Letter from Select Subcommittee on the Coronavirus Crisis to Gulf Island Fabrication Re PPP Loan (May 8, 2020)

Summary

Letter dated May 8, 2020, from the Select Subcommittee on the Coronavirus Crisis to the chief executive officer of Gulf Island Fabrication, Inc., Richard W. Heo. The letter requests that the company immediately return the Paycheck Protection Program (PPP) loan it obtained, and states that on April 20, 2020, the company reported to the Securities and Exchange Commission that it obtained a PPP loan in the amount of $10 million. It asks the company to state by May 11, 2020 whether it will return the funds and, if not, to produce documents and communications by May 15, 2020.

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                                                   May 8, 2020

Mr. Richard W. Heo
Chief Executive Officer
Gulf Island Fabrication, Inc.
16225 Park Ten Place, Suite 300
Houston, TX 77084

Dear Mr. Heo:

       The Select Subcommittee on the Coronavirus Crisis requests that Gulf Island Fabrication
immediately return the Paycheck Protection Program (PPP) loan it obtained so that these funds
may be used to support truly small businesses that are struggling to survive during the
coronavirus crisis.

        When Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES)
Act with broad bipartisan support, we intended to provide an invaluable lifeline for small
businesses that otherwise might be forced to lay off employees or shut down entirely. 1 We did
not intend for these funds to be used by large corporations that have a substantial investor base
and access to capital markets. 2

        Unfortunately, many large companies were able to utilize this program and obtained PPP
loans that were intended for small businesses. Some of the companies returned these funds amid
widespread public outrage. 3 However, other companies—including yours—still have not
returned these funds.



         1
             Coronavirus Aid, Relief, and Economic Security Act, P.L. 116-136, §§ 1102, 1106 (2020).
         2
           See Small Business Administration, Paycheck Protection Program Loans Frequently Asked Questions
(May 6, 2020) (online at https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-
Asked-Questions.pdf) (“For example, it is unlikely that a public company with substantial market value and access
to capital markets will be able to make the required certification in good faith, and such a company should be
prepared to demonstrate to SBA, upon request, the basis for its certification.”).
         3
           Ruth’s Chris to Repay Loan Amid Outcry Over Rescue Program, Wall Street Journal (Apr. 23, 2020)
(online at www.wsj.com/articles/public-companies-have-to-repay-small-business-rescue-loans-11587670442)
(“Returned funds will be recycled to make loans to additional businesses that qualify for aid under the program, a
Treasury spokesman said.”); The NBA’s Lakers, Worth $4 Billion, Received a $4.6 Million Small Business Loan
from the Stimulus Program, Associated Press (Apr. 28, 2020) (online at www.marketwatch.com/story/the-nbas-
lakers-worth-over-4-billion-received-46-million-small-business-loan-from-stimulus-program-2020-04-28).
Mr. Richard W. Heo
Page 2

      This is an issue of significant bipartisan concern. As House Republican Leader Kevin
McCarthy recently stated during a nationally televised interview:

        I was on the phone with the President and the Secretary Mnuchin yesterday, making sure
        that that’s not gonna happen, that we will go after those big companies that cheat the
        system. 4

       Similarly, Treasury Secretary Stephen Mnuchin called these actions “outrageous” and
added that he never would have expected such abuses “in a million years.” 5

       On April 20, 2020, your company reported to the Securities and Exchange Commission
that you obtained a PPP loan in the amount of $10 million. 6 According to your website, your
company is “a leading fabricator of complex steel structures, modules and marine vessels.” 7
You have over 900 employees and reported revenue of more than $300 million in 2019. 8

        Since your company is a public entity with a substantial investor base and access to
capital markets, we ask that you return these funds immediately. Returning these funds will
allow truly small businesses—which do not have access to alternative sources of capital—to
obtain the emergency loans they need to avoid layoffs, stay in business, and weather the
economic disruption caused by the coronavirus crisis.

        We request that you inform us by May 11, 2020, of whether you will return these funds,
including the specific amount being returned and the date by which the funds have been or will
be returned.

       If you choose not to return some or all of these funds, we request that you produce by
May 15, 2020, all documents and communications (1) between your company and the Small
Business Administration and the Department of the Treasury relating to the PPP loan; and (2)
between your company and any financial institution relating to the PPP loan, including all
applications for a PPP loan.

        Modeled after the Truman Committee during World War II, the Select Subcommittee on
the Coronavirus Crisis was established by the U.S. House of Representatives on April 23, 2020,
pursuant to House Resolution 935, “to conduct a full and complete investigation” of the
“efficiency, effectiveness, equity, and transparency of the use of taxpayer funds and relief
          4
            America’s Newsroom, Fox News (Apr. 21, 2020) (online at
http://video.foxnews.com/v/6151086586001/).
        5
          Treasury Secretary Mnuchin Says It Was ‘Outrageous’ for the LA Lakers to Take a Small Business Loan,
CNBC (Apr. 28, 2020) (online at www.cnbc.com/2020/04/28/mnuchin-says-it-was-outrageous-for-the-lakers-other-
such-businesses-to-take-small-business-loans.html).
        6
        Gulf Island Fabrication, Inc., Form 8-K (Apr. 20, 2020) (online at
www.sec.gov/Archives/edgar/data/1031623/000156459020017476/gifi-8k_20200417.htm).
        7
            Gulf Island Fabrication, Inc., Home Page (online at gulfisland.com) (accessed May 6, 2020).
       8
         Gulf Island Fabrication, Inc., Form 10-K (Mar. 5, 2020) (online at
www.sec.gov/Archives/edgar/data/1031623/000156459020008796/gifi-10k_20191231.htm).
Mr. Richard W. Heo
Page 3

programs to address the coronavirus crisis,” the nation’s “preparedness for and response to the
coronavirus crisis,” and “any other issues related to the coronavirus crisis.”

       If you have any questions about this request, please contact our staff at (202) 225-4400.

                                           Sincerely,




       ______________________                               ________________________
       Rep. James E. Clyburn                                Rep. Maxine Waters
       Chairman




       ______________________                               ________________________
       Rep. Carolyn B. Maloney                              Rep. Nydia M. Velázquez




       ______________________                               ________________________
       Rep. Bill Foster                                     Rep. Jamie Raskin




       ______________________
       Rep. Andy Kim

cc:   The Honorable Steve Scalise, Ranking Member
      Select Subcommittee on the Coronavirus Crisis


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