New Research By Accountable.US Finds Foreign-Focused Corporation Lavished CEOs With Pay And Has Over 900 Employees
HELENA, MT – On the heels of the bipartisan House of Representatives coronavirus oversight committee sending letters requesting large corporations identified as publicly-traded companies with more than $25 million in capitalization and more than 600 employees return bailouts worth about $10 million each from President’s Trump’s Small Business Administration’s Paycheck Protection Act program, Accountable.US released additional research on one of the more egregious corporate recipients: Gulf Island Fabrications.
“The Trump administration’s mismanagement of the Paycheck Protection Program is forcing real small businesses to lay off their employees or worse, close their doors, as large corporations like Gulf Island cash in on millions in taxpayer-funded bailouts,” said Jayson O’Neill, Accountable.US spokesperson. “This is a good first step in getting these funds back and into the hands of real small businesses in need. Unfortunately, until Congress fixes this program to prevent the Trump administration from handing out more favors to special interests and large corporations, this list is only going to get longer.”
In addition to sending a letter to Gulf Island Fabrication, the House oversight committee sent letters to EVO Transportation & Energy Services, MiMedx Group, Quantum Corporation and Universal Stainless & Alloy Products.
The Small Business Administration’s (SBA) Inspector General also recently released a report finding the Trump SBA’s lack of guidance led to many minority and women small businesses — as many as 90 percent — being left behind in the first round of the PPP program. There is no indication that the indefensible, systematic discrimination has been ‘fixed’ by the administration.
Gulf Island Fabrication (GIFI) Highlights:
- In late 2019, Gulf Island Fabrication gave former president and CEO Kirk Meche a severance of $958,000 and allowed him to remain eligible for certain incentives and performance awards;
- In November 2019, Gulf Island International named Richard Heo as its new president and CEO. Heo was given 100,000 restricted stock units plus an annual compensation of $487,000;
- Gulf Island Fabrication has been fined at least $254,085 by the Department Of Labor And Environmental Protection Agency for multiple violations; and
- Gulf Island Fabrication has more than 700 Employees in Houma, Louisiana, alone and 944 total according to their latest SEC filings.
These filings were compiled as part of an ongoing tracking project by government watchdog Accountable.US. TrumpBailouts.org documents the billion-dollar corporations and other large companies that have received taxpayer assistance under the CARES Act, and what advantages and assets they had going into the CODID-19 crisis that most small businesses could never access.
Previously controversial PPP grantees include a foreign-owned uranium mining corporation with ties to the Trump administration, at least two companies that market their ability to ship U.S. manufacturing jobs overseas, major luxury hotel chains, a fashion model agency, and even the L.A. Lakers.
BACKGROUND: The SBA’s Paycheck Protection Program has been plagued with reports of legitimate small businesses unable to access the help the President claimed would come in “record time”. They have faced a bureaucratic maze often ending in delays and rejection as banks reportedly prioritized those “with the best relationships — not the neediest or most deserving.” A recent survey of small businesses found only 13% of the 45% who applied for a PPP loan were ever approved. Meanwhile, CEOs of large companies have managed to coast through the process. Well over 300 publicly-traded firms or conflicted companies, some worth more than $100 million, have received over a billion dollars in taxpayer money. It’s no wonder the Trump administration has shied away from transparency in this process.
The Trump Administration Bailed Out Foreign-Focused Gulf Island Fabrication, Inc., Which Has Been Fined More Than $254,000 For Violations By The Department Of Labor And The EPA
Gulf Island Fabrication Received A $10 Million Loan Sourced From Taxpayer Funds From The Trump Administration
On April 17, 2020 Gulf Island Fabrication (GIFI) Announced The Trump Administration Had Given Them A $10 Million Loan, Under The Federal Paycheck Protection Program…
Gulf Island Fabrication (GIFI), Inc Received A $10 Million Bailout Via The Paycheck Protection Program. “On April 17, 2020, Gulf Island Fabrication, Inc. (the “Company”) entered into an unsecured loan in the aggregate principal amount of $10.0 million (the “Loan”) with Hancock Whitney Bank (the “Lender”) pursuant to the Paycheck Protection Program (the “PPP”), which is sponsored by the Small Business Administration (the “SBA”). The PPP is part of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), and it provides for loans to qualifying businesses in a maximum amount equal to the lesser of $10.0 million and 2.5 times the average monthly payroll expenses of the qualifying business. The proceeds of the loan may only be used for payroll costs, rent, utilities, mortgage interests, and interest on other pre-existing indebtedness (the “permissible purposes”).” [Gulf Island Fabrication 8-K, 04/17/20]
…Which Uses Foreign-Manufactured Steel And Sells To “International Energy” Customers…
Gulf Island Fabrication Relies On Foreign Steel To Make Products Used To Develop And Produce Oil And Gas. “We do not depend upon any single supplier or source. Demand for steel has remained steady both domestically and abroad over the last year with prices remaining fairly constant. […] Due to the inability of domestic mills to produce our customers’ required steel grades, we are often forced to procure material from foreign steel mills.” [Gulf Island Fabrication 10-K, 03/04/14]
Gulf Island Fabrication Sells Their Products To “International Energy Producers.” “Our customers include United States (“U.S.”) and, to a lesser extent, international energy producers; refining, petrochemical, LNG, industrial, power and marine operators; EPC companies; and certain agencies of the U.S. government.“ [Gulf Island Fabrication 10-K, 03/05/20]
…And Showers Millions On Its Previous And Current CEOs.
In Late 2019, Gulf Island Fabrication Gave Former President And CEO Kirk Meche A Severance Of $958,000 And Allowed Him To Remain Eligible For Certain Incentives And Performance Awards. “Under the terms of the Transition Agreement, Mr. Meche has agreed to restrictions on competition and solicitation of customers and employees for the one-year period following the Separation Date, and has also agreed to customary restrictive covenants related to confidential information, Company property, and non-disparagement. In exchange for his continued compliance with these restrictive covenants and the effectiveness of a waiver and release of claims, Mr. Meche will receive a severance payment in the aggregate amount of $958,000, $468,000 of which will be paid following the effectiveness of his waiver and release of claims, and the remainder of which will be paid out over the 12 months following the Separation Date. In addition, under the Company’s incentive programs, Mr. Meche will also remain eligible to receive (i) an annual cash incentive for fiscal year 2019, based on actual achievement of the applicable performance metrics, which bonus will be paid in 2020 at the time annual incentive payments are paid under the Company’s annual incentive plan, and (ii) pro-rata payments with respect to outstanding long-term performance awards granted to Mr. Meche during 2017, 2018 and 2019, based on actual achievement of the applicable performance metrics, and payable following the end of each performance cycle in accordance with the terms of the performance award agreements.” [Gulf Island Fabrication, Inc. 8-K, 10/18/19]
In November 2019, Gulf Island International Named Richard Heo As Its New President And CEO. “On November 11, 2019, the Board of Directors of Gulf Island Fabrication, Inc. (the “Company”) approved the appointment of Richard W. Heo, age 49, as its new President and Chief Executive Officer, effective November 14, 2019 (the “Effective Date”). In addition, as of the Effective Date, Mr. Heo was appointed to serve as a member of the Company’s Board of Directors. Mr. Heo will serve as a Class III Director, with a term expiring at the Company’s 2021 annual meeting of shareholders.” [Gulf Island Fabrication, Inc. 8-K, 11/11/19]
- Heo Was Given 100,000 Restricted Stock Units Plus An Annual Compensation Of $487,000. “Mr. Heo’s annual base salary will be $487,000. Mr. Heo will also participate in the Company’s annual incentive plan for executives beginning in 2020, with a target incentive award of 100% of his annual base salary, and he will participate in the Company’s long-term incentive plan for executives beginning in 2020. Mr. Heo will also receive an initial grant of 100,000 restricted stock units on November 14, 2019, which will vest in three equal annual installments provided he remains employed with the Company. In addition, Mr. Heo will also participate in the Company’s other benefit programs generally available to the Company’s executive officers.” [Gulf Island Fabrication, Inc. 8-K, 11/11/19]
Gulf Island Fabrication Has Been Fined At Least $254,085 By The Department Of Labor And Environmental Protection Agency For Multiple Violations
Gulf Island Fabrication Violations Ranged From Oil And Gas Pipeline Structures Construction To A Violation Of Reporting Requirements.
According To The Environmental Protection Agency, Gulf Island Fabrication Had One Violation Of “Violation Of Reporting Requirements” On September 10th, 1999, Resulting In A $182,000 Penalty. [EPA Civil Enforcement Case Report 06-1999-0829, accessed 04/21/20]
According To The Environmental Protection Agency, Gulf Island Fabrication Was Issued One Administrative Order On June 13th, 2011, Resulting In A $50,000 Penalty. [EPA Civil Enforcement Case Report For LA000A0000221090005900059, accessed 04/21/20]
According To The Environmental Protection Agency, Gulf Island Fabrication Was Issued One Administrative Order On February 12th, 2001, Resulting In A $8,825 Penalty. [EPA Civil Enforcement Case Report For LA000A0000221090005900016, accessed 04/21/20]
According To The United States Department Of Labor’s Occupational Safety and Health Administration, Gulf Island Fabrication Had One Violation Relating To “Oil and Gas Pipeline and Related Structures Construction” On July 29th, 2019, Resulting In A Penalty Of $13,260. [Inspection: 1419068.015 – Gulf Island Fabrication, Inc, accessed 04/21/20]
According To The United States Department Of Labor’s Occupational Safety and Health Administration, Gulf Island Fabrication Had One “Serious” Violation On May 7th, 2007. [Search for Gulf Island Fabrication, accessed 04/21/20, accessed 04/21/20]
As Large Businesses Get Loans, Small Business Owners Were Left Confused By The Small Business Loan Rollout, Worried About Fears Of Funding Availability, And Frustrated By A Lack Of Timely Response
Gulf Island Fabrication Has More Than 700 Employees In Houma, Louisiana, Alone…
Gulf Island Fabrication Was One Of The Houma-Area’s “Largest Employers.“ “With roughly 700 employees in Houma, Gulf Island is one of the area’ largest employers.” [Houma Today, 03/10/20]
… The Coronavirus Stimulus Package Was Supposed To Limit SBA Loans To Companies With 500 Employees Or Fewer…
New York Times: “Special-Interest Provisions” In The Coronavirus Stimulus Package Allowed Chain Restaurants And Hotels To File For Small Business Loans, Despite Exceeding Employment Limitations. “Tucked into the largest bailout in United States history — a $2 trillion federal stimulus package agreed to by congressional leaders and the White House early Wednesday in an effort to reduce the economic devastation of the coronavirus outbreak — are a range of provisions that stand to benefit specific industries and interest groups. […] Many of these special-interest provisions would be impossible for a casual reader of the legislation to identify. For example, on Page 15 of the bill, there is a section with the title ‘Business Concerns With More Than 1 Physical Location.’ It says this change in federal law will apply to companies that fit ‘a North American Industry Classification System code beginning with 72’ — a reference that turns out to mean the hotel and restaurant industry. The provision says that if a company owns multiple hotels, even if the overall hotel or restaurant chain has more than 500 employees — the limit to qualify for treatment as a small business — it will still be able to take advantage of the small-business benefits offered in the rescue package.” [New York Times, 3/25/20]
Wall Street Journal: Language In The Coronavirus Stimulus Package, Fought For By The National Restaurant Association, Allowed Big Restaurant And Hotel Chains To Participate Regardless Of Employment Figures. “While the new $350 billion Paycheck Protection Program is aimed at businesses with 500 or fewer employees, language in the $2 trillion federal stimulus bill allows big restaurant and hotel chains to participate regardless of how many people they employ. Sean Kennedy, executive vice president for the National Restaurant Association, which lobbied for the restaurant-and-hotel exception, says size shouldn’t matter.” [Wall Street Journal, 4/6/20]
But The Trump Administration Seems Intent On Giving Taxpayer Money To Large Corporations, Leaving Small Businesses Worried And Frustrated.
USA Today HEADLINE: “Coronavirus PPP Loans Leave Small Firms Confused, Wary And Rushing To Secure Cash To Survive” [USA Today, 4/13/20]
- USA Today: Restaurant Owners In Evansville, IN, Were Left Confused And Wary By The SBA Loan Process. “Other small businesses are befuddled by the loan process. David and Danielle Hodge closed their restaurant, Siciliano Subs, in Evansville, Indiana, a couple of weeks ago and laid off their four part-time employees. ‘I am afraid that I will not have enough money to pay rent next month and place a food order,’ David says. ‘I am praying we can get through this as quickly as possible so I can reopen. There is also a huge fear of reopening but people not being able to afford to come to eat at Siciliano’s because they are struggling financially.’ Yet the Hodges have balked at applying for an SBA loan. ‘We are confused with the process, and we have no idea who we are supposed to ask to clarify questions,’ David says. ‘There are too many what-ifs factors that scare us. We barely make it month to month, and what if I have to pay (the loan) back?’” [USA Today, 4/13/20]
CNBC HEADLINE: “There’s A Lot Of Anxiety As Small Businesses Worry The Loan Money Will Run Out” [CNBC, 4/6//20]
- A Business Owner In Tennessee Who Had Applied For An SBA Loan Said That Tensions Ran High In The Business Community Over The Availability Of Funds. “The Paycheck Protection Program, which is being overseen by the Small Business Administration, will pay out up to $349 billion in forgivable loans to businesses with 500 or fewer employees. […] Business owners like Doug Trovinger are afraid there won’t be any money left by the time his application is processed. ‘There’s a lot of anxiety within the business world,’ said Trovinger, who owns Document Doctors, LLC, a one-person shop based in Hendersonville, Tennessee. The 40-year-old is seeking a $10,000 loan to help cover salary and rent for his business, which specializes in document management and content creation like training and learning development. He filled out an application and passed it along to the community bank where he has an account. But the Small Business Administration hasn’t yet processed the loan, Trovinger said.” [CNBC, 4/6//20]
Fast Company HEADLINE: “‘Our Government Has Failed Us’: Frustrated, Self-Employed, And Left Behind By SBA Loan Programs” [Fast Company, 4/13/20]
- A Barber Shop Owner In Ohio Said He Had Waited Over A Week For A Response For An Emergency Loan Under The SBA’s Coronavirus Relief Program, To No Reply. “Like many businesses across Ohio, Nathan’s Barber Shop in Marion County was ordered to close its doors amid the coronavirus pandemic. Ohio Governor Mike DeWine has since extended the state’s stay-home order until at least May, and Nathan Riddle, the shop’s owner and operator, is running out of options. It’s been more than a week since he filled out the application for an Economic Injury Disaster Loan from the Small Business Administration—but he has yet to hear back from the agency. ‘I think the worst part in all of this would be our local government telling us that we are mandated to shut down, and then give absolutely zero clarity on how or when we will receive any assistance,’ Riddle says.” [Fast Company, 4/13/20]