Question

You have just been appointed to be a U.S. Foreign Service Officer (FSO), employed by the United States Agency for International Development (USAID). Your first assignment is working overseas in an embassy where you may give out millions of dollars in foreign aid loans to an important nation.

This nation has two types of loans from the United States government.

Type I loans for $2,000,000,000 and Type II loans for $34,000,000,000. Type I loans are listed by country in congressional reports, while

Type II loans are buried in one line with other country's repayments and defaults. If the U.S. Congress is clearly informed of a loan default, it will not give out any new loans to that country.

The U.S. Ambassador knows that this country is going to default on all loans to the United States government. However, if the country makes a small payment of $1,000,000 on the Type I loan, the U.S. Congressional report will appear as if the country is in good financial condition. This will make him look good.

You have been instructed by the Ambassador to set up an appointment with the Minister of Finance. During the meeting, you are told to tell the Minister to make the $1,000,000 payment on schedule for the Type I loan. If the nation does make the payment the U.S. Embassy will request another $30,000,000,000 appropriation from the U.S. Congress, which the Ambassador knows he can receive.

The Ambassador believes he will be appointed the next U.S. Secretary of State if this plan is accomplished.

Questions:

What should you do to maintain the LOSS RESERVE?

What are the ethical issues involved here regarding non-payment of loan?

What are the financial issues involved here and how does this related to loan defaulter or fraudulent?

What would you do with this information if you were in charge?

Do you really want this Ambassador as the U.S. Secretary of State?

Answer 1

1. 
   ??

   Answer 1

   To maintain loss reserve the following steps should be taken.

   A report should be prepared stating the actual facts of Type I and Type II loans and should be reported to US Congress i.e.

   Financial Status of the Loan

   The amount of loan given,
   The duration for which the loan was given,
   Rate of interest at which the loan was given,
   The amount of loan repaid by the borrowing country,
   The duration of time in which the amount was repaid,
   The amount of loan recoverable from the borrowing country.
   The amount of interest recoverable from the borrowing country,
   The amount of penalty recoverable from the borrowing country,
   Collateral attached with the loan.
   Present status of the loan whether bad debt or non performing asssets etc.

   Legal Status of the Loans

   Documentation of all the terms and conditions of the loan.
   Acceptance of all the terms and conditions to both the parties..
   Whether the terms and conditions on which the loans are given are legally acceptable and whether they can be taken up for legal recourse in case a need arises.

   Ethical Status of the Loans

   Whether the default in loan is due to some valid reasons.
   Whether the terms and conditions stated in the loan agreement paper was as per normal business terms.
   Whether there was any manipulation in circumstances which has led to loan default. etc.

   A recovery process should be initiated with the borrowing country such as

   The debt should be entered in debt collection program
   A demand letter is sent to borrowing country via fax, mail and email and an acknowledgment should be obtained.
   Attempt should be made to arrange payment from the borrowing country. All the disputes should be resolved and clear commitments should be obtained for repayment of the loan.
   Arrangement should be made to ensure the payment(s) of the loans materialize.
   If the borrowing country fails to cooperate in resolving the debt, then pre-legal collection attempts should be made.
   We should send our update and recommendations to the borrowing country, including details on forwarding claim to affiliated attorneys.
   If the borrowing country authorizes forwarding the claim, then we send it to our affiliated attorneys. We instruct them to work and investigate the claim for 60 days. If the borrowing bank decides not to authorized forwarding the claim, it is worked an additional 60 days then the file is closed.
   The attorney sends update and recommendations. If they recommend initiating legal action they will provide us with their suit requirements.
   When we receive suit requirements from the borrower country, the lawsuit is prepared and filed. When we do not received suit requirements or when the borrower country is unwilling to litigate the attorneys will work on the claim for another 60 days then close it.
   The complaint is served to the borrower country.
   Attorneys file for default judgment if no answer is filed by borrowing country. If an answer is filed the discovery process begins and a trial date is later set.
   If a judgment is awarded in our favor, attorneys file for a Writ of Attachment.
   Attorneys attempt to locate and verify assets.
   Attorneys initiate bank levies/ garnishment orders/ liens/ etc. to satisfy the judgment.

   Answer 2

   The ethical issues involved in the bilateral agreement of loans are as follows.

   The terms and conditions should be as per the normal business practices.
   There should not be any mal practice in forcing the borrower country or lender country into entering into a loan agreement.
   If the borrower bank has defaulted then there should not be any force-majeure and reasons for default should be valid.
   There should not be any foul play from the side of the borrower country.
   The borrower country as well as the lender country should not get into any unethical practices such as bribing, kick back etc.
   The agreement entered by both the parties should be a legal transaction and should be well documented. etc.
   The recover process should also be ethical and all aspects should be evaluated.

   Answer 3.

   The financial issues involved in the loans are as follows.

   The amount of loan given,
   The duration for which the loan was given,
   Rate of interest at which the loan was given,
   The amount of loan repaid by the borrowing country,
   The duration of time in which the amount was repaid,
   The amount of loan recoverable from the borrowing country.
   The amount of interest recoverable from the borrowing country,
   The amount of penalty recoverable from the borrowing country,
   Collateral attached with the loan.
   Present status of the loan whether bad debt or non performing asssets etc.

   If the ambassador asks the Finance Minister of the borrower country to make a repayment of $ 1,000,000.00 in lieu of additional loan of $30,000,000,000.00 then it is fraud by the ambassador because it will result in diverting fund to the wrong borrower. Also if the borrower country is not repaying the loan due to force majeure then it is a fraud by the borrower country (Finance Ministry). But if the above mentioned terms and conditions are not involved and the borrower country is unable to pay due to reasons beyond their control then it is a default.

   Answer 4

   If I was US Foreign Service Officer, I would have prepared an unbiased fair report of the situation and submitted to the higher authority. I would have incorporated the pros and cons of granting further loan and would have submitted my recommendation to aid decision making at higher level.

   Answer 4

   No, I will not want the particular ambassador mentioned in the question as U.S. Secretary of State.

   Answer 1

   To maintain loss reserve the following steps should be taken.

2. A report should be prepared stating the actual facts of Type I and Type II loans and should be reported to US Congress i.e.
   1. Financial Status of the Loan
      1. The amount of loan given,
      2. The duration for which the loan was given,
      3. Rate of interest at which the loan was given,
      4. The amount of loan repaid by the borrowing country,
      5. The duration of time in which the amount was repaid,
      6. The amount of loan recoverable from the borrowing country.
      7. The amount of interest recoverable from the borrowing country,
      8. The amount of penalty recoverable from the borrowing country,
      9. Collateral attached with the loan.
      10. Present status of the loan whether bad debt or non performing asssets etc.
   2. Legal Status of the Loans
      1. Documentation of all the terms and conditions of the loan.
      2. Acceptance of all the terms and conditions to both the parties..
      3. Whether the terms and conditions on which the loans are given are legally acceptable and whether they can be taken up for legal recourse in case a need arises.
   3. Ethical Status of the Loans
      1. Whether the default in loan is due to some valid reasons.
      2. Whether the terms and conditions stated in the loan agreement paper was as per normal business terms.
      3. Whether there was any manipulation in circumstances which has led to loan default. etc.
3. A recovery process should be initiated with the borrowing country such as
   1. The debt should be entered in debt collection program
   2. A demand letter is sent to borrowing country via fax, mail and email and an acknowledgment should be obtained.
   3. Attempt should be made to arrange payment from the borrowing country. All the disputes should be resolved and clear commitments should be obtained for repayment of the loan.
   4. Arrangement should be made to ensure the payment(s) of the loans materialize.
   5. If the borrowing country fails to cooperate in resolving the debt, then pre-legal collection attempts should be made.
   6. We should send our update and recommendations to the borrowing country, including details on forwarding claim to affiliated attorneys.
   7. If the borrowing country authorizes forwarding the claim, then we send it to our affiliated attorneys. We instruct them to work and investigate the claim for 60 days. If the borrowing bank decides not to authorized forwarding the claim, it is worked an additional 60 days then the file is closed.
   8. The attorney sends update and recommendations. If they recommend initiating legal action they will provide us with their suit requirements.
   9. When we receive suit requirements from the borrower country, the lawsuit is prepared and filed. When we do not received suit requirements or when the borrower country is unwilling to litigate the attorneys will work on the claim for another 60 days then close it.
   10. The complaint is served to the borrower country.
   11. Attorneys file for default judgment if no answer is filed by borrowing country. If an answer is filed the discovery process begins and a trial date is later set.
   12. If a judgment is awarded in our favor, attorneys file for a Writ of Attachment.
   13. Attorneys attempt to locate and verify assets.
   14. Attorneys initiate bank levies/ garnishment orders/ liens/ etc. to satisfy the judgment.

4. Answer 2

   The ethical issues involved in the bilateral agreement of loans are as follows.

5. The terms and conditions should be as per the normal business practices.
6. There should not be any mal practice in forcing the borrower country or lender country into entering into a loan agreement.
7. If the borrower bank has defaulted then there should not be any force-majeure and reasons for default should be valid.
8. There should not be any foul play from the side of the borrower country.
9. The borrower country as well as the lender country should not get into any unethical practices such as bribing, kick back etc.
10. The agreement entered by both the parties should be a legal transaction and should be well documented. etc.

11. Answer 3.

12. The financial issues involved in the loans are as follows.
    1. The amount of loan given,
    2. The duration for which the loan was given,
    3. Rate of interest at which the loan was given,
    4. The amount of loan repaid by the borrowing country,
    5. The duration of time in which the amount was repaid,
    6. The amount of loan recoverable from the borrowing country.
    7. The amount of interest recoverable from the borrowing country,
    8. The amount of penalty recoverable from the borrowing country,
    9. Collateral attached with the loan.
    10. Present status of the loan whether bad debt or non performing asssets etc.
13. If the ambassador asks the Finance Minister of the borrower country to make a repayment of $ 1,000,000.00 in lieu of additional loan of $30,000,000,000.00 then it is fraud by the ambassador because it will result in diverting fund to the wrong borrower. Also if the borrower country is not repaying the loan due to force majeure then it is a fraud by the borrower country (Finance Ministry). But if the above mentioned terms and conditions are not involved and the borrower country is unable to pay due to reasons beyond their control then it is a default.

14. Answer 4

    If I was US Foreign Service Officer, I would have prepared an unbiased fair report of the situation and submitted to the higher authority. I would have incorporated the pros and cons of granting further loan and would have submitted my recommendation to aid decision making at higher level.

    Answer 4

    No, I will not want the particular ambassador mentioned in the question as U.S. Secretary of State.

    Answer 1

    To maintain loss reserve the following steps should be taken.

    A report should be prepared stating the actual facts of Type I and Type II loans and should be reported to US Congress i.e.

    Financial Status of the Loan

    The amount of loan given,
    The duration for which the loan was given,
    Rate of interest at which the loan was given,
    The amount of loan repaid by the borrowing country,
    The duration of time in which the amount was repaid,
    The amount of loan recoverable from the borrowing country.
    The amount of interest recoverable from the borrowing country,
    The amount of penalty recoverable from the borrowing country,
    Collateral attached with the loan.
    Present status of the loan whether bad debt or non performing asssets etc.

    Legal Status of the Loans

    Documentation of all the terms and conditions of the loan.
    Acceptance of all the terms and conditions to both the parties..
    Whether the terms and conditions on which the loans are given are legally acceptable and whether they can be taken up for legal recourse in case a need arises.

    Ethical Status of the Loans

    Whether the default in loan is due to some valid reasons.
    Whether the terms and conditions stated in the loan agreement paper was as per normal business terms.
    Whether there was any manipulation in circumstances which has led to loan default. etc.

    A recovery process should be initiated with the borrowing country such as

    The debt should be entered in debt collection program
    A demand letter is sent to borrowing country via fax, mail and email and an acknowledgment should be obtained.
    Attempt should be made to arrange payment from the borrowing country. All the disputes should be resolved and clear commitments should be obtained for repayment of the loan.
    Arrangement should be made to ensure the payment(s) of the loans materialize.
    If the borrowing country fails to cooperate in resolving the debt, then pre-legal collection attempts should be made.
    We should send our update and recommendations to the borrowing country, including details on forwarding claim to affiliated attorneys.
    If the borrowing country authorizes forwarding the claim, then we send it to our affiliated attorneys. We instruct them to work and investigate the claim for 60 days. If the borrowing bank decides not to authorized forwarding the claim, it is worked an additional 60 days then the file is closed.
    The attorney sends update and recommendations. If they recommend initiating legal action they will provide us with their suit requirements.
    When we receive suit requirements from the borrower country, the lawsuit is prepared and filed. When we do not received suit requirements or when the borrower country is unwilling to litigate the attorneys will work on the claim for another 60 days then close it.
    The complaint is served to the borrower country.
    Attorneys file for default judgment if no answer is filed by borrowing country. If an answer is filed the discovery process begins and a trial date is later set.
    If a judgment is awarded in our favor, attorneys file for a Writ of Attachment.
    Attorneys attempt to locate and verify assets.
    Attorneys initiate bank levies/ garnishment orders/ liens/ etc. to satisfy the judgment.

    Answer 2

    The ethical issues involved in the bilateral agreement of loans are as follows.

    The terms and conditions should be as per the normal business practices.
    There should not be any mal practice in forcing the borrower country or lender country into entering into a loan agreement.
    If the borrower bank has defaulted then there should not be any force-majeure and reasons for default should be valid.
    There should not be any foul play from the side of the borrower country.
    The borrower country as well as the lender country should not get into any unethical practices such as bribing, kick back etc.
    The agreement entered by both the parties should be a legal transaction and should be well documented. etc.
    The recover process should also be ethical and all aspects should be evaluated.

    Answer 3.

    The financial issues involved in the loans are as follows.

    The amount of loan given,
    The duration for which the loan was given,
    Rate of interest at which the loan was given,
    The amount of loan repaid by the borrowing country,
    The duration of time in which the amount was repaid,
    The amount of loan recoverable from the borrowing country.
    The amount of interest recoverable from the borrowing country,
    The amount of penalty recoverable from the borrowing country,
    Collateral attached with the loan.
    Present status of the loan whether bad debt or non performing asssets etc.

    If the ambassador asks the Finance Minister of the borrower country to make a repayment of $ 1,000,000.00 in lieu of additional loan of $30,000,000,000.00 then it is fraud by the ambassador because it will result in diverting fund to the wrong borrower. Also if the borrower country is not repaying the loan due to force majeure then it is a fraud by the borrower country (Finance Ministry). But if the above mentioned terms and conditions are not involved and the borrower country is unable to pay due to reasons beyond their control then it is a default.

    Answer 4

    If I was US Foreign Service Officer, I would have prepared an unbiased fair report of the situation and submitted to the higher authority. I would have incorporated the pros and cons of granting further loan and would have submitted my recommendation to aid decision making at higher level.

    Answer 4

    No, I will not want the particular ambassador mentioned in the question as U.S. Secretary of State.Answer 1
    To maintain loss reserve the following steps should be taken.
    1. A report should be prepared stating the actual facts of Type I and Type II loans and should be reported to US Congress i.e.
    a. Financial Status of the Loan
    i. The amount of loan given,
    ii. The duration for which the loan was given,
    iii. Rate of interest at which the loan was given,
    iv. The amount of loan repaid by the borrowing country,
    v. The duration of time in which the amount was repaid,
    vi. The amount of loan recoverable from the borrowing country.
    vii. The amount of interest recoverable from the borrowing country,
    viii. The amount of penalty recoverable from the borrowing country,
    ix. Collateral attached with the loan.
    x. Present status of the loan whether bad debt or non performing asssets etc.
    b. Legal Status of the Loans
    i. Documentation of all the terms and conditions of the loan.
    ii. Acceptance of all the terms and conditions to both the parties..
    iii. Whether the terms and conditions on which the loans are given are legally acceptable and whether they can be taken up for legal recourse in case a need arises.
    c. Ethical Status of the Loans
    i. Whether the default in loan is due to some valid reasons.
    ii. Whether the terms and conditions stated in the loan agreement paper was as per normal business terms.
    iii. Whether there was any manipulation in circumstances which has led to loan default. etc.
    2. A recovery process should be initiated with the borrowing country such as
    a. The debt should be entered in debt collection program
    b. A demand letter is sent to borrowing country via fax, mail and email and an acknowledgment should be obtained.
    c. Attempt should be made to arrange payment from the borrowing country. All the disputes should be resolved and clear commitments should be obtained for repayment of the loan.
    d. Arrangement should be made to ensure the payment(s) of the loans materialize.
    e. If the borrowing country fails to cooperate in resolving the debt, then pre-legal collection attempts should be made.
    f. We should send our update and recommendations to the borrowing country, including details on forwarding claim to affiliated attorneys.
    g. If the borrowing country authorizes forwarding the claim, then we send it to our affiliated attorneys. We instruct them to work and investigate the claim for 60 days. If the borrowing bank decides not to authorized forwarding the claim, it is worked an additional 60 days then the file is closed.
    h. The attorney sends update and recommendations. If they recommend initiating legal action they will provide us with their suit requirements.
    i. When we receive suit requirements from the borrower country, the lawsuit is prepared and filed. When we do not received suit requirements or when the borrower country is unwilling to litigate the attorneys will work on the claim for another 60 days then close it.
    j. The complaint is served to the borrower country.
    k. Attorneys file for default judgment if no answer is filed by borrowing country. If an answer is filed the discovery process begins and a trial date is later set.
    l. If a judgment is awarded in our favor, attorneys file for a Writ of Attachment.
    m. Attorneys attempt to locate and verify assets.
    n. Attorneys initiate bank levies/ garnishment orders/ liens/ etc. to satisfy the judgment.
    Answer 2
    The ethical issues involved in the bilateral agreement of loans are as follows.
    1. The terms and conditions should be as per the normal business practices.
    2. There should not be any mal practice in forcing the borrower country or lender country into entering into a loan agreement.
    3. If the borrower bank has defaulted then there should not be any force-majeure and reasons for default should be valid.
    4. There should not be any foul play from the side of the borrower country.
    5. The borrower country as well as the lender country should not get into any unethical practices such as bribing, kick back etc.
    6. The agreement entered by both the parties should be a legal transaction and should be well documented. etc.
    7. The recover process should also be ethical and all aspects should be evaluated.
    Answer 3.
    1. The financial issues involved in the loans are as follows.
    a. The amount of loan given,
    b. The duration for which the loan was given,
    c. Rate of interest at which the loan was given,
    d. The amount of loan repaid by the borrowing country,
    e. The duration of time in which the amount was repaid,
    f. The amount of loan recoverable from the borrowing country.
    g. The amount of interest recoverable from the borrowing country,
    h. The amount of penalty recoverable from the borrowing country,
    i. Collateral attached with the loan.
    j. Present status of the loan whether bad debt or non performing asssets etc.
    2. If the ambassador asks the Finance Minister of the borrower country to make a repayment of $ 1,000,000.00 in lieu of additional loan of $30,000,000,000.00 then it is fraud by the ambassador because it will result in diverting fund to the wrong borrower. Also if the borrower country is not repaying the loan due to force majeure then it is a fraud by the borrower country (Finance Ministry). But if the above mentioned terms and conditions are not involved and the borrower country is unable to pay due to reasons beyond their control then it is a default.
    Answer 4
    If I was US Foreign Service Officer, I would have prepared an unbiased fair report of the situation and submitted to the higher authority. I would have incorporated the pros and cons of granting further loan and would have submitted my recommendation to aid decision making at higher level.
    Answer 4
    No, I will not want the particular ambassador mentioned in the question as U.S. Secretary of State.Answer 1
    To maintain loss reserve the following steps should be taken.
    1. A report should be prepared stating the actual facts of Type I and Type II loans and should be reported to US Congress i.e.
    a. Financial Status of the Loan
    i. The amount of loan given,
    ii. The duration for which the loan was given,
    iii. Rate of interest at which the loan was given,
    iv. The amount of loan repaid by the borrowing country,
    v. The duration of time in which the amount was repaid,
    vi. The amount of loan recoverable from the borrowing country.
    vii. The amount of interest recoverable from the borrowing country,
    viii. The amount of penalty recoverable from the borrowing country,
    ix. Collateral attached with the loan.
    x. Present status of the loan whether bad debt or non performing asssets etc.
    b. Legal Status of the Loans
    i. Documentation of all the terms and conditions of the loan.
    ii. Acceptance of all the terms and conditions to both the parties..
    iii. Whether the terms and conditions on which the loans are given are legally acceptable and whether they can be taken up for legal recourse in case a need arises.
    c. Ethical Status of the Loans
    i. Whether the default in loan is due to some valid reasons.
    ii. Whether the terms and conditions stated in the loan agreement paper was as per normal business terms.
    iii. Whether there was any manipulation in circumstances which has led to loan default. etc.
    2. A recovery process should be initiated with the borrowing country such as
    a. The debt should be entered in debt collection program
    b. A demand letter is sent to borrowing country via fax, mail and email and an acknowledgment should be obtained.
    c. Attempt should be made to arrange payment from the borrowing country. All the disputes should be resolved and clear commitments should be obtained for repayment of the loan.
    d. Arrangement should be made to ensure the payment(s) of the loans materialize.
    e. If the borrowing country fails to cooperate in resolving the debt, then pre-legal collection attempts should be made.
    f. We should send our update and recommendations to the borrowing country, including details on forwarding claim to affiliated attorneys.
    g. If the borrowing country authorizes forwarding the claim, then we send it to our affiliated attorneys. We instruct them to work and investigate the claim for 60 days. If the borrowing bank decides not to authorized forwarding the claim, it is worked an additional 60 days then the file is closed.
    h. The attorney sends update and recommendations. If they recommend initiating legal action they will provide us with their suit requirements.
    i. When we receive suit requirements from the borrower country, the lawsuit is prepared and filed. When we do not received suit requirements or when the borrower country is unwilling to litigate the attorneys will work on the claim for another 60 days then close it.
    j. The complaint is served to the borrower country.
    k. Attorneys file for default judgment if no answer is filed by borrowing country. If an answer is filed the discovery process begins and a trial date is later set.
    l. If a judgment is awarded in our favor, attorneys file for a Writ of Attachment.
    m. Attorneys attempt to locate and verify assets.
    n. Attorneys initiate bank levies/ garnishment orders/ liens/ etc. to satisfy the judgment.
    Answer 2
    The ethical issues involved in the bilateral agreement of loans are as follows.
    1. The terms and conditions should be as per the normal business practices.
    2. There should not be any mal practice in forcing the borrower country or lender country into entering into a loan agreement.
    3. If the borrower bank has defaulted then there should not be any force-majeure and reasons for default should be valid.
    4. There should not be any foul play from the side of the borrower country.
    5. The borrower country as well as the lender country should not get into any unethical practices such as bribing, kick back etc.
    6. The agreement entered by both the parties should be a legal transaction and should be well documented. etc.
    7. The recover process should also be ethical and all aspects should be evaluated.
    Answer 3.
    1. The financial issues involved in the loans are as follows.
    a. The amount of loan given,
    b. The duration for which the loan was given,
    c. Rate of interest at which the loan was given,
    d. The amount of loan repaid by the borrowing country,
    e. The duration of time in which the amount was repaid,
    f. The amount of loan recoverable from the borrowing country.
    g. The amount of interest recoverable from the borrowing country,
    h. The amount of penalty recoverable from the borrowing country,
    i. Collateral attached with the loan.
    j. Present status of the loan whether bad debt or non performing asssets etc.
    2. If the ambassador asks the Finance Minister of the borrower country to make a repayment of $ 1,000,000.00 in lieu of additional loan of $30,000,000,000.00 then it is fraud by the ambassador because it will result in diverting fund to the wrong borrower. Also if the borrower country is not repaying the loan due to force majeure then it is a fraud by the borrower country (Finance Ministry). But if the above mentioned terms and conditions are not involved and the borrower country is unable to pay due to reasons beyond their control then it is a default.
    Answer 4
    If I was US Foreign Service Officer, I would have prepared an unbiased fair report of the situation and submitted to the higher authority. I would have incorporated the pros and cons of granting further loan and would have submitted my recommendation to aid decision making at higher level.
    Answer 5
    No, I will not want the particular ambassador mentioned in the question as U.S. Secretary of State.

    Answer 1
    To maintain loss reserve the following steps should be taken.
    1. A report should be prepared stating the actual facts of Type I and Type II loans and should be reported to US Congress i.e.
    a. Financial Status of the Loan
    i. The amount of loan given,
    ii. The duration for which the loan was given,
    iii. Rate of interest at which the loan was given,
    iv. The amount of loan repaid by the borrowing country,
    v. The duration of time in which the amount was repaid,
    vi. The amount of loan recoverable from the borrowing country.
    vii. The amount of interest recoverable from the borrowing country,
    viii. The amount of penalty recoverable from the borrowing country,
    ix. Collateral attached with the loan.
    x. Present status of the loan whether bad debt or non performing asssets etc.
    b. Legal Status of the Loans
    i. Documentation of all the terms and conditions of the loan.
    ii. Acceptance of all the terms and conditions to both the parties..
    iii. Whether the terms and conditions on which the loans are given are legally acceptable and whether they can be taken up for legal recourse in case a need arises.
    c. Ethical Status of the Loans
    i. Whether the default in loan is due to some valid reasons.
    ii. Whether the terms and conditions stated in the loan agreement paper was as per normal business terms.
    iii. Whether there was any manipulation in circumstances which has led to loan default. etc.
    2. A recovery process should be initiated with the borrowing country such as
    a. The debt should be entered in debt collection program
    b. A demand letter is sent to borrowing country via fax, mail and email and an acknowledgment should be obtained.
    c. Attempt should be made to arrange payment from the borrowing country. All the disputes should be resolved and clear commitments should be obtained for repayment of the loan.
    d. Arrangement should be made to ensure the payment(s) of the loans materialize.
    e. If the borrowing country fails to cooperate in resolving the debt, then pre-legal collection attempts should be made.
    f. We should send our update and recommendations to the borrowing country, including details on forwarding claim to affiliated attorneys.
    g. If the borrowing country authorizes forwarding the claim, then we send it to our affiliated attorneys. We instruct them to work and investigate the claim for 60 days. If the borrowing bank decides not to authorized forwarding the claim, it is worked an additional 60 days then the file is closed.
    h. The attorney sends update and recommendations. If they recommend initiating legal action they will provide us with their suit requirements.
    i. When we receive suit requirements from the borrower country, the lawsuit is prepared and filed. When we do not received suit requirements or when the borrower country is unwilling to litigate the attorneys will work on the claim for another 60 days then close it.
    j. The complaint is served to the borrower country.
    k. Attorneys file for default judgment if no answer is filed by borrowing country. If an answer is filed the discovery process begins and a trial date is later set.
    l. If a judgment is awarded in our favor, attorneys file for a Writ of Attachment.
    m. Attorneys attempt to locate and verify assets.
    n. Attorneys initiate bank levies/ garnishment orders/ liens/ etc. to satisfy the judgment.
    Answer 2
    The ethical issues involved in the bilateral agreement of loans are as follows.
    1. The terms and conditions should be as per the normal business practices.
    2. There should not be any mal practice in forcing the borrower country or lender country into entering into a loan agreement.
    3. If the borrower bank has defaulted then there should not be any force-majeure and reasons for default should be valid.
    4. There should not be any foul play from the side of the borrower country.
    5. The borrower country as well as the lender country should not get into any unethical practices such as bribing, kick back etc.
    6. The agreement entered by both the parties should be a legal transaction and should be well documented. etc.
    7. The recover process should also be ethical and all aspects should be evaluated.
    Answer 3.
    1. The financial issues involved in the loans are as follows.
    a. The amount of loan given,
    b. The duration for which the loan was given,
    c. Rate of interest at which the loan was given,
    d. The amount of loan repaid by the borrowing country,
    e. The duration of time in which the amount was repaid,
    f. The amount of loan recoverable from the borrowing country.
    g. The amount of interest recoverable from the borrowing country,
    h. The amount of penalty recoverable from the borrowing country,
    i. Collateral attached with the loan.
    j. Present status of the loan whether bad debt or non performing asssets etc.
    2. If the ambassador asks the Finance Minister of the borrower country to make a repayment of $ 1,000,000.00 in lieu of additional loan of $30,000,000,000.00 then it is fraud by the ambassador because it will result in diverting fund to the wrong borrower. Also if the borrower country is not repaying the loan due to force majeure then it is a fraud by the borrower country (Finance Ministry). But if the above mentioned terms and conditions are not involved and the borrower country is unable to pay due to reasons beyond their control then it is a default.
    Answer 4
    If I was US Foreign Service Officer, I would have prepared an unbiased fair report of the situation and submitted to the higher authority. I would have incorporated the pros and cons of granting further loan and would have submitted my recommendation to aid decision making at higher level.
    Answer 4
    No, I will not want the particular ambassador mentioned in the question as U.S. Secretary of State.Answer 1
    To maintain loss reserve the following steps should be taken.
    1. A report should be prepared stating the actual facts of Type I and Type II loans and should be reported to US Congress i.e.
    a. Financial Status of the Loan
    i. The amount of loan given,
    ii. The duration for which the loan was given,
    iii. Rate of interest at which the loan was given,
    iv. The amount of loan repaid by the borrowing country,
    v. The duration of time in which the amount was repaid,
    vi. The amount of loan recoverable from the borrowing country.
    vii. The amount of interest recoverable from the borrowing country,
    viii. The amount of penalty recoverable from the borrowing country,
    ix. Collateral attached with the loan.
    x. Present status of the loan whether bad debt or non performing asssets etc.
    b. Legal Status of the Loans
    i. Documentation of all the terms and conditions of the loan.
    ii. Acceptance of all the terms and conditions to both the parties..
    iii. Whether the terms and conditions on which the loans are given are legally acceptable and whether they can be taken up for legal recourse in case a need arises.
    c. Ethical Status of the Loans
    i. Whether the default in loan is due to some valid reasons.
    ii. Whether the terms and conditions stated in the loan agreement paper was as per normal business terms.
    iii. Whether there was any manipulation in circumstances which has led to loan default. etc.
    2. A recovery process should be initiated with the borrowing country such as
    a. The debt should be entered in debt collection program
    b. A demand letter is sent to borrowing country via fax, mail and email and an acknowledgment should be obtained.
    c. Attempt should be made to arrange payment from the borrowing country. All the disputes should be resolved and clear commitments should be obtained for repayment of the loan.
    d. Arrangement should be made to ensure the payment(s) of the loans materialize.
    e. If the borrowing country fails to cooperate in resolving the debt, then pre-legal collection attempts should be made.
    f. We should send our update and recommendations to the borrowing country, including details on forwarding claim to affiliated attorneys.
    g. If the borrowing country authorizes forwarding the claim, then we send it to our affiliated attorneys. We instruct them to work and investigate the claim for 60 days. If the borrowing bank decides not to authorized forwarding the claim, it is worked an additional 60 days then the file is closed.
    h. The attorney sends update and recommendations. If they recommend initiating legal action they will provide us with their suit requirements.
    i. When we receive suit requirements from the borrower country, the lawsuit is prepared and filed. When we do not received suit requirements or when the borrower country is unwilling to litigate the attorneys will work on the claim for another 60 days then close it.
    j. The complaint is served to the borrower country.
    k. Attorneys file for default judgment if no answer is filed by borrowing country. If an answer is filed the discovery process begins and a trial date is later set.
    l. If a judgment is awarded in our favor, attorneys file for a Writ of Attachment.
    m. Attorneys attempt to locate and verify assets.
    n. Attorneys initiate bank levies/ garnishment orders/ liens/ etc. to satisfy the judgment.
    Answer 2
    The ethical issues involved in the bilateral agreement of loans are as follows.
    1. The terms and conditions should be as per the normal business practices.
    2. There should not be any mal practice in forcing the borrower country or lender country into entering into a loan agreement.
    3. If the borrower bank has defaulted then there should not be any force-majeure and reasons for default should be valid.
    4. There should not be any foul play from the side of the borrower country.
    5. The borrower country as well as the lender country should not get into any unethical practices such as bribing, kick back etc.
    6. The agreement entered by both the parties should be a legal transaction and should be well documented. etc.
    7. The recover process should also be ethical and all aspects should be evaluated.
    Answer 3.
    1. The financial issues involved in the loans are as follows.
    a. The amount of loan given,
    b. The duration for which the loan was given,
    c. Rate of interest at which the loan was given,
    d. The amount of loan repaid by the borrowing country,
    e. The duration of time in which the amount was repaid,
    f. The amount of loan recoverable from the borrowing country.
    g. The amount of interest recoverable from the borrowing country,
    h. The amount of penalty recoverable from the borrowing country,
    i. Collateral attached with the loan.
    j. Present status of the loan whether bad debt or non performing asssets etc.
    2. If the ambassador asks the Finance Minister of the borrower country to make a repayment of $ 1,000,000.00 in lieu of additional loan of $30,000,000,000.00 then it is fraud by the ambassador because it will result in diverting fund to the wrong borrower. Also if the borrower country is not repaying the loan due to force majeure then it is a fraud by the borrower country (Finance Ministry). But if the above mentioned terms and conditions are not involved and the borrower country is unable to pay due to reasons beyond their control then it is a default.
    Answer 4
    If I was US Foreign Service Officer, I would have prepared an unbiased fair report of the situation and submitted to the higher authority. I would have incorporated the pros and cons of granting further loan and would have submitted my recommendation to aid decision making at higher level.
    Answer 5
    No, I will not want the particular ambassador mentioned in the question as U.S. Secretary of State.

15. The recover process should also be ethical and all aspects should be evaluated.