Overseas 

Private 

Investment 

Corporation

ANNUAL REPORT 2002

Delivering on the Promise
1 PRESIDENT’S MESSAGE

4 INNOVATIVE PARTNERSHIPS, PRODUCTS AND TOOLS

6 AFRICA

8 HOUSING

10 RUSSIA AND ITS NEIGHBORING STATES

12 FRONTLINE STATES

14 SMALL BUSINESS

16 2002 INVESTMENT PROJECTS

19 2002 INVESTMENT FUNDS’ PROJECTS

20 OPIC COUNTRIES AND AREAS

21 FINANCIAL STATEMENTS

32 BOARD OF DIRECTORS

32 OFFICERS AND MANAGEMENT
Last year, in my first annual report, 

I discussed the importance of refocusing on OPIC’s

mission to make the agency a catalyst for development

in the world’s new and emerging markets. I offered both

broad objectives and specific strategies that would help

us to do a better job of bringing the benefits of economic development to the neediest countries, cooperating with private markets, and enabling smaller U.S. businesses to pursue

opportunities in the developing world.

OPIC must continue to play a vital role in the economic and social development of lessdeveloped countries, as well as those in transition from non-market economies. These countries

look to U.S. private sector-led investment to help create jobs, improve infrastructure, generate

goods and services, and support economic growth. By directing private investment toward

these areas, we accelerate the reduction of worldwide poverty. We bring a better quality of life

to populations that lack the health, the education, or even the access to life’s basic necessities

that enable them to contribute to—or benefit from—economic growth. Simply put, private

sector-led development creates sustainable and enduring economic growth and increased

political pluralism.

As 2001 ended, it was clear that OPIC’s mission was more important than ever. As 2002

unfolded, fulfilling that mission became more challenging than ever. That is why I am proud

to report this year that OPIC leadership and staff responded to the call and delivered on our

promise. I am even more proud of everyone in our organization for accomplishing so much

through such trying times.

■ We delivered on our commitment to emphasize public-private partnerships as the best

way to leverage investment in projects of potentially greater risk in areas of greatest need.

The Bush Administration’s vision statement for the World Summit on Sustainable

Development noted that, “in partnership, we will work to unite governments, the private

sector, and civil society to strengthen democratic institutions of governance, open markets,

and to mobilize and use all development resources more effectively.” OPIC has met this

challenge by forging innovative partnerships that make a difference.

For example, a $100 million OPIC loan guaranty enabled Wachovia Bank to expand its

lending to small-and medium-sized businesses investing in emerging markets worldwide.

Another $300 million in loan guaranties to Citibank established similar lending facilities for

projects in Latin America and Pakistan. Besides delivering on our promise to strengthen

OPIC’s partnerships with the private markets, these new lending facilities also met OPIC’s

increased requirement for “additionality.” That is, instead of competing with private lenders

or insurers, OPIC is enhancing the commercial market’s ability to offer loans of longer 

tenor for projects in riskier environments—financing that would otherwise be difficult or

impossible to obtain.

Additionally, our public-private partnerships include local communities and local nongovernmental organizations where their inclusion helps to increase economic growth

through investment as well as achieve broader social and environmental objectives. In the

right circumstances, the inclusion of such groups in development projects can mobilize the

1

PRESIDENT’S MESSAGE

Results
participation of the local community and help

assure that the benefits are widely shared.

OPIC looks forward to providing support

for more projects that demonstrate the value

of these partnerships: creating a coastal

wildlife sanctuary with the active involvement

of the local community; rehabilitating an existing rail and port system that will help international relief organizations carry out their

important work in sub-Saharan Africa; and

working with a not-for-profit located in South

Africa to provide housing for HIV positive

individuals and their families.

■ We delivered on our commitment to critically evaluate the developmental impact of

every proposed investment. In 2002, OPIC

created a sophisticated measurement tool

including a comprehensive scoring matrix that weighs each developmental indicator according to its importance in contributing to the economic and social welfare of the host country.

With this tool, we will be better able than ever to demonstrate OPIC’s success in implementing our developmental mission.

■ We delivered on our commitment to direct investment to underserved and strategically

important regions and nations. In sub-Saharan Africa, OPIC-supported projects will help

build 90,000 homes for low-income families, fight the spread of disease, reduce post-harvest

losses and provide safe, clean drinking water. OPIC’s announced participation in a new $210

million private equity fund serving Russia and its neighboring states increased our support

for their continuing evolution to free market economies. Seizing the earliest opportunity to

get involved in the frontline states in the international war against terrorism, we provided

$259 million in finance and insurance for five projects in Pakistan and established a $50

million line of credit to support economic reconstruction and U.S. investment in postTaliban Afghanistan.

■ We delivered on our commitment to help meet basic human needs, especially housing,

for populations the world over. In Mexico, Romania, Nicaragua, and South Africa—to

name just a few of the countries where OPIC is making a difference—innovative OPIC

loans, insurance offerings and public-private partnerships are increasing the availability and

quality of affordable residential housing. Equally important, we’re supporting solutions

that help alleviate critical housing shortages in ways that work best in each host country.

One country may benefit from OPIC political risk insurance to third-party lenders, which

in turn purchase mortgage loans originated by local commercial banks. Elsewhere, OPIC

direct financing is helping to establish on-lending facilities to provide low-cost home

improvement loans. With new commitments in 2002, OPIC’s growing housing portfolio

now includes $215 million in political risk insurance and $110 million in financing for

projects in six countries.

■ We delivered on our commitment to create new opportunities for U.S. small businesses

in the world’s emerging markets. We refocused our efforts on the sector that generates 40

percent of U.S. Gross Domestic Product, with the result that smaller enterprises were principal participants in 31 OPIC projects receiving $256 million in support.

2

In 2002, despite heightened

perceptions of risk—and 

in a very real sense

because of them—OPIC 

committed $1.2 billion 

in loans, guaranties or

insurance to support 45

developmental projects

around the world.
3

Two important programs in 2002 provided the visible culmination of our yearlong focus

on U.S. small business. One was the opening of the OPIC Small Business Center. This latest

of several OPIC outreach efforts to the small business community offers qualified enterprises

access to OPIC resources and a streamlined approval process that reduces their costs of

international expansion. In conjunction with the Center’s announcement at year’s end, we

launched the Small Business Initiative in partnership with the U.S. Small Business

Administration. The initiative improves government services to U.S. small businesses by

training OPIC and SBA staffs on each other’s programs and promoting the regular exchange

of information on economic, financial and political issues, business development, and risk

management. By combining our two organizations’ international expertise, we not only

respond to President Bush’s call for greater coordination among federal agencies; we go a

long way toward unleashing the capacity of U.S. small businesses to generate growth,

improve living standards and instill entrepreneurial spirit overseas.

For over 30 years, OPIC has been the primary U.S. Government agency focused on private sector investment in the developing world and emerging economies. In that time, OPIC

has supported nearly $145 billion worth of investments that have helped host countries generate over $11 billion in revenues and create over 680,000 jobs. These OPIC-supported projects have generated $65 billion in U.S. exports and created more than 254,000 jobs here at

home. In 2002, despite heightened perceptions of risk—and in a very real sense because of

them—OPIC committed $1.2 billion in loans, guaranties or insurance to support 45 developmental projects around the world.

If the required financing or insurance would not happen without OPIC’s involvement,

then neither would the necessary projects themselves: a power plant in remote northeastern

Nicaragua, a modern dairy farm near Moscow, or a diagnostic testing laboratory to help

Ethiopia win the battle against AIDS. Our proven ability to mobilize private capital investment in areas of such great need—to deliver what we promise—demonstrates the critical role

OPIC must continue to play in supporting the economic development of emerging 

markets and developing nations.

Peter S. Watson

President and CEO
4

Innovative Partnerships, Products and Tools

OPIC has for over 30 years demonstrated a unique

ability to find novel solutions to problems inherent in

stimulating foreign direct investment in developing

countries. Some of our greatest successes result in government, nongovernmental organizations, and private

industry working in partnership to accomplish more

than they can when working alone. 

A prime example is a multilateral, public-private partnership

that is increasing the supply of

affordable housing in South

Africa. In this program, a $15

million OPIC loan guaranty

enables a U.S. for profit company

to support a local South African

bank in providing loans to private

developers and contractors who

are building low-income houses

under contract to the government’s

National Urban Reconstruction

and Housing Agency. NURCHA

subsidies help fulfill the dream of

homeownership for individuals

with monthly incomes of 3,500

rand (about $400) or less.

An agreement between OPIC

and the United Nations Mission in

Kosovo has enabled OPIC to make

its products and services available

to leverage the private sector

investment that will be crucial to

the economic growth of Kosovo

and the rest of Yugoslavia.

A $100 million loan guaranty

will enable Wachovia Bank to

expand its lending to small-and

medium-sized businesses investing
in emerging markets. In a true

partnership approach, OPIC and

Wachovia will share the risk in the

bank’s long-term loans in eligible

countries. A $35 million guaranty

will also allow National City Bank

of Cleveland to expand its mediumand long-term lending to middlemarket businesses. Besides

reviewing each transaction for

U.S. effects, environmental

impact, and human and workers’

rights protections, OPIC will establish concentration limits to assure

diversity of the facility’s portfolio.

Because achieving developmental results is the reason for

these partnerships—and for all

OPIC activities—we unveiled in

2002 a new measurement tool

that now enables us to evaluate

and quantify the developmental

contribution of OPIC projects.

Ultimately, each OPIC project

will receive a comprehensive

score and rating based on a

weighted total of its development

indicators, including human

capacity building, private sector

development, leveraging of 

foreign direct investment, corporate social responsibility, and 

private-public partnerships. 

The development of these criteria has been a critical element in

our strategy to make OPIC more

relevant and more faithful to its

original mission. It will also help

underpin OPIC’s commitment to

build strategic partnerships

between private investors, host

governments, and local communitybased organizations.

HELPING BUSINESS DO BUSINESS 5

One way OPIC fosters partnerships between U.S. businesses

and private and public entities in developing nations is by

sponsoring and participating in conferences on international investment opportunities and available OPIC services.

Two such conferences in 2002 showcased opportunities in

Serbia and the Andean region. ■ Interest in Serbia’s

steadily improving investment climate drew more

than 50 U.S. companies to the U.S.-Serbia Business

Opportunities Conference in Belgrade. Serbia is at

the heart of the new South East Europe Free Trade

Area, a dynamic emerging market of 60 million people

in eight countries. Economic reforms there have led

to the monetary stability, fiscal accountability, trade

liberalization, business privatization, and legal and

regulatory frameworks that can now attract foreign

investors. ■ More than 200 companies from the U.S.,

Bolivia, Colombia, Ecuador, and Peru attended the

Andean Regional Trade and Investment Conference,

an unprecedented effort by the trade-related

agencies of the U.S. government to encourage

American companies to do business in the

region. Fulfilling President Bush’s commitment

to support regional economic development

with increased U.S. outreach, the conference

enabled American and Andean country companies

to network for potential joint ventures and 

partnerships.
6

Africa

Sub-Saharan Africa receives the lowest level of foreign

investment in the world, suffers one of the world’s

highest poverty rates, and has almost no private sector.

That is why in 2002 OPIC worked not only to 

support but actively seek developmental projects with

the potential to help nations in this region counter

these destructive forces, meet their populations’ basic

developmental needs, and help them prepare for

future economic growth.

Facing an AIDS epidemic, the

people of Ethiopia will benefit

from access to quality medical

diagnostic testing services when

International Clinical Laboratories

(ICL) opens its facility in Addis

Ababa. An OPIC loan to

MedPharm, Inc., the U.S. member

of the ICL joint venture, will help

establish the lab, which will perform according to international

standards. The lab will serve the

majority of the country and 

introduce testing technologies not

currently available in Ethiopia. In

addition, ICL will promote health

issues and awareness about AIDS,

tuberculosis and malaria through

health fairs, screening programs

and other outreach efforts.

Our first housing initiative on

the African continent involves a
$15 million loan guaranty to the

Soros Economic Development

Fund that will enable South

Africa’s National Urban

Reconstruction and Housing

Agency to finance the building of

90,000 homes for low-income

families. Besides providing affordable homes with potable water for

up to half a million people, this

project will produce exceptional

developmental benefits. All of the

new homes will meet provincial

and national housing standards,

which means building them will

lead to the expansion of local electrical, water and sanitary systems.

The project will also stimulate the

local construction sector through

expanded opportunities for smaller developers and contractors, as

well as training for workers.

Technology-sector jobs and

productivity-enhancing business

services are the leading developmental benefits of $1.1 million in

OPIC political risk insurance that

will allow Decision Technologies

International (DTI) of Wappingers

Falls, New York, to open an office

as well as to develop and market

software products and services in

Nigeria. From this new office in the

capital city of Abuja, DTI will market its Web-enabled e-commerce

and enterprise management software solutions to Nigerian clients.

As DTI grows and its need for

skilled workers increases, the 

company plans to attract students

from Nigerian universities by

sponsoring science fairs and offering scholarships and on-the-job

training in Web-enabled software

and other technologies. 7

NO LONGER A PIPE DREAM

Following last year’s groundbreaking project in Kenya, OPIC

and Texas-based nonprofit Living Water International (LWI)

are working together again to make a clean glass of water

an everyday experience for people throughout

Africa. ■ Just $100,000 in OPIC financing will

provide LWI a new drilling machine, air compressor, and other equipment to drill dozens of wells

in Ghana, providing local communities with clean

water and the better health that goes with it.

Communities raise the funding to pay for drilling

the wells, driven by both the need for clean

water and the knowledge that similar LWI projects have reduced the rates of waterborne diseases by 95 percent. ■ To protect public health,

all wells are tested for contamination before use.

LWI trains local citizens to maintain the wells,

pumps, and storage tanks, keeping them free from

contamination. To finance maintenance and give

the communities a sense of ownership, local

water boards established at each site are encouraged to sell water for a penny a bucket. ■ OPIC

will continue to build partnerships with organizations like LWI as well as other members of the

Millennium Water Alliance to bring potable water

to communities throughout Africa.
8

Housing

Only the combined strength of

public, private, local, and international investment can reduce the

housing deficit in the world’s

emerging markets.

That is one reason OPIC has

made housing a strategic priority.

Another is that a vibrant housing

sector can be one of a country’s

primary economic engines, providing jobs and opportunities 

for growth, not only in the host

countries, but for U.S. businesses

as well.

Housing is a basic human need. In some countries 

it is, by law, a human right. Yet more than a billion

people around the world live in inadequate shelter.

And for many people throughout the developing

world, owning a home is even further out of reach.

The typical Latin American household needs 5.4

times its annual income to buy a house; an African

household, 12.5 times. While some governments

subsidize the cost of housing for their neediest 

citizens, most of the world’s working poor still must

struggle to own even the most basic home. To meet

the projected growth of households, developing

countries may need as many as 21 million new 

housing units per year through 2010.
The U.S. housing sector is the

world’s most efficient and diversified, and our housing finance

model can be replicated to create

primary and secondary mortgage

markets. So OPIC is supporting

projects to leverage the unique

capacity of both U.S. housing 

and finance expertise to help

countries around the world meet

their citizens’ need for quality,

affordable homes.

That is exactly what we’re

helping to accomplish in Mexico

through a $2.5 million loan to 

the U.S. nonprofit, Cooperative

Housing Foundation (CHF).

Proceeds of the loan flow through

CHF to Mexican nonprofit organizations, which in turn lend

money to private citizens to

finance home improvements or

new home construction. The

project especially targets the need

for safe and adequate housing for

workers along the U.S.-Mexico

border. CHF is also offering educational programs for potential

lenders and borrowers.

OPIC’s support of housing projects dates to our very beginnings in

1971. Later we provided the loan

guaranty that helped establish a

secondary mortgage loan market

in Costa Rica. Since that time, our

housing portfolio has grown to

include $200 million in political

risk insurance and $115 million 

in financing for projects in

Argentina, Guatemala, Nicaragua,

the Dominican Republic, South

Africa, and Mexico.

A HOME OF THEIR OWN 9

With little liquidity and an estimated shortage of over

750,000 units, Guatemala’s housing market typifies the

problems experienced in developing economies. A lack of

consistent long-term financing often leaves low- and mediumincome buyers unable to obtain mortgage loans. With fewer

qualified buyers to sell to, local builders are unable to construct enough homes to meet demand. It’s a vicious cycle that

OPIC hopes to stop with $15 million in insurance coverage for

a project that will serve as a catalyst for the creation of a

secondary mortgage market in Guatemala. The insurance will

enable Mercury Mortgage Finance-Guatemala,

Ltd., of Miami, to raise $100 million through a

bond offering in U.S. capital markets to

acquire and securitize new home mortgages

originated by private Guatemalan banks. The

mortgage notes will then be used as collateral

and the primary source of repayment for

mortgage-backed securities sold in the U.S. to

qualified institutional buyers. All of this

should help lower interest costs, increase the

availability of mortgage funds, and standardize mortgage procedures. Another result of

OPIC’s first mortgage securitization insurance

should be the unbundling of the Guatemalan

mortgage industry into origination, servicing,

investing, and risk-bearing components, 

similar to the U.S.
10

President Bush has committed the U.S. to “building a

constructive, respectful relationship with Russia—

a relationship that has the potential to benefit not

only our two countries, but also the world.” As the

primary U.S. agency focused on private sector

investment in the developing world and economies

in transition, OPIC plays an important role in making

this relationship work by helping Russia and its

neighboring states transition to market economies.

Russia and its Neighboring States

Our latest efforts in this region

delivered on OPIC’s own commitment to refocus on our traditional

developmental mission and drew

on OPIC’s strength in supporting

the establishment of open, competitive markets and entrepreneurial enterprises in countries where

these were once alien concepts.

For example, OPIC has created

a $210 million private equity fund

that will directly invest in midsized, consumer-services companies that are new, expanding, or

undergoing privatization. Focused

primarily on Russia, the fund may

also invest in Armenia,

Azerbaijan, Belarus, Georgia,

Kazakhstan, Kyrgyzstan,

Moldova, Tajikistan,

Turkmenistan, Ukraine, and

Uzbekistan. The fund will benefit

from new internal controls,

streamlined administration, a
11

transparent and competitive selection process, and a new leverage

ratio that will attract investment

capital while providing an appropriate balance of risk and return

for the U.S. government. OPIC

will also provide a $150 million

guaranty to Citibank for U.S. dollar

and local currency projects in

Russia, Azerbaijan, Kazakhstan,

Ukraine, and Uzbekistan.

Supporting U.S. objectives for 

the region, OPIC must clear each

project for its environmental

impact, assurance of human and

workers’ rights and its impact on

the U.S. economy.

While Romania has made

tremendous economic progress

since the Cold War, the benefits of

an expanding and stable economy

have not filtered down to many of

the country’s small or family

owned businesses. To correct this

situation, the Cooperative

Housing Foundation (CHF), a

U.S. nonprofit, is using a $2.5 

million OPIC loan to implement 

a community-based business 

loan program in seven western

Romanian counties. The 

organization’s local affiliate,

CHF/Romania, will provide 

local banks with technical training and risk sharing to improve

their lending to micro, small, and

medium-sized businesses, making

them more competitive with their

regional counterparts.

In Moldova, a CIS economic

reform success story, Foodpro

International, Inc., of San Jose,

California, received $675,000 in

OPIC insurance for the walnut

and dried fruit processing plant of

its Alamantara Pro joint venture.

Among Europe’s largest producers

of walnuts, Moldova exports both

a commercially important product

and the fruits of a free market.

CREAM OF THE CROP

With a 50 percent drop in its cow population since 1991, the

dairy industry in Russia’s Dmitrov region has become unable

to assure a reliable supply of raw milk to processors in

Moscow and the Moscow Oblast. ■ A $1.2 million OPIC loan

to Dmitrov Dairy Farms supported by Russian Dairy Farms,

Inc. of Minneapolis, Minnesota, will help reverse the industry’s decline with what is expected to be one of the most

modern and efficient dairy farms in all of Russia. When completed in 2004, the 500-cow farm will ship 12 tons of milk

daily and sell approximately 200 bull calves a year to local

beef producers. Introducing state-of-the-art American dairy

production technology, modern dairy management practices, and high-quality genetics to

the Russian dairy industry, the project will

set the country’s standard of performance. ■

And it will help others duplicate its success.

As part of the region’s Integrated Dairy

Improvement Project, Dmitrov Dairy Farms 

will partner with the local agricultural technical college to train future professional dairy

managers and specialists. And it will develop

an extension program to share new production

technology with local dairy producers and 

forage technology to forage producers who

have signed supply contracts.
12

In war-torn Afghanistan, more than half the population lives in dire poverty. In Pakistan, following a

decade of political and economic instability, almost a

third of the nation lives on less than one dollar a day.

Yet there is cause for hope. In 2002, U.S. foreign economic policy—supported by OPIC efforts—helped to

deliver increased private U.S. investment in these

frontline states.

As part of the Bush Administration’s multi-agency initiatives

for the reconstruction of postTaliban Afghanistan, OPIC

announced in January that it

would establish an initial $50 

million line of credit to support

U.S. investment there. That

announcement followed an OPIC

co-hosted conference earlier in the

month that represented the first

high-level discussion of U.S. private

sector involvement in the country.

The event assembled more than 40

Afghan-American business leaders

and senior U.S. officials to outline

investment opportunities in the

war-torn country.

In May, Executive Vice

President and Chief Operating

Officer Ross Connelly represented

OPIC on an exploratory investment mission with the U.S. Trade

and Development Agency to meet

with senior Afghan officials and

Frontline States

*

*

*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.
assess opportunities specifically in

the telecommunications and 

lodging industries.

Post-Taliban Afghanistan will

require support as it rebuilds its

economy and economic institutions, including the capacity 

to make use of foreign direct

investment to the benefit of the

Afghan population.

In Pakistan, OPIC provided

$259 million in finance and insurance for five projects in 2002.

OPIC’s first project in a frontline

state provides up to $7 million in

political risk insurance for Avaz

Networks, Inc. to expand the 

software development facility in

Islamabad, where it produces

embedded voice and data solutions

for telecommunications equipment

manufacturers. Expansion of the

Communications Enabling

Technologies, Pakistan (CETP)

operation will include equipment

purchase and upgrade, office 

renovation, and staff hiring. By

the fifth year of the project, CETP

will employ and train approximately 250 employees. Avaz had

been unable to find political risk

insurance on the private market.

Meanwhile, a new $75 million

loan guaranty to Citibank will

create a lending facility for

Pakistan as part of the $300 

million in support for the country

OPIC had announced the previous

October. By sharing the risk of

new investments with Citibank,

OPIC leverages its ability to

finance projects while helping the

bank to expand its medium- and

long-term lending.

13

MANAGING RISK IN A CHANGING WORLD

In addition to the efforts we have already undertaken to

promote and support investment in Pakistan, OPIC continues

to find ways to encourage and enable private sector investment. OPIC has been able to mitigate some of the perceived

risks of doing business in frontline states with programs to

stabilize existing investment and shore up existing markets

that capital may otherwise abandon. ■ OPIC has provided

and will continue to provide to existing businesses or projects

confronted with cancellation of sabotage and 

terrorism insurance or the inability to refinance

their operations. ■ OPIC will continue to explore

these and other options so that we can better work

with the private sector to target investment to

strategically important countries in the fight

against terrorism. Most important, we will continue to fulfill our mission and to help ensure

that, in the wake of September 11, the American

business community does not retreat from global

investment opportunities in developing nations

and emerging markets.
14

Small Business

In 2001, we renewed our commitment to help unleash the full

power of U.S. small business to

stimulate free markets in developing countries. In 2002, we delivered measurable results: 31 new

OPIC projects, representing $256

million in financing and insurance

for small businesses, demonstrating the limitless promise of the

U.S. entrepreneurial spirit.

ISP Optics of New York will

rely on $777,600 in political risk

insurance to expand its optical

components manufacturing facility in Russia. With OPIC’s coverage insuring equipment and accessories, the company will increase

output and quality control of the

lenses, domes, prisms, polarizers,

Long recognized as the engine of commerce here at

home, U.S. small businesses typically lack the

resources to pursue opportunities abroad. OPIC

facilitates the type of public-private partnerships that

can provide small businesses access to loans and

political risk insurance generally not available to

them through the private markets. Additionally, U.S.

entrepreneurs can serve as role models for local host

country entrepreneurs, spurring the development of

small businesses in countries that lack a dynamic

small business sector.
and wave plates it produces for

markets around the world.

Rapid Mail Company Ltd.

received a $100,000 direct OPIC

loan to open a Mail Boxes Etc.

(MBE) franchise in Belize City—

the first business to provide a 

full range of packing, shipping,

and private mail services in a

country heavily dependent on the

import of manufactured goods

from the U.S. 

In 2002, OPIC launched two

major programs to further increase

the participation of U.S. small businesses in world markets. The OPIC

Small Business Center, under the

direction of OPIC Chief Financial

Officer Gary Keel, a former acting

associate administrator of the SBA,

will coordinate OPIC activities to

encourage small business deals

through a streamlined and costsaving approval process. 

The OPIC/SBA initiative, meanwhile, will coordinate the capabilities and offerings of our two agencies, further improving small businesses’ access to capital, services,

and foreign markets.

Under this initiative, each

agency will provide training on its

programs to the other’s personnel

in order to better serve U.S. small

business. OPIC and SBA staff will

also meet regularly to share information about economic, financial,

and political developments, business development, as well as risk

mitigation and management.

15

THE POWER TO GROW

Though it is the largest country in Central America, Nicaragua

currently has one of the region’s lowest levels of electricity

usage. Only 51 percent of the country’s population even has

access to electricity. For those who have it, supply is unreliable, resulting in frequent brownouts. ■ Recognizing that

reliable electrical power is a vital ingredient for economic

growth, the government of Nicaragua is committed to

expanding generating capacity to meet a projected six 

percent annual increase in demand. OPIC and the U.S. 

small business sector are committed to help.

■ American & Caribbean International

Corporation, a Pinecrest, Florida, engineering firm, received $2 million in OPIC 

political risk insurance to build and operate

a 4.5-megawatt diesel-fired power plant

near remote Puerto Cabezas. Besides serving

as the city’s sole source of energy, the plant

will bring this region multiple developmental

benefits, including improved infrastructure

and increased industrial output. Without

OPIC, none of this might be happening; 

we provided American & Caribbean

International the political risk insurance 

it could not find in the private sector.
Support

Company Project Description Amount Type

Africa and the Middle East

Angola

S&N Pump Company Pump and motor distribution and repair facility $495,000 Finance

(S&N Pump Africa, LDA) 

S&N International LLC Pump and motor distribution and repair facility $750,000 Insurance

(S & N Pump Africa LDA )

Chad

Pride International, Inc. Oil and gas drilling $100,000,000 Insurance

(Pride Forasol SAS)

Ethiopia

Mr. Tilaye Berihune Medical diagnostic testing facility $489,677 Finance

(Medpharm, Inc.)

Ghana

B&C Management, Inc. Operation of a gravel quarry $168,560 Finance

(B&C Management, Inc.)

Jewell Industries, Inc. Dehydration facility to process spices, $2,000,000 Finance

(African-American Trading Company, Inc.) dried fruit and nuts

Living Water International Drilling potable-water wells $100,000 Finance

(Living Water International) (Ghana)

Namibia

Diamond Fields International Ltd. Mining of off shore diamond deposits $15,000,000 Finance

(Diamond Fields International Ltd.)

Nigeria

Decision Technologies International, Inc. Software business center development $1,080,000 Insurance

(Decision Software Research Centre Ltd)

South Africa

Soros Economic Development Low-income residential housing construction $15,000,000 Finance

Fund/Soros Charitable Foundation

(South Africa Financing Enterprise)

Togo

Sterling Merchant Finance Ltd. Banking $13,500,000 Insurance

(Sterling Merchant Bank Togo, S.A.)

Asia and the Pacific

Indonesia

Unocal Corporation Oil and gas exploration and production $350,000,000 Finance

(West Seno I & II)

Mongolia

Mr. Lee Cashell Tourist camps to provide $250,000 Finance

(Mongolian Resorts XXK) adventure travel activities

Pakistan

Remington Holdings, Inc. Purchase oil and gas concessions $130,750,000 Finance

(Western Acquisitions, Inc.)

Citibank, N.A. On-lending facility $75,000,000 Finance

(Citibank, N.A. (Pakistan On Lending Facility)

Avaz Networks, Inc. Software development $7,000,000 Insurance

(Communications Enabling Technologies, Pakistan)

El Paso Corporation Power plant $23,000,000 Insurance

(Habibullah Coastal Power (Private) Company)

El Paso Corporation Power plant $23,000,000 Insurance

(Fauji Kabirwala Power Company Limited)

16

2002 Investment Projects
Support

Company Project Description Amount Type

17

Sri Lanka

General Electric International, Inc. Power plant $9,000,000 Insurance

(Lakdhanavi Private Ltd)

Thailand

Pacific Subsea Saipan, Inc. Underwater submarine tourism $600,000 Finance

(Pacific Subsea Saipan, Inc.)

Europe and the New Independent States

Georgia

Steadfast Insurance Company Hotel development $4,349,250 Insurance

(Marriott Tbilisi Hotel and 

Marriott Courtyard Hotel)

Latvia

Vernon E. Sandy Contractors Ltd. Hotel development $4,145,850 Insurance

(Vernon Business Group Ltd.)

Moldova

International Communication Systems, Inc. Transit & traffic routing $300,000 Insurance

(International Communication Systems Inc., S.R.L.)

Foodpro International, Inc. Walnut and dried fruit processing plant $675,000 Insurance

(Alimentara Pro S.R.L.)

NIS Regional and Caucasus

Citibank, N.A. On-lending facility $150,000,000 Finance

(Citibank, N.A. (Russia/CIS Lending Facility)

Romania

The Cooperative Housing Foundation Loan program to $2,500,000 Finance

(The Cooperative Housing Foundation) SME’s/homeowner associations.

Russia

Gordon P. Getty Family Trust Oil and gas exploration $30,000,000 Finance

(ZAO Stimul)

Scott Nicol Bulk bottled water & $2,500,000 Finance

(Joint Stock Company Firm Clear Water) water cooler distribution

Russian Dairy Farms, Inc. Dairy farm $1,200,000 Finance

(Dmitrov Dairy Farms, CJSC)

Soros Economic Development Fund On-lending facility for micro and $30,000,000 Finance

(Small Business Credit Bank) small companies

International Scientific Products Corporation Expansion of an optic components $777,600 Insurance

(ISP Optics, Sankt Saint Petersburg) manufacturing facility

Turkey

National Union Fire Insurance Company Gas power plant $2,125,440 Insurance

of Pittsburgh, Pennsylvania

(Adapazari Electricity Generation Company)

National Union Fire Insurance Company Gas power plant $3,699,840 Insurance

of Pittsburgh, Pennsylvania

(Izmir Electricity Generation Company)

National Union Fire Insurance Company Gas power plant $3,709,440 Insurance

of Pittsburgh, Pennsylvania

(Gebze Electricity Generation Company)
18

Support

Company Project Description Amount Type

The Americas

Belize

Jennifer Lovell Operation of retail center $100,000 Finance 

(Rapid Mail Company Limited)

Ecuador

James Besch Agriculture (farm) $450,000 Finance

(Besch International, Inc./

San Martin Farms CIA. Ltda.)

El Salvador

ECSI International, Inc. Computer information systems $4,250,000 Insurance

Gun registration

(ID-Systems S.A.)

Guatemala

Texas Overseas Gas Corp. Liquefied petroleum gas distribution $25,000,000 Insurance

(Zeta Gas de Centro America S.A.)

Colite Outdoor, LLC Outdoor advertising, billboards $350,000 Insurance

(Colite Guatemala, S.A.)

Mercury Mortgage Finance Mortgage securitization $15,000,000 Insurance

(Guatemala Mortgage Trust Ltd.)

Haiti

Harding Enterprises, Inc. Tourism/hotels $25,000,000 Insurance

(Caribbean Hotel Ventures S.A.)

Western Wireless International Corporation Building and operation of a cellular network $18,000,000 Insurance

(Communication Cellulaire d’Haiti)

Mexico

Heron, Ltd. Restaurant franchises $1,219,000 Finance

(Wend-Rey Restaurants, Ltd.)

Brad Schwarz/Marvin Schwarz/Benny Cherry Curbside water purification and distribution sites $1,500,000 Finance

(Faro de Agua SA DE C.V.)

Nicaragua

American & Caribbean International Corp. Power plant $2,000,000 Insurance

(Puerto Cabezas Power S.A.)

Colite Outdoor, LLC Outdoor advertising, billboards $150,000 Insurance

(Colite Nicaragua, S.A.)

Turks & Caicos Islands

Blanchard TCI Ltd. Telecommunications $4,273,114 Insurance

(Caicos Television Holdings Ltd.)

Venezuela

Saul Siegel Concrete pile manufacturing facility $2,250,000 Finance

(Raymond de Venezuela, C.A.)

WilPro Energy Services (El Furrial) Ltd. Gas compression $25,000,000 Insurance

(WilPro Energy Services (El Furrial) Limited)

Caterpillar Financial Services Corporation Purchase and operation of a passenger ferry $35,000,000 Insurance

(Consolidada de Ferrys, C.A.) (Conferry)

Wilpro Energy Services (PIGAP II) Limited Gas compression $25,000,000 Insurance

(Wilpro Energy Services (PIGAP II) Limited)
In 2002, OPIC-supported funds invested $130 million in 70 projects around the globe, with an average

investment of $1.8 million per project. Highlights from these projects are:2

Portfolio Company Country Description

Africa and the Middle East

Songhai Financial Holdings Ghana Investment banking and brokerage

Cora de Comstar Cote d’Ivoire Telecommunications

Bayt.com Jordan Bilingual Arabic-English Internet enabled recruitment service

Aregon Jordan Procurement services provider

Africa Broadcast Network South Africa Media/communications

Phyto-Riker Pharmaceutical Ghana Pharmaceutical company

Asia and the Pacific

First Pacific Company Limited Philippines, Thailand, & Indonesia Consumer goods

Jain Irrigation Systems India Water irrigation systems

The Americas

Despegar Colombia, Argentina On-line travel services

Net Uno Venezuela Telecommunications

New Independent States and Europe

Efes Breweries Romania, NIS Brewery distribution

Nova Banka Croatia Financial services

Eastbridge Poland Poland, Central Europe Department store chain, CD/book chain

Stern Cement Russia Cement manufacturing

Synergia 99 Poland Real estate development

Serbia Broadband Networks Serbia Media/communications

Eksimbanka Serbia Financial services

MV Centrum Czech Republic Commercial office space real estate development

2 These projects are a sampling of projects in which OPIC-supported investment funds invested during fiscal year 2002.

19

2002 Investment Funds’ Projects 

OPIC-supported privately managed private equity investment funds provide long-term growth capital,

management expertise, and new technologies, while supporting adoption of international standards of

reporting and transparency and environmental and worker rights sensitivity; all to promote private sector

enhancement fundamental to the development of emerging market economies. OPIC’s funds operate in

every region of the world. Current OPIC funds include:1

Africa Growth Fund

Africa Millennium Fund

Agribusiness Partners International

AIG Brunswick Millennium Fund

Allied Small Business Fund

Aqua International Partners

Asia Development Partners 

Asia Pacific Growth Fund

Bancroft Eastern Europe Fund

1 This list does not include two OPIC funds which have completed operations. 

Draper International 

Emerging Europe Fund 

Global Environment Emerging Markets Fund

Global Environment Emerging Markets Fund, II

Great Circle Fund

India Private Equity Fund

InterArab Investment Fund

Israel Growth Fund

Modern Africa Growth and Investment Fund 

Newbridge Andean Partners

New Century Capital Partners

Poland Partners

Russia Partners

South America Private Equity Growth Fund

Soros Investment Capital Ltd.

ZM Africa Investment Fund 
20

OPIC programs encourage U.S. private investment in over 150 countries and

areas around the world, contributing to economic growth at home and abroad.

OPIC programs are generally available in the more than 150 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 for up-to-date information on the availability of OPIC services in specific countries, as well as

information on program availability in countries not listed. 

OPIC Countries and Areas

Africa and the 

Middle East

Afghanistan 

Algeria 

Angola

Bahrain

Benin

Botswana

Burkina Faso

Cameroon

Cape Verde

Central African Republic

Chad

Congo

Congo, Democratic Republic of

Djibouti

Egypt

Equatorial Guinea

Eritrea

Ethiopia

Gabon

Gambia 

Ghana

Guinea

Guinea-Bissau

Israel

Jordan

Kenya

Kuwait

Lebanon

Lesotho

Madagascar

Malawi

Mali

Mauritania

Mauritius

Morocco

Mozambique

Namibia

Niger

Nigeria

Oman

Rwanda

São Tomé & Príncipe

Senegal

Sierra Leone

Somalia

South Africa

Swaziland

Tanzania

Togo

Tunisia

Uganda

West Bank & Gaza

Yemen

Zambia

Zimbabwe

The Americas

Anguilla

Antigua & 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

Netherlands Antilles

Nicaragua

Panama

Paraguay

Peru

St. Kitts & Nevis

St. Lucia

St. Vincent & The Grenadines

Suriname

Turks & Caicos

Trinidad & Tobago

Uruguay

Venezuela

Asia and the Pacific

Bangladesh

Cambodia

Cook Islands

East Timor 

Fiji

India 

Indonesia

Kiribati

Korea

Laos

Malaysia

Marshall Islands

Micronesia, Federated States of

Mongolia

Nepal

Pakistan

Palau

Papua New Guinea

Philippines

Singapore

Sri Lanka

Taiwan

Thailand

Tonga

Vietnam

Western Samoa

Europe and the New

Independent States

Albania 

Armenia

Azerbaijan

Bosnia & Herzegovina

Bulgaria

Croatia

Cyprus

Czech Republic

Estonia 

Georgia

Greece

Hungary

Ireland

Kazakhstan

Kosovo

Kyrgyzstan

Latvia

Lithuania

Macedonia, Former Yugoslav

Republic of

Malta

Moldova

Montenegro

Northern Ireland

Poland

Portugal

Romania

Russia

Slovakia

Slovenia

Tajikistan

Turkey

Turkmenistan

Ukraine

Uzbekistan

Yugoslavia

*In Mexico, OPIC’s programs are limited to direct loans to projects that significantly involve U.S. small businesses or cooperatives.
21

2001 M Street, NW

Washington, DC 20036

To the Board of Directors

Overseas Private Investment Corporation:

We have audited the accompanying balance sheets of the Overseas Private

Investment Corporation (OPIC) as of September 30, 2002 and 2001, and the related statements of income, capital and retained earnings, and cash flows for the years

then ended. These financial statements are the responsibility of OPIC’s management.

Our responsibility is to express an opinion on these financial statements based on

our audit.

We conducted our audits in accordance with auditing standards generally accepted

in the United States of America and Government Auditing Standards, issued by the

Comptroller General of the United States. Those standards require that we plan and

perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test

basis, evidence supporting the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement

presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of OPIC at September 30, 2002 and 2001 and

the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our

reports dated December 18, 2002 on our consideration of OPIC’s internal control

over financial reporting and its compliance with laws and regulations. Those reports

are an integral part of an audit conducted in accordance with Government Auditing

Standards and should be read in conjunction with this report in considering the

results of our audit.

December 18, 2002

KPMG LLP. KPMG LLP, a U.S. limited liabiliy partnership, is 

a member of KPMG International, a Swiss association.

Independent Auditors’ Report on Financial Statements
22

Balance sheets

OVERSEAS PRIVATE INVESTMENT CORPORATION

At September 30 ($ in thousands)

2002 2001

ASSETS

Fund Balance with U.S. Treasury (Notes 2 and 4) $ 661,696 $ 678,570

U.S. Treasury securities, at amortized cost plus related receivables 

(Notes 2 and 7) 3,629,543 3,524,168

Direct loans outstanding of $138,601 and $75,379 less allowance for 

uncollectible loans of $19,373 and $10,079 in FY 2002 and FY 2001 

(Notes 2 and 10) 119,228 65,300

Accounts receivable resulting from investment guaranties of 

$115,371 and $69,808 less allowance for doubtful recoveries of 

$45,261 and $29,576 in FY 2002 and FY 2001 (Notes 2 and 11) 70,110 40,232

Assets acquired in insurance claims settlements of $220,843 and 

$239,776 less allowance for doubtful recoveries of $89,808 and 

$97,690 in FY 2002 and FY 2001 (Notes 2 and 11) 131,035 142,086

Accrued interest and fees and other 18,888 19,237

Furniture, equipment and leasehold improvements at cost less 

accumulated depreciation and amortization of $11,000 in FY 2002 and 

$10,201 in FY 2001 (Notes 2, 14 and 19) 3,409 8,273

TOTAL ASSETS $ 4,633,909 $ 4,477,866

LIABILITIES, CAPITAL AND RETAINED EARNINGS

Liabilities:

Reserve for political risk insurance (Note 2) $ 275,000 $ 260,000

Reserve for investment guaranties (Note 2) 570,000 550,000

Accounts payable and accrued expenses 8,304 8,475

Customer deposits and deferred income 32,918 35,717

Borrowings from U.S. Treasury (Note 6) 131,529 57,763

Unearned premiums 13,071 18,565

Deferred rent & rent incentives from lessor of $20,418 and $20,486 net 

of accumulated amortization of $10,921 and $9,618 in FY 2002 and 

FY 2001 (Note 14) 9,497 10,868

1,040,319 941,388

Contingent liabilities (Notes 9, 10, 17 and 18)

Capital and retained earnings:

Contributed capital 50,000 50,000

Credit funding (Note 5) 148,427 79,896

Interagency transfers 1,072 1,147

Retained earnings and statutory reserves:

Insurance (Notes 9 and 12) 1,801,177 1,846,826

Guaranty (Notes 10 and 12) 1,418,115 1,558,609

Retained earnings 174,799 0

3,593,590 3,536,478

TOTAL LIABILITIES, CAPITAL AND RETAINED EARNINGS $ 4,633,909 $ 4,477,866

See accompanying notes to the financial statements.
Statements of income

23

OVERSEAS PRIVATE INVESTMENT CORPORATION

For the years ended September 30 ($ in thousands)

2002 2001

REVENUES

Political risk insurance premiums and fees (Note 9) $ 57,651 $ 66,577

Investment financing interest and fees 91,706 93,501

Other operating income 32,346 30,958

Interest on U.S. Treasury securities 223,186 227,557

404,889 418,593

EXPENSES

Provisions for reserves:

Political risk insurance (Note 2) 11,710 43,848

Investment financing (Notes 2 and 10) 162,162 103,411

Salaries and benefits (Notes 15 and 16) 21,098 19,078

Rent, communications and utilities (Note 14) 5,406 5,126

Contractual services 15,291 23,814

Travel 1,632 1,431

Interest on borrowings from U.S. Treasury (Note 6) 5,245 3,738

Depreciation and amortization (Note 2) 1,001 1,965

Writedown of internally developed software (Note 19) 4,358 0

Other general and administrative expenses 2,187 1,563

230,090 203,974

NET INCOME $ 174,799 $ 214,619

See accompanying notes to the financial statements.
OVERSEAS PRIVATE INVESTMENT CORPORATION

For the years ended September 30 ($ in thousands)

Contributed Credit Interagency Retained

Capital Funding Transfers Statutory Reserves Earnings Total

Insurance Guaranty

(Notes 9 and 12) (Notes 10 and 12)

Balance September 30, 2000 $50,000 $ 96,308 $1,085 $1,883,973 $1,289,843 $ 0 $3,321,209

Net income — — — (36,935) 251,554 — 214,619

Credit funding received from:

Accumulated earnings — 23,750 — (1,000) — (22,750) 0

Credit funding used — (39,962) — — 17,212 22,750 0

Interagency transfers — (200) 62 788 — — 650

Balance September 30, 2001 $50,000 $ 79,896 $1,147 $1,846,826 $1,558,609 $ 0 $3,536,478

Net income ————— 174,799 174,799

Return credit funding

to U.S. Treasury ———— (135,420) — (135,420)

Credit funding received from:

Accumulated earnings — 69,862 — (46,697) — (23,165) 0

Upward Reestimates — 127,806———— 127,806

Credit funding used — (128,664) — — 105,499 23,165 0

Dividend to U.S. Treasury ———— (110,573) — (110,573)

Interagency transfers — (473) (75) 1,048 — — 500

Balance September 30, 2002 $50,000 $148,427 $1,072 $1,801,177 $1,418,115 $174,799 $3,593,590

See accompanying notes to the financial statements.

Statements of capital and retained earnings

24
Statements of cash flows

25

OVERSEAS PRIVATE INVESTMENT CORPORATION

For the years ended September 30 ($ in thousands)

2002 2001

Cash Flows from Operating Activities:

Net Income $ 174,799 $ 214,619

Adjustments to reconcile net income

to net cash provided by operating activities:

Provisions for:

Political risk insurance 11,710 43,848

Investment financing 162,162 103,411

Insurance claim recoveries 61 270

Amortization of premiums on U.S. securities 22,646 18,205

Accretion of discounts on U.S. securities (4,599) (4,064)

Amortization of deferred rent and rental incentives (1,371) (1,333)

Depreciation and amortization of furniture,

equipment and leasehold improvements 1,001 2,043

Write down of internally developed software 4,358 0

(Increase) Decrease in assets:

Accrued interest and fees 2,534 (6,520)

Accounts receivable 17 61

Assets acquired in insurance claims settlements 0 (938)

Recoveries on assets acquired in insurance claims settlements 16,712 1,276

Assets acquired in finance claims settlements (174,077) (31,879)

Recoveries on assets acquired in finance claims settlements 9,519 7,188

Increase (Decrease) in liabilities:

Accounts payable and accrued expenses (172) (441)

Unearned premiums (5,494) (1,825)

Customer deposits and deferred income (2,799) 270

Insurance claim payments (2,431) (2,812)

Cash Provided by Operating Activities 214,576 341,379

Cash Flows from Investing Activities:

Sale and maturity of U.S. Treasury securities 1,124,009 401,190

Purchase of U.S. Treasury securities (1,249,632) (634,194)

Repayment of direct loans 8,595 27,844

Disbursement of direct loans (70,006) (47,880)

Acquisition of furniture and equipment (495) 200

Cash Used in Investing Activities (187,529) (252,840)

Cash Flows from Financing Activities:

Dividend to U.S. Treasury (110,573) 0

Return credit funding to U.S. Treasury (135,420) 0

Interagency transfers 500 650

Upward Reestimates 127,806 0

Credit Reform borrowings from U.S. Treasury 73,766 41,896

Repayments of borrowings from U.S. Treasury 0 (47,059)

Cash Used in Financing Activities (43,921) (4,513)

NET (DECREASE) INCREASE IN CASH (16,874) 84,026

CASH AT BEGINNING OF YEAR 678,570 594,544

CASH AT END OF YEAR $ 661,696 $ 678,570

See accompanying notes to the financial statements.
OVERSEAS PRIVATE INVESTMENT CORPORATION 

September 30, 2002 and 2001

(1) STATEMENT OF CORPORATE PURPOSE

The Overseas Private Investment Corporation (OPIC) is a selfsustaining U.S. Government corporation created under the

Foreign Assistance Act of 1961 (FAA), as amended, to facilitate

U.S. private investment in developing countries and emerging

market economies, primarily by offering political risk insurance,

investment guarantees, and direct loans. As a government corporation, OPIC is not subject to income tax.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: These financial statements have been prepared to report the financial position, results of operations, and

cash flows of OPIC. OPIC’s accounting policies conform to

accounting principles generally accepted in the United States of

America. OPIC’s financial 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 generally 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 Insurance and Investment Guarantee

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 as in some

direct loan and investment guarantee 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 flows.

Depreciation and Amortization: OPIC capitalizes property and

equipment at historical cost for acquisitions exceeding $5,000.

Depreciation and amortization of fixed 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

Guarantees: The reserves for political risk insurance and investment

guarantees 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 guarantees 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 guarantees 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 guarantees outstanding, worldwide economic and political conditions, and project-specific risk factors.

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 guarantee fees on investment guarantees are accrued

based on the principal amount outstanding. Revenue from both

loan interest payments and guarantee 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.

Reclassifications: Certain FY2001 balances have been reclassified to conform to FY2002 financial statement presentations.

Use of Estimates: The preparation of financial 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 financial 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 financial

decisions and management controls of the Office of

Management and Budget. As a result of this relationship, OPIC’s

operations may not be conducted nor its financial 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 financing 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, 2002 and 2001 consists of the following (dollars

in thousands):

2002 2001

Restricted:

Precredit reform $ 3,655 861

Credit reform 652,741 661,041

Interagency fund transfers 1 2

Unrestricted 5,299 16,666

Total $ 661,696 $ 678,570

The Federal Credit Reform Act of 1990 established separate

accounts for cash flows associated with investment financing activity approved prior to implementation of the Act and investment

financing 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

26

Notes to Financial Statements
determined to be no longer needed for the liquidation of the

remaining pre-Credit Reform direct loans and investment guarantees, they are transferred to OPIC’s noncredit insurance account. In

2001, OPIC transferred $5 million to the noncredit insurance

account. No funds were transferred in 2002. 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. Those balances are also expected to

grow as the volume of Credit Reform financings grows over time.

From time to time the Agency for International Development

(A.I.D.) has entered into various memoranda of understanding

with OPIC that provide for the transfer of funds from A.I.D. to

OPIC to carry out specific programs. These cash balances may

not be commingled with other OPIC cash and are available solely for the purposes of the individual agreements.

(5) CREDIT FUNDING

OPIC’s finance 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 fiscal 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.

In fiscal year 2001, OPIC’s appropriations legislation authorized

the corporation to use $24 million of its accumulated earnings to

cover the future costs of credit transactions committed in fiscal years

2001 and 2002. In fiscal year 2002, OPIC received no credit funding authority for new loan commitments; however, approximately

$19 million in carryover 2001 credit authority was available for use

in fiscal year 2002. In addition to the credit funding allocated directly to OPIC through the appropriations process, OPIC has received a

total of $67 million in net transfers from other agencies to be used

exclusively to finance projects in the New Independent States (NIS). 

The following table shows the status of funding for credit

activities (dollars in thousands):

2002 2001

Balance carried forward $ 79,896 96,308

Upward reestimates 127,806 —

Transferred from earnings 69,862 23,750

Interagency transfers (473) (200)

Credit funding used (128,664) (39,962)

Credit funding $ 148,427 79,896

Changes in financial and economic factors over time can affect

the subsidy estimates made at the time of loan commitments.

Therefore, in accordance with OMB guidelines, OPIC reestimates

subsidy costs for each group of loans obligated in a given fiscal year

to account for those changing factors. The cost of reestimates that

result in increases to subsidy are automatically funded while

decreases to subsidy costs result in excess funds that are deposited at

the U.S. Treasury. OPIC incurred increased subsidy costs of $127.8

million and decreases in subsidy costs of $135.4 million in FY 2002.

The way in which OPIC calculates the subsidy cost of its

loans for credit reform purposes differs from the way it calculates its loss reserves and net finance income in accordance with

GAAP for financial statement purposes. While both the subsidy

calculations and the GAAP loss allowances factor in the risk of

individual credits, the GAAP loss allowances do not recognize

the present value of future interest and fees, as to do so would

effectively record revenue prior to realization. 

(6) BORROWINGS FROM THE U.S. TREASURY

In accordance with the Federal Credit Reform Act of 1990, the

portion of investment financing activities not funded through the

appropriations process must be funded by borrowings from the

U.S. Treasury. Borrowings for Credit Reform financings totaled

$73.8 million in 2002 and $41.9 million in 2001, all of which

have been disbursed. OPIC paid a total of $5.2 million and $3.7

million in interest to the U.S. Treasury during fiscal years 2002

and 2001, respectively, and principal repayments of $47.1 million were made in 2001 under OPIC’s borrowing agreement with

the U.S. Treasury. No repayments were made in 2002. Future

payments and interest rates for borrowings outstanding at

September 30, 2002 are as follows (dollars in thousands):

Principal

Interest rate amount due

Payment due in:

Fiscal year 2003 N/A $ —

Fiscal year 2004 N/A —

Fiscal year 2005 6.5% 1,823

Fiscal year 2006 4.76% – 6.53% 15,048

Fiscal yaer 2007 4.71% – 5.13% 31,252

Thereafter 4.65% – 7.12% 83,406

Total $ 131,529

(7) INVESTMENT IN U.S. TREASURY SECURITIES

The composition of investments and related receivables at

September 30, 2002 and 2001 is as follows (dollars in thousands):

2002 2001

Investments, amortized cost $ 3,570,586 3,447,289

Matured investment receivables — 15,721

Interest receivable 58,957 61,158

Total $ 3,629,543 3,524,168

The investment receivable at September 30, 2001 includes

two investments that matured on Saturday, September 30, 2001,

but were not redeemed by the U.S. Treasury until the first business day of fiscal year 2002.

The amortized cost and estimated fair value of investments

in U.S. Treasury securities are as follows (dollars in thousands):

Gross Gross Gross

amortized unrealized unrealized Estimated

cost gains losses fair value

At September 30, 2002

$ 3,570,586 452,661 (411) 4,022,836

At September 30, 2001

$ 3,447,289 323,070 (1,121) 3,769,238

At September 30, 2002, the securities held at year end had

an interest range of 2.75% to 14% and a maturity period from

one month to almost 26 years.

OPIC generally holds its securities to maturity. The amortized cost and estimated fair value of U.S. Treasury securities at

September 30, 2002, by contractual maturity, are shown below

(dollars in thousands):

Amortized Estimated

cost fair value

Due in one year or less $ 329,290 336,587

Due after one year through five years 1,219,199 1,331,999

Due after five years through 10 years 1,211,078 1,321,810

Due after 10 years 811,019 1,032,440

Total $ 3,570,586 4,022,836

27
(8) STATUTORY LIMITATIONS ON THE ISSUANCE OF

INSURANCE AND FINANCE

OPIC issues insurance and financing under a single limit for both

programs fixed by statute in the Foreign Assistance Act (FAA). At

September 30, 2002, this combined limit was $29 billion, of

which combined insurance and finance utilization was $13 billion.

(9) POLITICAL RISK INSURANCE

Insurance revenues include the following components for the

years ended September 30 (dollars in thousands):

2002 2001

Political risk insurance premiums $ 55,080 66,212

Miscellaneous insurance income 2,571 365

Total insurance revenue $ 57,651 66,577

OPIC’s capital, retained earnings, and reserves available for

insurance at both September 30, 2002 and 2001 totaled $2.3 billion. Charges against retained earnings could arise from (A) outstanding political risk insurance contracts, (B) pending claims

under insurance contracts, and (C) guarantees 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 confiscation, 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 were reported as assets acquired in

insurance settlements.

OPIC’s Maximum Contingent Liability at September 30,

2002 and 2001 was $6.8 billion and $8.2 billion. 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, 2002

and 2001 was $4.8 billion and $5.3 billion.

(b) Pending Claims: At September 30, 2002 and 2001, the

total amount of compensation formally requested in insurance

claims for which no determination of specific liability had yet

been made was approximately $349.6 million and $19.5 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 may become a claim.

Compliance with this notice provision sometimes results in the

filing of notice of events that do not mature into claims.

The highly speculative nature of such notice, both as to the

likelihood that the event referred to will ripen into a claim and

the amount, if any, of compensation that may become due, leads

OPIC to follow a policy of not recording a specific liability related to such notices in its financial statements. Any claims that

might arise from these situations are factored into the reserves

for political risk insurance.

(c) Claims Settlement Guarantees and Indemnities: OPIC also

has off-balance-sheet risk in connection with one claim settlement. OPIC settled a claim in 1991 through a guarantee of $30

million of host government obligations. Payments by the host

government have reduced OPIC’s exposure to $10.2 million and

$12.4 million at September 30, 2002 and 2001, respectively. Any

claims that might arise from these situations are factored into

the nonspecific reserve for political risk insurance.

Changes in the reserve for political risk insurance during fiscal years 2002 and 2001 were as follows (dollars in thousands):

2002 2001

Beginning balance $ 260,000 220,000

Charge offs (2,431) (2,812)

Recoveries 61 270

Increase in provisions 11,710 39,423

Transfers from other reserves 5,660 3,119

Ending balance $ 275,000 260,000

(10) INVESTMENT FINANCING

OPIC is authorized to provide investment financing to projects

through direct loans and investment guarantees. Project financing provides medium- to long-term funding through direct loans

and investment guarantees to ventures involving significant equity and/or management participation by U.S. businesses. Project

financing looks for repayment from the cash flows 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 guarantees

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 guarantees that supplement

the fund’s privately raised equity. OPIC’s guarantee 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 guarantee any of the fund’s equity, and all equity investments in OPICbacked funds are fully at risk.

OPIC’s authorization to make direct loans and investment

guarantees can be found in sections 234(c) and 234 (b) of the

Foreign Assistance Act (FAA), respectively. Direct loans and

investment guarantees 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 fiscal years 2002 and 2001, $24 million 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 financing at both September 30, 2002

and 2001 totaled $2.1 billion.

Direct Loans: Direct loans are made for projects in developing

and other eligible countries involving U.S. small business or

28
cooperatives, on terms and conditions established by OPIC.

Direct loan exposure at September 30, 2002 totaled $362 million, of which $138.6 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 $21.7 million at

September 30, 2002 and $12.8 million at September 30, 2001. If

interest income had been accrued on those loans, it would have

approximated $800,000 during fiscal year 2002 and $600,000

during fiscal year 2001. Interest collected on delinquent loans

and recorded as income when received amounted to $1.1 million

and $1.3 million for fiscal years 2002 and 2001, respectively.

Changes in the allowance for uncollectible loans during fiscal

years 2002 and 2001 were as follows (dollars in thousands):

2002 2001

Beginning balance $ 10,079 10,120

Charge offs (920) (1,880)

Recoveries 2,536 3,242

Increase/decrease in provisions 7,482 (1,479)

Increase in capitalized interest 196 76

Ending balance $ 19,373 10,079

Investment Guarantees: OPIC’s investment guarantee covers the

risk of default for any reason. In the event of a claim on OPIC’s

guarantee, OPIC makes payments of principal and interest to the

lender. These payments are recorded as accounts receivable resulting from investment guarantees. The loans that are guaranteed can

bear either fixed or floating rates of interest and are payable in

U.S. dollars. OPIC’s losses on payment of a guarantee are reduced

by the amount of any recovery from the borrower, the host government, or through disposition of assets acquired upon payment

of a claim. Guarantees extend from 5 to 17 years for project

finance and from 10 to 12 years for investment funds.

Credit risk represents the maximum potential loss due to

possible nonperformance by borrowers under terms of the contracts. OPIC’s exposure to credit risk under investment guarantees, including claim-related assets, was $5.8 billion at

September 30, 2002, of which $3.1 billion was outstanding. Of

the $5.8 billion, $3.1 billion related to project finance and $2.7

billion related to investment fund guarantees. Included in the

$2.7 billion of investment fund exposure is $837 million of estimated interest that could accrue to the guaranteed lender. This

interest generally accrues over a 10-year period, payable upon

maturity. Upon complete nonperformance by the borrower,

OPIC would be liable for principal outstanding and interest

accrued on disbursed investment funds. At September 30, 2002,

$253 million of the $837 million had actually accrued to the

guaranteed lender on disbursed investment funds; the remainder

represents an estimate of interest that could accrue to the guaranteed lender over the remaining investment fund term.

Changes in the reserve for investment guaranties during fiscal years 2002 and 2001 were as follows (dollars in thousands):

2002 2001

Beginning balance $ 550,000 460,000

Charge offs (119,485) —

Increase in provisions 139,485 89,625

Transfers to/from other reserves — 375

Ending balance $ 570,000 550,000

(11) CLAIM-RELATED ASSETS

Claim related assets may result from payments on claims under

either the insurance program or the investment financing program. Under the financing program, when OPIC pays a guaranteed party a receivable is created. Under the insurance program,

similar receivables reflect the value of assets, generally shares of

stock, local currency, or host country notes, that may be

acquired as a result of a claim settlement. These receivables are

generally collected over a period of 5 to 15 years.

In FY2000, OPIC paid two insurance claims totaling $217.5

million. OPIC’s potential loss on these claims is included in

allowance for doubtful recoveries at September 30, 2002 and

2001. In fiscal year 2001, OPIC entered into an agreement related to these claims with the host government of Indonesia to

recover, over a 14-year period, the outstanding receivable plus

interest that is due on these two claims. In FY2002, OPIC

received $16 million in recoveries against these claims.

Changes in the allowance for doubtful recoveries for assets

acquired in insurance claims settlements during fiscal years 2002

and 2001 were as follows (dollars in thousands):

2002 2001

Beginning balance $ 97,690 102,284

Charge offs — (5,900)

Increase in provisions — 4,425

Recoveries (2,222) —

Transfers to other reserves (5,660) (3,119)

Ending balance $ 89,808 97,690

Changes in the allowance for doubtful recoveries for assets

resulting from investment guaranties during fiscal years 2002

and 2001 were as follows (dollars in thousands):

2002 2001

Beginning balance $ 29,576 26,935

Charge offs — (12,249)

Recoveries 490 —

Increase in provisions 15,195 15,265

Transfers to other reserves — (375)

Ending balance $ 45,261 29,576

(12) STATUTORY RESERVES AND FULL FAITH AND CREDIT

Section 235(c) of the FAA established a fund with separate

accounts known as the Insurance Reserve and the Guarantee

Reserve for the respective discharge of potential future liabilities

arising from insurance or from guarantees issued under Section

234(b) of the FAA. These amounts may be increased by transfers

from retained earnings or by appropriations. In FY 2001, OPIC’s

Board of Directors authorized the allocation of all retained earnings to these statutory reserves, thereby reflecting OPIC’s

increased ability to absorb potential losses without having to

seek appropriated funds. The allocation of retained earnings to

the Insurance Reserve and the Guarantee Reserve was based on

the amount of maximum exposure outstanding for insurance

and guarantees, respectively.

All valid claims arising from insurance and guarantees issued

by OPIC constitute obligations on which the full faith and credit

of the United States of America is pledged for full payment. At

both September 30, 2002 and 2001, the statutory Insurance

Reserve totaled $1.8 billion and the statutory Guarantee Reserve

totaled $1.4 billion and $1.6 billion, respectively. Should funds

in OPIC’s reserves not be sufficient to discharge obligations arising under insurance, and if OPIC exceeds its $100 million borrowing authority authorized by statute for its insurance program, funds would have to be appropriated to fulfill the pledge

of full faith and credit to which such obligations are entitled.

Standing authority for such appropriations is contained in

Section 235(f) of the FAA. The Federal Credit Reform Act of

1990 authorizes permanent, indefinite appropriations and borrowings from the U.S. Treasury, as appropriate, to carry out all

obligations resulting from the investment financing program.

29
(13) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL

INSTRUMENTS

The estimated values of each class of financial instrument for

which it is practicable to estimate a fair value at September 30,

2002 are as follows (dollars in thousands):

Carrying Fair

amount value

Financial assets:

Cash $ 661,696 661,696

U.S. Treasury securities 3,570,586 4,022,836

Interest receivable on securities 58,957 58,957

Direct loans 119,228 119,228

Accounts receivable from 

investment guarantees 70,110 70,110

Assets acquired in insurance 

claims settlements 131,035 131,035

Financial liabilities:

Borrowings from the U.S. Treasury 131,529 125,326

The methods and assumptions used to estimate the fair value

of each class of financial instrument are described below:

Cash: The carrying amount approximates fair value because

of the liquid nature of the cash, including restricted cash.

U.S. Treasury Securities: The fair values of the U.S. Treasury

securities are estimated based on quoted prices for Treasury

securities of the same maturity available to the public. (OPIC is

not authorized, however, to sell its securities to the public, but is

instead restricted to direct transactions with the U.S. Treasury.)

Interest receivable on the securities is due within 6 months and is

considered to be stated at its fair value.

Direct Loans, Accounts Receivable Resulting from Investment

Guarantees, and Assets Acquired in Insurance Claims Settlements:

These assets are stated on the balance sheet at the present value

of the amount expected to be realized. This value is based on

management’s quarterly review of the portfolio and considers

specific factors related to each individual receivable and its collateral. The stated value on the balance sheet is also management’s best estimate of fair value for these instruments.

Borrowings from the U.S. Treasury: The fair value of borrowings from the U.S. Treasury is estimated based on the face

value of borrowings discounted over their term at year-end rates.

These borrowings were required by the Federal Credit Reform

Act, and repayment terms are fixed by the U.S. Treasury in

accordance with that Act.

Investment Guarantees Committed and Outstanding: OPIC’s

investment guarantees 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, it is not meaningful to calculate their fair value.

(14) OPERATING LEASE

Minimum future rental expenses under the 15-year lease at 1100

New York Avenue, N.W. will be approximately $5.2 million annually, with additional adjustments tied to the consumer price index.

Lease incentives related to OPIC’s 1992 move to this location totaled

$16.7 million. The value of these incentives is deferred in the balance

sheets and is being amortized to reduce rent expense on a straightline basis over the 15-year life of the lease. Rental expense for 2002

and 2001 was approximately $5.0 million and $4.5 million.

(15) PENSIONS

OPIC’s permanent employees are covered by the Civil Service

Retirement System (CSRS) or the Federal Employee Retirement

System (FERS). For CSRS, OPIC withheld 7.0% of employees’

gross 2002 earnings. In 2001 through October 5, 2002, OPIC

contributed 8.51% of employees’ gross earnings, and after

October 5, 2002, 7.5%. The sums were transferred to the Civil

Service Retirement Fund from which this employee group will

receive retirement benefits. For FERS, OPIC withheld 0.80% of

employees’ gross earnings. In 2002 and 2001, OPIC contributed

10.7% of employees’ gross earnings. This sum is transferred to

the FERS fund from which the employee group will receive

retirement benefits. An additional 6.2% of the FERS employees’

gross earnings is withheld; that plus matching contributions by

OPIC are sent to the Social Security System from which the

FERS employee group will receive social security benefits. 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 7% of gross CSRS earnings is

withheld and 0% to 12% 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 benefits

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 financial statements. Paying retirement

benefits and reporting plan assets and actuarial information is

the responsibility of the U.S. Office 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 benefits, assets available for

benefits, and unfunded pension liability are not allocated to individual departments and agencies.

(16) POSTRETIREMENT BENEFITS

OPIC sponsors three defined benefit postretirement plans that

cover qualifying employees. The three plans provide major medical coverage, dental and vision coverage, and life insurance. The

medical and the dental and vision plans are both contributory

plans. The life insurance plan includes options that are contributory and noncontributory.

Shown below is disclosure information for the years ended

September 30, 2002 and 2001 (dollars in thousands):

2002 2001

Reconciliation of accrued benefit cost:

Benefit liability at end of year $ (3,332) (3,324)

Fair value of plan assets 

at end of year — —

Funded status at year-end (3,332) (3,324)

Unrecognized net actuarial gain (907) (812)

Accrued benefit cost $ (4,239) (4,136)

Components of net periodic benefit cost:

Service cost $ 100 107

Interest cost 206 228

Expected return on plan assets — —

Recognized net actuarial loss (96) (69)

Net periodic benefit cost $ 210 266

30
Effect of Health Care Trend: Assumed health care cost trend

rates have a significant effect on the amounts reported for the

health care plans. A one-percentage point change in assumed

health care cost trend rates would have the following effects as of

or for the year ended September 30, 2002 (dollars in thousands):

1 percentage 1 percentage

point increase point decrease

Effects on total service cost and

interest cost components $ 50 (40)

Effect on postretirement 

benefit liability 522 (422)

Change in benefit liability:

2002 2001

Benefit liability at beginning of year $ (3,324) (3,032)

Service cost (100) (107)

Interest cost (206) (228)

Actuarial gain/loss 191 (62)

Benefits paid 107 105

Benefit liability at end of year $ (3,332) (3,324)

Weighted-average discount rate

assumption as of September 30 6.75% 7.50%

For measurement purposes, a 9% annual rate of increase in

the per capita cost of medical benefits was assumed for 2002.

The rate was assumed to decrease gradually to 8% for 2003, 7%

in 2004, 6% in 2005, 5.5% in 2006 and remain at that level

thereafter. The per capita cost for dental benefits was assumed to

increase by 5.5% for each year.

(17) CONCENTRATION OF RISK

OPIC is subject to certain risks associated with financial instruments not reflected in its balance sheet. These financial instruments include political risk insurance, loan guarantees, 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 financing

through direct loans and investment guarantees.

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

the assets of the projects or transactions it guarantees. 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 guarantees. OPIC takes all necessary steps to protect its position in such

collateral and retains the ability to enforce its rights as a secured

lender if such action becomes necessary.

The following is a summary of OPIC’s off-balance-sheet risk

at September 30, 2002 and 2001 (dollars in thousands):

2002

Unused

Total Outstanding commitments

Guarantees $ 5,717,443 3,027,938 2,689,505

Undisbursed 

direct loans 222,943 — 222,943

Insurance 6,810,941 4,829,428 1,981,513

2001

Unused

Total Outstanding commitments

Guarantees $ 6,498,216 3,378,881 3,119,335

Undisbursed 

direct loans 317,590 — 317,590

Insurance 8,246,003 5,323,861 2,922,142

OPIC’s off-balance-sheet finance and insurance exposure

involves coverage outside of the United States. The following is a

breakdown of such total commitments at September 30, 2002 by

major geographical area (dollars in thousands):

Undisbursed

Loan portion on

guarantees direct loans Insurance

Africa $ 540,996 24,053 221,841

Asia 1,057,762 80,200 1,226,989

Europe 819,816 23,611 665,820

Latin America 1,503,101 40,929 4,095,175

Middle East 158,178 — 365,789

NIS (New Independent 

States) 934,239 51,200 235,327

Worldwide 703,351 2,500 —

$ 5,717,443 222,493 6,810,941

OPIC has several client-specific contracts with stop-loss limits that are less than the aggregate coverage amounts. The insurance stop-loss adjustment represents the difference between the

aggregate coverage amount and OPIC’s actual exposure under

these contracts.

At September 30, 2002, OPIC’s largest finance and insurance

exposure was in the following countries and sectors (dollars in

thousands):

Country Sector

Brazil $ 1,364,282 Financial services $ 4,035,213

Argentina 1,086,661 Power generation 3,847,790

Turkey 1,069,037 Oil and gas services 1,907,500

Venezuela 1,054,175 Manufacturing 1,051,747

Indonesia 807,484 Communications 713,587

(18) OTHER CONTINGENCIES

OPIC is currently involved in certain legal claims and has

received notifications of potential claims in the normal course of

business. Management believes that the resolution of these matters will not have a material adverse impact on OPIC.

(19) WRITE-DOWN OF INTERNALLY DEVELOPED SOFTWARE

In fiscal year 2002, management analyzed previously capitalized

costs associated with internally developed software and determined that a portion of those costs would no longer be of future

benefit and should be written down by $4.4 million. The writedown was calculated as the difference between the carrying

amount less costs identified by management as having future

economic benefit, in accordance with FAS 121, “Accounting for

Impairment of Long-lived Assets.”

(20) STATUTORY COVENANTS

OPIC’s enabling statute stipulates both operating and financial

requirements with which OPIC must comply. In management’s

opinion, OPIC is in compliance with all such requirements.

31
32 Office of the President

Peter Watson

President and CEO

Ross Connelly

Executive Vice President 

and COO

Joseph Flynn

Chief of Staff

Dulce Zahniser

Deputy Chief of Staff and

Senior Advisor to the President

Marysue Shore

Senior Advisor to the President

and Director of African Affairs

Rod Morris

Special Advisor to the President

Insurance Department 

Michael Lempres

Vice President

Ruth Ann Nicastri

Director, Latin America

Edith Quintrell 

Director, Technical Operations

& Europe (Including Russia)

Mark Stuckart

Director, Asia/Eurasia

James Williams

Director, Africa & Europe

(Eurasia & Middle East

Finance Department 

Robert Drumheller

Vice President

John Aldonas

Director, Project Finance

Debra Erb

Director, Housing Programs

David Frantz

Director, Project Finance

Ralph Matheus

Director, Small and Medium

Enterprises

James Polan

Director, Project Finance

Nancy Rivera

Director, Project Finance

Alfredo Rodriguez

Director, Project Management

and Special Assets Group

Brian Treadwell

Director, Project Finance

Tracey Webb

Director, Credit Policy 

& Analysis

Investment Funds Department

Cynthia Hostetler

Vice President

Barbara Brereton

Director, Private Equity 

Steven Cowan

Director, Private Equity

James Hansley

Director, Private Equity

Eugene Pohren

Director, Private Equity

Investment Development and

Economic Growth Department

Daniel Nichols 

Vice President

Peter Ballinger

Director, Investment Services

(Ankara, Turkey)

Joan Edwards

Director, Investment Services

and Program Development

Carl Reinhardt

Director, Investment Services

Karen Roberts

Director, Business Development

Office of the Chief 

Financial Officer

Gary Keel

Vice President 

Rosemary Allen

Director of Operations

Martha Edmondson

Director, Financial

Management

Richard Westfield

Deputy Chief Information

Officer

Legal Affairs Department 

Mark Garfinkel

Vice President & General

Counsel

Geoffrey Anderson

Deputy General Counsel 

Michael Abbey

Associate General Counsel,

Investment Funds

Brian Christaldi

Associate General Counsel,

Project Finance

Dev Jagadesan

Associate General Counsel,

Administrative Law

Merlin Liu

Associate General Counsel,

Direct Loans and Housing

Finance

Thomas Mahaffey

Associate General Counsel,

Special Assets

Marc Monheimer

Associate General Counsel,

Insurance

Robert O’Sullivan

Associate General Counsel,

Insurance Claims

Office of External Affairs

Christopher Coughlin

Vice President

Richard Horanburg

Director, Congressional Affairs

Lawrence Spinelli

Director, Communications

Office of Investment Policy

Virginia Green

Vice President

Richard Corrigan

Director, Risk Management

Harvey Himberg

Deputy Vice President and

Director, Environmental Affairs

Anthony Ieronimo

Director, Economic Analysis &

Project Monitoring

Andrew S. Natsios

Administrator

U.S. Agency for International

Development 

Jon M. Huntsman, Jr.

Deputy U.S. Trade

Representative

Office of the U.S.

Trade Representative

Peter S. Watson

President & Chief Executive

Officer

Overseas Private Investment

Corporation

D. Cameron Findlay

Deputy Secretary of Labor

U.S. Department of Labor

Grant D. Aldonas

Under Secretary of Commerce

for International Trade

U.S. Department of Commerce

Alan P. Larson

Under Secretary of State for

Economic, Business, and

Agricultural Affairs

U.S. Department of State

John B. Taylor

Under Secretary of the

Treasury for International

Affairs

U.S. Department of the

Treasury

Melvin E. Clark, Jr.

President and CEO

Metroplex Corporation

Washington, D.C.

(Service ended December 2002)

John J. Pikarski, Jr.

Gordon & Pikarski

Chicago, Illinois

(Service ended December 2002)

Lottie L. Shackelford

Executive Vice President

Global USA, Inc.

Little Rock, Arkansas

(Service ended December 2002)

Gary A. Barron

President

Strategic Alliance Partners

Hallandale Beach, Florida

Samuel E. Ebbesen (General,

USA, Ret.) 

President & Chief Executive

Officer

Virgin Islands Telephone

Corporation

St. Thomas, Virgin Islands

(Service began December 2002) 

Collister Johnson, Jr. 

Senior Consultant

Mercer Management

Consulting, Inc.

McLean, Virginia

(Service began December 2002) 

George J. Kourpias

Retired President, 

International Association of

Machinists & Aerospace

Workers

Silver Spring, Maryland

John L. Morrison 

Chairman

Highland Capital

Minneapolis, Minnesota

(Service began December 2002) 

Diane M. Ruebling

Field Vice President

The Mony Group

Midvale, Utah

(Service began December 2002) 

Ned L. Siegel

President

The Siegel Group

Boca Raton, Florida 

(Service began December 2002)

C. William Swank

Retired Executive Vice

President

Ohio Farm Bureau Federation

Westerville, Ohio

(Service began December 2002) 

Officers & Management

Board of Directors
Photo credits

CHRISTOPHER ASTRIAB

page 1

BRUCE CAMERON

pages 3 (top left and right), 9, and 14

STEVE JOHNSTON

page 11

MICHAEL MESSER

pages 3 (bottom row), 10 (bottom left),

and 13

Courtesy of COOPERATIVE 

HOUSING FOUNDATION

page 8 (bottom left and right)

Courtesy of THE WORLD BANK

front cover (2nd row, left), 6 (bottom

left), 7, 12 (bottom left and right)

Design by Eason Associates, Inc.

Printing by Fontana Lithograph, Inc.

Printed on recycled paper
Overseas 

Private 

Investment 

Corporation

An agency of the 

United States Government

1100 New York Avenue, NW

Washington, D.C. 20527

InfoLine: 202-336-8799

www.opic.gov