing $99,530 Insurance

Navarro Trading, LLC Baja Transportation/Baja Salt Distribution of salt to Central America $1,036,000 Finance

*

*Information has temporarily been redacted, including to protect the safety of implementing partners.
WWW.OPIC.GOV 23

GUATEMALA

Alaska Power and Telephone Company Hidroelectrica Rio Hondo S.A. 32 MW hydropower project $41,600,000 Finance

Colite Outdoor, LLC Colite Guatemala, S.A. Commercial billboard leasing $152,708 Insurance

Mercury Mortgage Finance Guatemala, Ltd Guatemala Mortgage Corporation Guarantee of a mortgage-backed security $7,500,000 Finance

HONDURAS

Colite Outdoor, LLC Colite Honduras, S.A. Commercial billboard leasing $101,130 Insurance

M Homes, LLC Honduras Homes, S.A. Financing lease-purchase program for low-income 

homes

$9,219,000 Finance

MEXICO

Baring Latin America Partners Baring Mexico Private Equity II Fund Private equity fund $60,000,000 Investment Funds

Citibank, N.A. Financiera Compartamos,S.A.* Microlending to micro-entrepreneurs $5,200,000 Finance

Fluor Corp. ICA-Fluor Daniel S. de R.L. de C.V. Guarantee medium-term capital & standby letters of 

credit

$250,000,000 Finance

Lemna International, Inc. Lemna de Mexico, S.A. de C.V. Wastewater treatment plant $4,000,000 Insurance

Lemna International, Inc. Lemna de Mexico, S.A. de C.V. Wastewater treatment facility & sewage infl uent 

pipeline

$3,320,000 Finance

Financial Intermediary GEMet Affordable housing — Investment Funds

NICARAGUA

Colite Outdoor, LLC Colite Nicaragua, S.A. Commercial billboard leasing $150,975 Insurance

Corea Group, Inc. on Behalf of Eligible US 

Investors

Sacuanjoche Adventure Lodge S.A. Lodge $2,123,779 Insurance

Gilberto J. Morales Gonzales Gilberto Juan Morales Gonzalez, d/b/a 

Ferreteria Morales

Hardware & building material store & 

distribution center

$104,000 Finance

Gilberto J. Morales Gonzales Gilberto Juan Morales Gonzalez, d/b/a 

Ferreteria Morales

Hardware store $59,850 Insurance

Infi nity, Inc. To be established Oil & gas exploration - Tyra Block $3,778,084 Insurance

Infi nity, Inc. To be established Oil & gas exploration - Perlas Block $2,806,887 Insurance

Carlos J. Rondon & Melva Jo Winger de 

Rondon

Inversiones Agropecuarias, S.A. Coffee plantation $5,000,000 Insurance

PANAMA

Colite Outdoor, LLC Colite Panama, S.A. Commercial billboard leasing $91,462 Insurance

PERU

El Saladero USA, LLC El Saladero UY S.R.L. Acquisition & development of cattle ranch & grain farm $550,000 Finance

LFLP Holdings, LLC Financiera Total, S.A. Consumer credit $10,800,000 Insurance

LFLP Holdings, LLC Total Artefactos, S.A. Retail stores $25,000,000 Insurance

LATIN AMERICA AND THE CARIBBEAN REGIONAL

ACCION International Emergency Liquidity Facility, L.P. Financing facility available during liquidity emergencies $1,000,000 Finance

Citibank, N.A. Digicel Int’l Finance, Ltd. (Tranche A)* Telecommunication expansion $4,000,000 Finance

Citibank, N.A. Digicel Int’I Finance, Ltd.(Tranche B)* Telecommunication expansion $11,000,000 Finance

ALL OPIC COUNTRIES

Frontier Finance International Procredit Holding A.G. On-lending to project companies for micro-lending $25,000,000 Finance

*Downstream transactions committed under framework agreements entered into during prior fi scal years.

 
24 2005 ANNUAL REPORT

OPIC Countries and Areas 

OPIC programs encourage U.S. private investment in some 150 countries and areas around the 

world, contributing to economic growth at home and abroad.

OPIC programs are generally available in the countries and areas listed below. From time to time, 

statutory and policy constraints may limit the availability of OPIC programs in certain countries, or 

countries where programs were previously unavailable may become eligible. Investors are urged to 

contact OPIC directly or check the Web site www.opic.gov/GeneralOPIC/ctrylist.htm for up-to-date 

information regarding the availability of OPIC services in specifi c countries, as well as information 

on program availability in countries not listed.

(As of September 30, 2005)
WWW.OPIC.GOV 25

AFRICA AND THE MIDDLE EAST

Algeria

Angola

Bahrain

Benin

Botswana

Burkina Faso

Cameroon

Cape Verde

Central African Republic

Chad

Congo, Democratic Republic of

Congo, Republic of 

Djibouti

Egypt

Equatorial Guinea

Eritrea

Ethiopia

Gabon

Gambia

Ghana

Guinea

Guinea-Bissau

Iraq

Israel

Jordan

Kenya

Kuwait

Lebanon

Lesotho

Madagascar

Malawi

Mali

Mauritania

Mauritius

Morocco

Mozambique

Namibia

Niger

Nigeria

Oman

Rwanda

São Tomé and Príncipe

Senegal

Sierra Leone

Somalia

South Africa

Swaziland

Tanzania

Togo

Tunisia

Uganda

West Bank and Gaza

Yemen

Zambia

Zimbabwe

ASIA AND THE PACIFIC

Afghanistan 

Bangladesh

Cambodia

Cook Islands

East Timor

Fiji

India

Indonesia

Kiribati

Laos

Malaysia

Marshall Islands

Micronesia

Mongolia

Nepal

Pakistan

Palau

Papua New Guinea

Philippines

Samoa

Singapore

South Korea

Sri Lanka

Taiwan

Thailand

Tonga

Vietnam

EUROPE AND THE NEW 

INDEPENDENT STATES

Albania

Armenia

Azerbaijan

Bosnia and Herzegovina

Bulgaria

Croatia

Cyprus

Czech Republic

Estonia

Georgia

Greece

Hungary

Ireland

Kazakhstan

Kosovo

Kyrgyzstan 

Latvia

Lithuania

Macedonia

Malta

Moldova

Northern Ireland

Poland

Portugal

Romania

Russia

Serbia and Montenegro

Slovakia

Slovenia

Tajikistan

Turkey

Turkmenistan

Ukraine

Uzbekistan

LATIN AMERICA AND 

THE CARIBBEAN

Anguilla

Antigua and Barbuda

Argentina

Aruba

Bahamas

Barbados

Belize

Bolivia

Brazil

Chile

Colombia

Costa Rica

Dominica

Dominican Republic

Ecuador

El Salvador

French Guiana

Grenada

Guatemala

Guyana

Haiti

Honduras

Jamaica

Mexico

Netherlands Antilles

Nicaragua

Panama

Paraguay

Peru

St. Kitts and Nevis

St. Lucia

St. Vincent and the Grenadines

Suriname

Trinidad and Tobago

Turks and Caicos

Uruguay

 

WWW.OPIC.GOV 27

INDEPENDENT AUDITORS’ REPORT ON FINANCIAL STATEMENTS

 



WWW.OPIC.GOV 31

CASH FLOWS FROM OPERATING ACTIVITIES 2005 2004

Net income $ 221,189 $163,056

Adjustments to reconcile net income to net cash provided by operating activities:

Provisions for:

Political risk insurance 11,367 54,000

Investment fi nancing 70,051 85,404

Amortization of premiums on U.S. securities 17,657 22,988

Accretion of discounts on U.S. securities (5,931) (3,227)

Amortization of deferred rent and rental incentives (561) (684)

Increase (decrease) in rent incentives 1,647 (4,266)

Depreciation and amortization of furniture, equipment and leasehold improvements 452 433

(Increase) decrease in assets:

Accrued interest and fees (707) 4,873

Accounts receivable 10 (3)

Assets acquired in insurance claims settlements (50,000) (96,241)

Recoveries on assets acquired in insurance claims settlements 124,149 19,525

Assets acquired in fi nance claims settlements (37,636) (77,869)

Recoveries on assets acquired in fi nance claims settlements 36,517 23,757

Increase (decrease) in liabilities:

Accounts payable and accrued expenses (2,127) 520

Customer deposits and deferred income 15,154 2,093

Unearned premiums (2,528) 1,602

Capitalized interest 385 —

Insurance claim payments — (296)

Cash provided by operating activities 399,088 195,665

CASH FLOWS FROM INVESTING ACTIVITIES

Sale and maturity of U.S. Treasury securities 1,321,186 1,129,059

Purchase of U.S. Treasury securities (1,546,631) (1,264,015)

Repayment of direct loans 19,802 9,967

Disbursement of direct loans (139,455) (319,305)

Acquisition of furniture and equipment (4,612) (396)

Cash used in investing activities (349,710) (444,690)

CASH FLOWS FROM FINANCING ACTIVITIES

Return credit funding to U.S. Treasury (446,915) (40,425)

Interagency transfers 6,200 25,000

Credit appropriations 120,416 41,315

Credit reform borrowings from U.S. Treasury 79,637 397,308

Cash provided by (used in) fi nancing activities (240,662) 423,198

Net increase (decrease) in cash (191,284) 174,173

Fund balance with U.S. Treasury at beginning of year 1,084,107 909,934

Fund balance with U.S. Treasury at end of year $ 892,823 $ 1,084,107

See accompanying notes to fi nancial statements.

STATEMENTS OF CASH FLOWS

Overseas Private Investment Corporation—Years ended September 30, 2005 and 2004

($ in thousands)

 
32 2005 ANNUAL REPORT

(1) Statement of Corporate Purpose

The Overseas Private Investment Corporation (OPIC) is a 

self-sustaining U.S. Government corporation created under the Foreign Assistance Act of 1961 (FAA), as amended. OPIC facilitates U.S. private investment in developing 

countries and emerging market economies, primarily by 

offering political risk insurance, investment guaranties, 

and direct loans. As a government corporation, OPIC is 

not subject to income tax.

(2) Summary of Signifi cant Accounting Policies

Basis of Presentation: These fi nancial statements have been 

prepared to report the fi nancial position, results of operations, and cash fl ows of OPIC. OPIC’s accounting policies 

conform to accounting principles generally accepted in 

the United States of America. OPIC’s fi nancial statements 

are presented on the accrual basis of accounting. Under 

the accrual basis, revenues are recognized when earned, 

and expenses are recognized when a liability is incurred, 

without regard to receipt or payment of cash.

Fund Balance with U.S. Treasury: Substantially all of 

OPIC’s receipts and disbursements are processed by the 

U.S. Treasury which, in effect, maintains OPIC’s bank accounts. For purposes of the Statement of Cash Flows, fund 

balance with U.S. Treasury is considered cash.

Investment in U.S. Treasury Securities: By statute, OPIC is 

authorized to invest funds derived from fees and other revenues related to its insurance and preinvestment programs 

in U.S. Treasury securities. Investments are carried at face 

value, net of unamortized discount or premium, and are 

held to maturity. OPIC has the ability and intent to hold 

its investments until maturity or until the carrying cost 

can be otherwise recovered.

Assets Acquired in Investment Guaranty and Insurance 

Claims Settlements: Assets acquired in claims settlements 

are valued at the lower of management’s estimate of the 

net realizable value of recovery or the cost of acquisition.

OPIC acquires foreign currency in settlement of inconvertibility claims when an insured foreign enterprise is unable to convert foreign currency into U.S. dollars, as well 

NOTES TO FINANCIAL STATEMENTS

Overseas Private Investment Corporation — September 30, 2005 and 2004

as in some direct loan and investment guaranty collection 

efforts. The initial U.S. dollar equivalent is recorded and 

revalued annually until the foreign currency is utilized 

by OPIC or other agencies of the United States Government, or until it is exchanged for U.S. dollars by the 

foreign government.

Allowances: The allowances are based on management’s 

periodic evaluations of the underlying assets. In its evaluation, management considers numerous factors, including, 

but not limited to, general economic conditions, asset 

composition, prior loss experience, the estimated fair value 

of any collateral, and the present value of expected future 

cash fl ows.

Depreciation and Amortization: OPIC capitalizes property 

and equipment at historical cost for acquisitions exceeding $5,000. Depreciation and amortization of fi xed assets, 

leasehold improvements, and lease incentives are computed using the straight-line method over the estimated 

useful life of the asset or lease term, whichever is shorter, 

with periods ranging from 5 to 15 years.

Reserves for Political Risk Insurance and Investment Guaranties: The reserves for political risk insurance and investment guaranties provide for losses inherent in those 

operations using the straight-line method. These reserves 

are general reserves, available to absorb losses related to 

the total insurance and guaranties outstanding, which 

are off-balance-sheet commitments. The reserves are 

increased by provisions charged to expense and decreased 

for claims settlements. The provisions for political risk insurance and investment guaranties are based on management’s evaluation of the adequacy of the related reserves. 

This evaluation encompasses consideration of past loss 

experience, changes in the composition and volume of the 

insurance and guaranties outstanding, worldwide economic and political conditions, and project-specifi c risk factors. 

Also, in the political risk insurance reserve evaluation, 

OPIC takes into consideration losses incurred but not 

yet reported.

Contingent Liabilities Related to Investment Guaranties: The 

fair value of investment guaranties entered into after December 31, 2002 is recognized as a liability. A corresponding amount is recorded as an asset to refl ect the fact that 

 
WWW.OPIC.GOV 33

OPIC is compensated for the assumption of the liability. 

See also note 18.

FASB Interpretation No. 45: In November 2002 the Financial Accounting Standards Board (FASB) issued Interpretation No. 45, Guarantor’s Accounting and Disclosure 

Requirements for Guaranties, Including Indirect Guaranties 

of Indebtedness of Others ( FIN 45). FIN 45 requires that 

upon issuance of a guaranty, the guarantor must disclose 

and recognize a liability for the fair value of the obligation 

it assumes under that guaranty. The initial recognition 

and measurement requirement of FIN 45 applies only to 

guaranties issued or modifi ed after December 31, 2002.

Revenue Recognition: Facility fees are received in advance 

and recognized as deferred income, then amortized over 

the applicable loan period using the straight line method. 

Interest on loans and guaranty fees on investment guaranties are accrued based on the principal amount outstanding. Revenue from both loan interest payments and 

guaranty fees that is more than 90 days past due is recognized only when cash is received. Revenue from political 

risk insurance premiums is recognized over the contract 

coverage period. Accretion of premium and discount on 

investment securities is amortized into income under a 

method approximating the effective yield method.

Interagency transfers: OPIC periodically receives funding 

from other U.S. Government agencies to be used to support various programs and initiatives.

Use of Estimates: The preparation of fi nancial statements 

requires management to make estimates and assumptions 

that affect the reported amounts of assets and liabilities, 

the disclosure of contingent assets and liabilities at the 

date of the fi nancial statements, and the reported amounts 

of revenue and expenses during the reporting period. 

Actual results could differ from these estimates.

(3) Intragovernmental Financial Activities

OPIC, as a U.S. Government corporation, is subject to 

fi nancial decisions and management controls of the Offi ce 

of Management and Budget. As a result of this relationship, OPIC’s operations may not be conducted, nor its 

fi nancial position reported, as they would be if OPIC 

were not a government corporation. Furthermore, in 

accordance with international agreements relating to its 

programs, as well as internal U.S. Government operating procedures, foreign currency acquired by OPIC can 

be used for U.S. Government expenses. This facility 

constitutes an additional means, which would otherwise 

be unavailable, by which OPIC can recover U.S. dollars 

with respect to its insurance and investment fi nancing 

programs.

(4) Fund Balance with U.S. Treasury

OPIC is restricted in its uses of certain cash balances, as 

described below. The fund balance with U.S. Treasury as 

of September 30, 2005 and 2004 consists of the following 

(dollars in thousands):

2005 2004

Restricted:

Pre-Credit reform $ 241 66

Credit reform 877,825 1,067,631

Interagency fund transfers 1 1

Unrestricted 14,756 16,409

Total $ 892,823 1,084,107

The Federal Credit Reform Act of 1990 established separate accounts for cash fl ows associated with investment 

fi nancing activity approved prior to implementation of the 

Act and investment fi nancing activity subject to the Act. 

With the advent of Credit Reform, OPIC is not permitted to invest its pre-Credit Reform cash balances. These 

balances grow over time, and when they are determined to 

be no longer needed for the liquidation of the remaining 

pre-Credit Reform direct loans and investment guaranties, they are transferred to OPIC’s unrestricted noncredit 

insurance account. In 2005 and 2004, OPIC transferred 

$4 million and $3.5 million, respectively, to the noncredit 

insurance account. Credit Reform balances are also maintained in the form of uninvested funds. The U.S. Treasury 

pays OPIC interest on those cash balances except for 

undisbursed credit funding.

(5) Credit Funding

OPIC’s fi nance activities are subject to the Federal Credit 

Reform Act of 1990, which was implemented as of October 1, 1991. Credit Reform requires agencies to estimate 

the long-term cost to the government of each fi scal year’s 

new credit transactions and to obtain funding through 

the appropriations process equal to the net present value 

of such costs at the beginning of the year. OPIC’s credit 

funding is available for two years. In addition, the Act 

requires the administrative costs related to its credit program to be displayed.

 

WWW.OPIC.GOV 35

At September 30, 2005, the securities held had an interest range of 2% to 14% and a maturity period from two 

months to almost 23 years.

OPIC holds its securities to maturity. The amortized cost 

and estimated fair value of U.S. Treasury securities at September 30, 2005, by contractual maturity, are shown below 

(dollars in thousands):

Amortized 

cost

Estimated 

fair value

Due in one year or less $ 629,307 629,648

Due after one year 

through fi ve years 1,872,246 1,866,410

Due after fi ve years 

through 10 years 934,698 960,625

Due after 10 years 638,152 795,858

Total $ 4,074,403 4,252,541

(8) Statutory Limitations on the Issuance of 

Insurance and Finance

OPIC issues insurance and fi nancing under a single limit 

for both programs, currently $29 billion, fi xed by statute in 

the FAA. At September 30, 2005, OPIC’s insurance and 

fi nance programs have collectively utilized $12.9 billion.

(9) Political Risk Insurance

Insurance revenues include the following components for 

the years ended September 30 (dollars in thousands):

2005 2004

Political risk insurance premiums $ 30,711 43,680

Miscellaneous insurance income 71 102

Total $ 30,782 43,782

OPIC’s capital, retained earnings, and reserves available 

for insurance at September 30, 2005 and 2004 totaled $1.7 

billion and $2.2 billion, respectively. Charges against retained earnings could arise from (A) outstanding political 

risk insurance contracts, (B) pending claims under insurance contracts, and (C) guaranties issued in settlement of 

claims arising under insurance contracts.

(a) Political Risk Insurance

OPIC insures investments for up to 20 years against three 

different risks: inconvertibility of currency, expropriation, 

and political violence. Insurance coverage against inconvertibility protects the investor from increased restrictions 

on the investor’s ability to convert local currency into 

U.S. dollars. Inconvertibility insurance does not protect 

against devaluation of a country’s currency.

Expropriation coverage provides compensation for losses 

due to confi scation, nationalization, or other governmental actions that deprive investors of their fundamental 

rights in the investment.

Insurance against political violence insures investors 

against losses caused by politically motivated acts of violence (war, revolution, insurrection, or civil strife, including terrorism and sabotage).

Under most OPIC insurance contracts, investors may 

obtain all three coverages, but claim payments may not 

exceed the single highest coverage amount. Claim payments are limited by the value of the investment and the 

amount of current coverage in force at the time of the loss 

and may be reduced by the insured’s recoveries from other 

sources. In addition, in certain contracts, OPIC’s requirement to pay up to the single highest coverage amount is 

further reduced by stop-loss and risk-sharing agreements. 

Finally, losses on insurance claims may be reduced by recoveries by OPIC as subrogee of the insured’s claim against 

the host government. Payments made under insurance 

contracts that result in recoverable assets are reported as 

assets acquired in insurance settlements.

OPIC’s Maximum Contingent Liability at September 30, 

2005 and 2004 was $4.5 billion and $6.3 billion, respectively. This amount is OPIC’s estimate of maximum exposure to insurance claims, which includes standby coverage 

for which OPIC is committed but not currently at risk. A 

more realistic measure of OPIC’s actual exposure to insurance claims is the sum of each single highest “current” 

coverage for all contracts in force, or Current Exposure to 

Claims (CEC). OPIC’s CEC at September 30, 2005 and 

2004 was $3.1 billion and $3.8 billion, respectively.

(b) Pending Claims

At September 30, 2005 and 2004, the total amount of 

compensation formally requested in insurance claims for 

which no determination of specifi c liability had yet been 

made was approximately $2.9 million and $50.7 million, 

respectively. In addition to requiring formal applications 

for claimed compensation, OPIC’s contracts generally 

require investors to notify OPIC promptly of host government action that the investor has reason to believe is or 

 
36 2005 ANNUAL REPORT

may become a claim. Compliance with this notice provision sometimes results in the fi ling of notices of events 

that do not mature into claims.

OPIC does not record a specifi c liability related to such 

notices in its fi nancial statements, due to the highly speculative nature of such notices, both as to the likelihood 

that the events referred to will ripen into any claims, and 

the amounts of compensation, if any, that may become 

due. Any claims that might arise from these situations are 

factored into the reserves for political risk insurance.

(c) Claims Settlement Guaranties and Indemnities

OPIC also has off-balance-sheet risk in connection with 

one claim settlement. OPIC settled a claim in 1991 

through a guaranty of $30 million of host government 

obligations. Payments by the host government have 

reduced OPIC’s exposure to $3.6 million and $5.8 million 

at September 30, 2005 and 2004, respectively. Any claims 

that might arise from this settlement are factored into the 

nonspecifi c reserve for political risk insurance.

Changes in the reserve for political risk insurance during fi scal years 2005 and 2004 were as follows (dollars in 

thousands):

2005 2004

Beginning balance $ 270,000 260,000

Charge offs — (296)

Increase in provisions 11,367 54,001

Transfers from (to) other reserves 33,633 (43,705)

Total $ 315,000 270,000

(10) Investment Financing

OPIC is authorized to provide investment fi nancing to 

projects through direct loans and investment guaranties. 

Project fi nancing provides medium- to long-term funding through direct loans and investment guaranties to 

ventures involving signifi cant equity and/or management 

participation by U.S. businesses. Project fi nancing looks 

for repayment from the cash fl ows generated by projects, 

and as such, sponsors need not pledge their own general 

credit beyond the required project completion period.

Investment funds use direct loans and investment guaranties to support the creation and capitalization of investment 

funds that make direct equity and equity-related investments in new, expanding, or privatizing companies in 

emerging market economies. The fund managers, selected 

by OPIC, are experienced, private investment professionals. 

OPIC’s participation in a fund takes the form of long-term, 

secured loans and loan guaranties that supplement the 

fund’s privately raised equity. OPIC’s guaranty may be applied only to the debt portion of the fund’s capital and, for 

certain funds, to accrued interest on that debt. OPIC does 

not guaranty any of the fund’s equity, and all equity investments in OPIC-backed funds are fully at risk.

OPIC’s authorization to make direct loans and investment guaranties can be found in sections 234(c) and 234 

(b) of the FAA, respectively. Direct loans and investment 

guaranties are committed in accordance with the Federal Credit Reform Act of 1990, pursuant to which loan 

disbursements and any claim payments for these commitments have been funded through appropriations actions, 

borrowings from the U.S. Treasury, and the accumulation 

of earnings or collection of fees. In fi scal years 2005 and 

2004, $23.8 million and $23.9 million, respectively, was 

made available for credit funding costs. OPIC is in compliance with all relevant limitations and credit funding 

appropriations guidance. OPIC’s capital, retained earnings, and reserves available for claims on its investment 

fi nancing at September 30, 2005 and 2004 totaled $3.3 

billion and $3 billion, respectively.

Direct Loans: Direct loans are made for projects in 

developing and other eligible countries involving U.S. 

small business or cooperatives, on terms and conditions 

established by OPIC. Direct loan exposure at September 30, 2005 totaled $1.2 billion, of which $619 million 

was outstanding. Direct loan exposure at September 30, 

2004 totaled $897 million, of which $500 million was outstanding. Interest income is not accrued on direct loans 

that have payments that are more than 90 days past due. 

Loans with payments more than 90 days past due totaled 

$51.2 million at September 30, 2005 and $35.1 million at 

September 30, 2004. If interest income had been accrued 

on those loans, it would have approximated $2.1 million 

during fi scal year 2005 and $1.1 million during fi scal year 

2004. Interest collected on delinquent loans and recorded 

as income when received amounted to $1.1 million and 

$1 million for fi scal years 2005 and 2004, respectively.

Changes in the allowance for uncollectible loans 

during fi scal years 2005 and 2004 were as follows (dollars 

in thousands):

 


WWW.OPIC.GOV 39

at year-end rates. These borrowings were required by the 

Federal Credit Reform Act, and repayment terms are fi xed 

by the U.S. Treasury in accordance with that Act.

Investment Guaranties Committed and Outstanding: OPIC’s 

investment guaranties are intended to provide a means 

of mobilizing private capital in markets where private 

lenders would be unwilling to lend without the full faith 

and credit of the U.S. Government. Given the absence of 

a market for comparable instruments, OPIC determined 

that the fair value is the present value of future fees expected to be collected.

(14) Operating Lease

OPIC negotiated a new building lease during fi scal year 

2004. Under the lease terms, OPIC received interest-bearing tenant improvement allowances for space refurbishment. Total incentives offered by the lessor to cover these 

costs were $3.4 million. The value of these incentives is 

deferred in the balance sheet and is amortized to reduce 

rent expense on a straight-line basis over the 15-year life 

of the lease.

Rental expense for 2005 and 2004 was approximately 

$4.9 million and $4.7 million, respectively. Minimum 

future rental payments under the 15-year lease at 1100 

New York Avenue, N.W. are approximately $4.3 million 

annually, with additional adjustments tied to the consumer price index.

(15) Pensions

OPIC’s permanent employees are covered either by the 

Civil Service Retirement System (CSRS) or the Federal Employee Retirement System (FERS). For CSRS 

employees, OPIC withheld 7.0% of gross 2005 earnings 

and contributed 7.0% of gross 2005 earnings. For FERS 

employees, OPIC withheld 0.80% of gross 2005 earnings 

and contributed 10.7% of gross 2005 earnings. Withholdings and contributions are transferred appropriately to 

the Civil Service Retirement Fund and FERS fund, from 

which the applicable employee groups will receive retirement benefi ts. An additional 6.2% of the FERS employees’ 

gross earnings is withheld, matched by OPIC, and sent to 

the Social Security system, from which the FERS employee group will also receive social security benefi ts. OPIC 

occasionally hires employees on temporary appointments, 

and those employees are covered by the Social Security 

system, under which 6.2% of earnings is withheld and 

matched by OPIC.

FERS (after an initial eligibility period) and CSRS 

employees may elect to participate in the Thrift Savings 

Plan (TSP). Based on employee elections, 0% to 10% of 

gross CSRS earnings is withheld and 0% to 15% of gross 

FERS earnings is withheld, subject to the IRS elective 

deferral limit for the tax year. FERS employees receive an 

automatic 1% contribution from OPIC. Amounts withheld for FERS employees are matched by OPIC, up to an 

additional 4%, for a total of 5%.

Although OPIC funds a portion of employee pension 

benefi ts under the CSRS, the FERS, and the TSP, and 

makes necessary payroll withholdings, it has no liability 

for future payments to employees under these programs. 

Furthermore, separate information related to OPIC’s 

participation in these plans is not available for disclosure 

in the fi nancial statements. Paying retirement benefi ts 

and reporting plan assets and actuarial information is the 

responsibility of the U.S. Offi ce of Personnel Management 

and the Federal Retirement Thrift Investment Board, 

which administer these plans. Data regarding the CSRS 

and FERS actuarial present value of accumulated benefi ts, 

assets available for benefi ts, and unfunded pension liability 

are not allocated to individual departments and agencies.

(16) Concentration of Risk

OPIC is subject to certain risks associated with fi nancial 

instruments not refl ected in its balance sheet. These 

fi nancial instruments include political risk insurance, loan 

guaranties, and committed-but-undisbursed direct loans.

With respect to political risk insurance, OPIC insures 

against currency inconvertibility, expropriation of assets, and political violence. Additionally, OPIC provides 

investment fi nancing through direct loans and investment 

guaranties.

OPIC’s credit policy is to take a senior security position 

in the assets of the projects or transactions it guaranties. 

The nature and recoverable value of the collateral pledged 

to OPIC varies from transaction to transaction and may 

include tangible assets, cash collateral or equivalents, 

and/or a pledge of shares in the project company as well as 

personal and corporate guaranties. OPIC takes all necessary steps to protect its position in such collateral and 

 

 

 
42 2005 ANNUAL REPORT

OPIC Board of Directors

Andrew S. Natsios

Administrator

U.S. Agency for International Development

Rob Portman

U. S. Trade Representative

Office of the U.S. Trade Representative 

Robert Mosbacher, Jr.

President & Chief Executive Officer

Overseas Private Investment Corporation

David A. Sampson

Deputy Secretary of Commerce

U.S. Department of Commerce

Steven J. Law

Deputy Secretary of Labor

U.S. Department of Labor

Ambassador Josette Sheeran Shiner

Under Secretary of State for Economic, 

 Business & Agricultural Affairs

U.S. Department of State

Timothy D. Adams

Under Secretary for International Affairs

U.S. Department of the Treasury

Collister Johnson, Jr. 

Senior Consultant

Mercer Management Consulting, Inc.

McLean, Virginia

Samuel E. Ebbesen (General, USA, Ret.)

President & Chief Executive Officer

Virgin Islands Telephone Corporation

St. Thomas, Virgin Islands 

Christopher J. Hanley 

General Secretary-Treasurer

International Union of Operating Engineers

Washington, D.C.

C. William Swank 

Retired Executive Vice President

Ohio Farm Bureau Federation

Westerville, Ohio

John L. Morrison

Chairman

Callanish Capital LLC

Minneapolis, Minnesota 

Diane M. Ruebling

President

The Ruebling Group

Midvale, Utah

Ned L. Siegel 

Chairman

The Siegel Group

Boca Raton, Florida

Sanford L. Gottesman

President

The Gottesman Company

Austin, Texas

 
WWW.OPIC.GOV 43

OFFICE OF THE PRESIDENT

Robert Mosbacher, Jr.

President & Chief Executive Officer

Joseph Flynn

Chief of Staff

Dulce Zahniser

Deputy Chief of Staff & 

Senior Advisor to the President

OPIC Executive Staff

VICE PRESIDENTS 

Edith Quintrell 

Acting Vice President

Insurance Department

Robert Drumheller

Vice President

Structured Finance Department

James Polan

Vice President

Small and Medium Enterprise Finance Department

Cynthia Hostetler

Vice President

Investment Funds Department

Daniel Nichols 

Vice President

Office of Economic Development

Rosemary Allen

Acting Vice President & Chief Financial Officer

Office of the Chief Financial Officer

Mark Garfinkel

Vice President & General Counsel

Legal Affairs Department

Christopher Coughlin

Vice President

Office of External Affairs

Christine Emery

Vice President

Office of Investment Policy

 
44 2005 ANNUAL REPORT

Photography Credits

Front Cover: Thatcher Cook, for International Rescue Committee 

Page 2: Apache Corporation 

Page 3: Martin Simon 

Page 6: Barbara Gibian, OPIC 

Page 7: Joseph Wozniak, OPIC 

Page 7 Sidebar: Dulce Zahniser, OPIC 

Page 8: Apache Corporation 

Page 9: Thomas Debass, OPIC 

Page 10: Debra Erb, OPIC 

Page 11: Richard Reikenis, GHP Honduras 

Page 12: ProCredit Holding AG 

Page 13: Timothy Harwood, OPIC 

Page 14: Rosemary Allen, OPIC 

Page 15: Joseph Wozniak, OPIC 

Page 15 Sidebar: Conference photographer, OPIC 

Page 16: Thatcher Cook, for International Rescue Committee 

Page 17: David Frantz, OPIC