[Senate Report 112-67]
[From the U.S. Government Publishing Office]


                                                       Calendar No. 147
112th Congress                                                   Report
                                 SENATE
 1st Session                                                     112-67

======================================================================



 
   A BILL TO PROMOTE SUSTAINABLE PRIVATE SECTOR GROWTH AND ECONOMIC 
                          DEVELOPMENT IN HAITI

                                _______
                                

  August 30 (legislative day, August 2), 2011.--Ordered to be printed

   Filed under authority of the order of the Senate of August 2, 2011

                                _______
                                

          Mr. Kerry, from the Committee on Foreign Relations,
                        submitted the following

                                 REPORT

                         [To accompany S. 954]

    The Committee on Foreign Relations, having had under 
consideration of the bill (S. 954) to promote the strengthening 
of the Haitian private sector, reports favorably thereon 
without amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page

  I. Purpose..........................................................1
 II. Committee Action.................................................1
III. Discussion.......................................................2
 IV. Cost Estimate....................................................4
  V. Evaluation of Regulatory Impact..................................5
 VI. Changes in Existing Law..........................................5

                               I. PURPOSE

    The purpose of S. 954 is to promote sustainable private 
sector growth and economic development in Haiti.

                          II. COMMITTEE ACTION

    S. 954 was introduced by Senators Lugar, Durbin, and Rubio 
on May 11, 2011. On May 17, 2011, the committee ordered S. 954 
reported favorably by voice vote.

                            III. DISCUSSION

    S. 954, the Haitian-American Enterprise Fund Act, 
authorizes the establishment of a fund to provide loans, equity 
investments and other forms of support to small- and medium-
sized private enterprises to create jobs in Haiti. The 
legislation provides several purposes for the establishment of 
the Fund, including to:

    1.  Promote the development of Haiti's private sector, 
particularly small- and medium-sized enterprises, the 
agricultural sector and joint ventures with United States and 
Haitian participants; and
    2.  Promote policies and practices to strengthen Haiti's 
private sector through advocating good governance and 
transparency in Haiti as well as through loans, grants, equity 
investments, feasibility studies, technical assistance, 
insurance, guarantees and other measures.

    The Haitian-American Enterprise Fund (the Fund) is modeled 
after similar funds established through the Support for East 
European Democracy (SEED) Act of 1989 (P.L. 101-179; 22 U.S.C. 
5421) to assist the economic development of Eastern Europe. 
Funds authorized under the SEED Act were invested in over 500 
enterprises in 19 countries, leveraged an additional $5 billion 
in private investment capital from outside the U.S. Government, 
provided substantial development capital where supply was 
limited, and created or sustained over 260,000 jobs through 
investment and development activities.
    The bill provides for the Fund to be administered by a 
nonprofit entity under the supervision of a board of directors 
consisting of six private citizens from the United States or 
Haiti, of which not more than two may be citizens of Haiti, 
appointed by the President of the United States. The committee 
recognizes the important leadership role the board of directors 
must play and expects the Fund's board members to be 
individuals who have led successful business careers and 
demonstrated experience and expertise in international and 
particularly emerging markets similar to the experience of 
individuals who previously served on the Board of Directors of 
a successful Enterprise Fund established by the United States 
Government on or after January 1, 1990. The legislation also 
states that the President may appoint, upon the recommendation 
of the board, two additional board members, of which, only one 
can be a noncitizen of the United States.
    The bill incorporates provisions of the SEED Act specifying 
that no part of the funds of the Enterprise Fund shall inure to 
the benefit of any board member, officer, or employee of the 
Enterprise Fund, except as salary or reasonable compensation 
for services. The committee notes that board members of prior 
Enterprise Funds have served without compensation and 
encourages the Board of the Haiti Enterprise Fund to follow 
this practice. In addition, consistent with the practice of 
prior Enterprise Funds, the committee expects that any firm, 
association, or entity in which a board member of the Fund 
serves as partner, director, officer, or employee will not 
receive financing from the Fund.
    The bill directs the U.S. Agency for International 
Development (USAID) to have effective administrative oversight 
of the fund. The bill requires a grant agreement between USAID 
and the Fund establishing the rules and procedures--as 
specified by the Secretary of State--for the utilization of the 
Fund's capital. The bill requires that these rules and 
procedures will include provisions specified by the Secretary 
of State to ensure that the Fund is not used to finance money 
laundering or terrorist activities.
    The legislation also directs the Fund to take into account 
such considerations as internationally recognized worker rights 
and other internationally recognized human rights, 
environmental factors, United States economic and employment 
effects, and the likelihood of commercial viability of the 
activity receiving assistance. The Fund may conduct public 
offerings or private placements for the purpose of soliciting 
and accepting United States venture capital.
    The legislation directs the President to notify the 
relevant committees of the identity of the organization that 
will operate the Fund not later than 15 days before designating 
said organization. The President is also directed to notify 
appropriate congressional committees of the names and 
qualifications of the individuals who will comprise the initial 
board of directors, the procedures established for the purposes 
of curtailing money-laundering and terrorist financing 
activities and the size of the financial grant that shall be 
made available to the Fund not later than 15 days before 
designating the organization that will operate the Fund.
    The bill incorporates provisions of the SEED Act requiring 
that the Fund will be subjected to an annual audit by a U.S. 
licensed public accountant and recipients of support from the 
Fund will keep independent records of their use of Fund 
assistance.
    The bill also requires that the Fund provide an annual 
report to the Senate Committee on Foreign Relations, the Senate 
Committee on Appropriations, the House Committee on Foreign 
Affairs, and the House Committee on Appropriations detailing 
its administrative expenses. The bill directs the Government 
Accountability Office (GAO) to conduct an assessment of the 
Fund's activities every 3 years and provide a report to the 
above-mentioned congressional committees.
    The bill provides that the Fund should, to the maximum 
extent practicable, adopt best practices and procedures used by 
previous Enterprise Funds.
    The bill directs the Fund to end its reinvestment cycle not 
later than December 31, 2021, unless USAID determines--after 
consultation with the above-mentioned congressional 
committees--that the reinvestment cycle should be extended. The 
bill directs the assets of the Fund at the time of its 
dissolution to be returned to the General Fund of the U.S. 
Treasury for the purpose of deficit reduction. The committee 
expects that the capital to establish the fund and cover its 
administrative expenses shall be drawn from funds already 
authorized through existing appropriations.
    The committee, noting the April 2011 constructive trip of 
previous Enterprise Fund Board Members to Haiti in advance of 
the creation of a Haitian-American Enterprise Fund, suggests 
that the observations and recommendations offered by these 
previous board members be given careful consideration by the 
Secretary of State and USAID during the formation of the Fund.
    The committee notes that the cost estimate provided by the 
Congressional Budget Office (CBO) estimates that the 
capitalization of the Fund would require an appropriation of 
$200 million. The committee understands that the CBO estimate 
was largely based on an average of the appropriations granted 
to previous enterprise funds authorized under the SEED Act. In 
light of the current realities and absorptive capacity of 
Haiti's economy, the committee expects that the appropriation 
used to capitalize the Fund will be significantly lower than 
the cost estimate provided by the CBO. The size of any such 
appropriation will ultimately be determined during the 
Congress' regular appropriations process.

                           IV. COST ESTIMATE

    In accordance with rule XXVI, paragraph 11(a) of the 
Standing Rules of the Senate, the committee provides this 
estimate of the costs of this legislation prepared by the 
Congressional Budget Office.

                            United States Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 26, 2011.
Hon. John F. Kerry,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 954, the Haitian-
American Enterprise Fund Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sunita 
D'Monte.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

S. 954--Haitian-American Enterprise Fund Act--As ordered reported by 
        the Senate Committee on Foreign Relations on May 17, 2011

    S. 954 would authorize the President to establish an 
enterprise fund for Haiti to stimulate private-sector 
development in that country and would authorize the 
appropriation of such sums as may be necessary for that 
purpose. The fund would be similar to enterprise funds 
established in the 1990s for several countries and would 
provide technical and financial assistance to the private 
sector.
    Based on information from the Administration and 
appropriations provided for previous enterprise funds, CBO 
estimates that implementing the bill would cost $200 million 
over the 2012-2016 period, assuming appropriation of the 
necessary amounts. CBO further estimates that the fund would be 
capitalized over four years with separate installments of 
funding. The bill would require the Government Accountability 
Office to assess the fund's activities and report to the 
Congress periodically. CBO estimates that the cost of 
implementing that requirement would be less than $500,000 over 
the 2012-2016 period, assuming the availability of appropriated 
funds. Enacting the bill would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    The estimated budgetary impact of S. 954 is shown in the 
following table. The costs of this legislation fall within 
budget function 150 (international affairs).

----------------------------------------------------------------------------------------------------------------
                                                            [By fiscal year, in millions of dollars]
                                               -----------------------------------------------------------------
                                                   2012       2013       2014       2015       2016    2012-2016
----------------------------------------------------------------------------------------------------------------
Estimated Authorization Level.................        50         50         50         50          0        200
Estimated Outlays.............................        25         50         50         50         25        200
----------------------------------------------------------------------------------------------------------------


    The bill would require the fund to be terminated no later 
than December 31, 2021 (unless the U.S. Agency for 
International Development determines it should be extended) and 
the assets of the fund at the time of dissolution to be 
returned to the Treasury. Other enterprise funds have generally 
had a life span of 10 to 15 years. Some had assets that 
exceeded the original funding levels, while others have 
experienced losses. Because of the uncertainty surrounding the 
term and performance of the fund, CBO cannot provide an 
estimate of any potential receipts; furthermore, any such 
receipts would probably be received outside the 10-year budget 
period.
    S. 954 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CBO staff contact for this estimate is Sunita D'Monte. 
The estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                   V. EVALUATION OF REGULATORY IMPACT

    Pursuant to rule XXVI, paragraph 11(b) of the Standing 
Rules of the Senate, the committee has determined that there is 
no regulatory impact as a result of this regulation.

                      VI. CHANGES IN EXISTING LAW

    In compliance with rule XXVI, paragraph 12 of the Standing 
Rules of the Senate, the committee has determined that no 
changes in existing law are made by the bill, as reported.