A $30-billion loan to United States from China to pay off debts incurred by the U.S. military and the United Nations has been billed as a “massive investment” by the Chinese government.
However, in a new report, the Department of Justice’s Civil Division has found the loan, which is part of the Defense Department’s $1.1 trillion China-U.S.-India Infrastructure Fund, is “largely an investment in a private company and is in no way a government-backed project.”
The Department of the Treasury’s Inspector General (IG) said in a statement that the loan is an “unfair and deceptive act of U.s. taxpayer money laundering.”
The IG said the loan was a massive “unfunded obligation” for a government that “exceeds its borrowing capacity.”
SBA Loan Administrator, Thomas Baskin, said the $30bn loan was made through an intermediary, which was “very unusual.”
“It’s a massive investment in the United Kingdom,” Baskins told reporters.
“I think there are a lot of questions that need to be answered, and that’s why we’ve been very careful in how we’ve handled this,” he added.
“We have to take this very seriously.”
The SBA, which has been a target of Chinese cyberattacks, has already spent $12 billion to cover the U-turn in interest payments.
The U.K. government said in March it was cutting its debt from $7.6 billion to $4.9 billion.
The Treasury’s IG said China is not obligated to repay the loan to date.
Baskers spokesman said the SBA’s loan is not an “insurance policy” for the Chinese.
“This is not a guarantee of the loan being repaid,” he told The Verge.
“It is a guarantee that this loan is being repaid.”
He added that SBA is not in a position to “help cover the SBI’s debt, and in any event this loan will not be paid in full.”