House Democrats on Wednesday launched an investigation into a $765 million federal loan granted to Eastman Kodak to make pharmaceutical drug components at its U.S. factories. The deal has drawn scrutiny due to possible insider trading by Kodak executives.
House Coronavirus Crisis Subcommittee Chair Jim Clyburn, D-S.C., Financial Services Chair Maxine Waters, D-Calif., and other lawmakers sent a letter seeking details on the agreement to Eastman Kodak Executive Chair James Continenza. They also sent a letter to U.S. International Finance Development Corp. CEO Adam Boehler, whose agency granted the loan to Kodak.
“Companies and individuals that receive federal funds in response to the coronavirus crisis must follow the law and not engage in abusive practices,” the letter to Continenza said. “DFC’s decision to award this loan to Kodak despite your company’s lack of pharmaceutical experience and the windfall gained by you and other company executives as a result of this loan raise questions that must be thoroughly examined.”
Democrats are asking for documents relating to stock transactions by company executives, along with information on how Kodak procured the loan.
The Securities and Exchange Commission is investigating the trading of Kodak stock, after its price spiked last week due the news of the loan. Sen. Elizabeth Warren, D-Mass., urged SEC Chairman Jay Clayton to conduct an investigation in a letter.
“The Monday, July 27, trades are not the only questionable stock trade involving Kodak and the company’s Defense Production Act deal with the Trump administration. The Kodak chairman and other members of Kodak’s board of directors appear to have purchased substantial amounts of company stock last month, ahead of the public announcement, at a time when Kodak and the Trump administration were negotiating the deal in secret,” she wrote in the letter.
The deal was formally announced by President Trump on July 28.
The Trump administration approved the deal under the Defense Production Act. The agreement with Kodak will reportedly boost U.S. production of generic medicines and create 360 jobs.
During a White House press briefing on Tuesday, Trump announced an investigation into the Kodak deal.
“We’ll do a little study on that. We’ll find out. If there is any problem, we’ll let you know about it very quickly,” he told reporters. “We’ll see what that’s all about.”
Rochester, New York-based Kodak was founded in 1888 and has long been known for producing camera-related products. The federal loan will allow the company to open a new branch, Kodak Pharmaceuticals.