When an export credit agency pays out an insurance claim, a process to recover the money from the overseas buyer whirs into action. Jacob Atkins takes a dive into this hidden aspect of official export credit insurance and discovers a niche industry carrying out complex and sometimes dangerous assignments to track down debts.


Ahmed Madkour had a plan: get out of Aleppo before Friday prayers.

It was mid-2012 and Syria was beginning its descent into civil war as Bashar Al-Assad deployed increasingly brutal measures to quell mass protests challenging his rule. Across the country, the worst clashes always erupted on Friday afternoons as demonstrators poured out of mosques and onto the streets.

Unlike most of the trickle of international visitors entering Syria, Madkour wasn’t a journalist or part of a peacekeeping mission – he was there to take pictures of serial numbers on buses.

At the time, the Dutchman worked for Recovery Advisers, one of a niche crop of firms that export credit agencies (ECAs) hire to investigate insurance claims and enforce debts.

ECAs are government-run bodies with a mandate to boost exports by insuring trade finance provided by commercial lenders or directly financing exporters. Their support is typically called upon for high-risk transactions or markets shirked by commercial insurers and where banks are wary to go it alone.

As a result, ECA-supported transactions are often undertaken in countries where legal scaffolding is weak, information on companies is difficult to find and borrowers find it easy to slink into the shadows if they become unable – or unwilling – to honour their debts.

Similar to commercial insurers, when ECAs pay out on a claim filed by an exporter or lender, it gets the ball rolling on an often knotty process of trying to recover at least some of the funds.

That’s how Madkour found himself in Syria amid the first stirrings of a civil war.

An ECA had covered the export of buses to Aleppo to buyers who ultimately did not pay, and Madkour’s job was to verify the claim by checking how many vehicles had been received and meeting with the importer to discuss possible repayments so the ECA could recover at least some of the claim.

Madkour says he stayed at the Sheraton Hotel – later requisitioned by the Syrian army and turned into barracks – because an Arab League delegation was sequestered there, and he believed it would afford him some safety. He completed his meetings, took pictures of the bus chassis to confirm they were the very same vehicles covered by the ECA, and managed to get a seat on a late Thursday flight to Cairo.

Now a father, Madkour no longer parachutes into budding war zones, but the risks he took to merely file a report for an ECA illustrate the lengths agencies will go to prove to their government they’ve turned over every rock, even if they can’t reclaim the funds.


Never forgive, never forget

Perennial reasons for defaults by export finance borrowers are often as humdrum as cash flow or foreign exchange issues – the latter particularly prevalent recently amid acute dollar shortages in some developing countries.

But headline-grabbing events like coups, economic depressions and pandemics are also catalysts for a sudden spike in claims from borrowers or lenders. And the process of recovering those claims can continue long after the events have faded from recent memory.

Members of the Berne Union, which include both ECAs and commercial credit insurers, paid US$30.6bn in claims on medium-to-long term export credit policies between 2013 and 2022, and managed to make US$23.7bn of recoveries in the same period.

“Claims tend to be driven by acute shocks which are then partially, or fully, reconciled. Because of this, industry losses are significantly lower than claims data would first suggest – supporting a healthy industry over the long term,” says the association.

Recoveries often lag claims by around two years – and in some extraordinary cases, decades.

In May this year, lawyers from the British ECA UKEF and BAE Systems, a defence and aircraft manufacturer, traipsed into a London courtroom in a dispute over claims paid some 40 years ago, when the newly installed Islamic government in Iran cancelled contracts to buy missile systems.

The two sides reached an undisclosed settlement, but only after UKEF waited decades for arbitration between BAE and the Iranian defence ministry to conclude.

In the aftermath of the 9/11 terrorist attacks in 2001, UKEF repossessed 44 commercial jets and only sold the last one some 15 years later in 2016.

Elsewhere, Sweden’s EKN says it sends bi-annual reminder letters to the government of North Korea, requesting repayment for claims it paid in the 1970s to Volvo and other Swedish firms under EKN-backed transactions. That debt has now ballooned to SEK2.8bn (US$276mn).

ECAs are generally much more patient than their commercial insurance counterparts for a variety of reasons. Where private insurers are accountable to shareholders, ECAs answer to their government and ultimately taxpayers, meaning their decision-making is more cautious.

“We have an obligation under our mission statement to operate at no net cost to the taxpayer,” says Arthur O’Loan, UKEF’s head of restructuring, claims and recoveries. “So we can’t leave [an] exposure on the ground, we can’t just walk away from it.”

“Commercial insurers will take a very different view,” he tells GTR. “They’ll take one look at it and say, is it worth hanging in here or not? They’ll close their position much, much more quickly than I will. We’re long-term players because we’ve got other drivers behind us in terms of our obligation. We’re not obligated to shareholders, we’re obligated to taxpayers and the statute.”

More often than they involve jetting into failed states, complex recovery cases can sometimes be long waiting games. For example, they could entail engaging local lawyers to monitor an insolvency case grinding through the courts and hoping an opportunity will present itself, or dealing with legal delaying tactics by borrowers.

In some cases, ECAs may draw on their government links to enlist the assistance of diplomats at embassies to help make headway.

Inevitably, some recoveries are dead ends. Typically, an ECA will concede to writing off a claim in situations where the buyer has no collateral or assets to seize, a court has barred the way, or a liquidation has concluded, and there’s nothing left in the coffers.


Sinners or saints?

ECAs can often facilitate amicable recovery through patient negotiation.

If there are borrowers who are uncooperative, “then it’s very difficult because you cannot talk with them, they don’t react, they ignore you”, says Claudia Oberle, head of claims and recovery at Swiss Export Risk Insurance, known as Serv.

“And then there are other debtors who might have some liquidity problems, but they’re basically willing to pay – they just need time. With this kind of debtor, you can always find a solution. Compared to more commercially oriented operators, we have more patience, so we can agree with them on a payment plan.”

The quasi-government status of ECAs can also give them an edge over commercial creditors. “Private parties don’t want to default on their sovereign-backed debt, they will almost see that as the ‘family silver’,” says one ECA recoveries specialist.

Sometimes all it takes is putting a local face to an otherwise unknown ECA.

“Most of the time, we find that the buyers really are not bad people, they really are just people who got into some trouble and need some help and some understanding to get out of it,” says Andreina Perez, director of quality control and business development at IA Group, a Netherlands-based debt recovery advisory.

When dealing with borrowers located in far-flung countries, or who are clearly trying to avoid their payment obligations, ECAs will often hand files to specialised firms like IA Group, based in Amsterdam, and Dubai-headquartered Recovery Advisers.

The firms have networks of local representatives and lawyers who can surprise a factory owner, for example, with a visit representing an ECA they thought they’d managed to shake off. Typically, they operate on a no-win, no-fee basis, and take a slice of any successfully recovered amounts.

The average short-term export credit case IA Group handles is around the US$250,000 mark, says Perez. For medium and long-term policies, cases range from around US$500,000 all the way up to the biggest recovery the firm has handled – US$110mn.

Their efforts can sometimes be long-running, cross-border affairs. Perez recalls paying a visit to an African company which had imported around US$1mn-worth of machinery in an insured transaction but had not paid the invoice.

“From the outside, their office seemed pretty humble, but stepping inside was like entering another world,” she says. Rooms shimmered in gold and walls were covered with replicas of world-famous works of art.

The firm’s director agreed to a payment plan but never acted on it. But in conversation, he had mentioned the firm would be attending a trade fair in the Netherlands. IA Group tagged along, but the director never showed.

Ultimately, after discussions with the underlying exporter, they realised the machinery could be turned off remotely. “And so, we flipped the switch,” says Perez. “With the machines off, it wasn’t long before a frantic call came through from our debtor.”

In another recovery venture, Madkour was tasked by an ECA with tracking down a Saudi businessman who had ordered buses worth several million dollars from a supplier for his business near the Iraqi border but had stopped making payments.

“So we hopped on a tiny plane, reached the closest point to where we thought he was, rented a car and just started driving around in a semi-deserted village, looking for any sign of buses,” Madkour recalls.

It didn’t take long to spot the enormous fleet of coaches – and its owner – in the small town. It transpired that instead of deliberately hiding from his creditors, the bus owner was simply disorganised, and an English-speaking assistant who had previously handled his communications with the Europeans had since left. Payments were scheduled and the adventure in the desert chalked up as a win.

But matters become more complicated when it becomes clear that a buyer in an export finance transaction never had any intention of paying for the goods or services they received.

Although fraud cases can help ECAs learn preventative lessons for the future, IA Group’s Perez says: “When you are dealing with fraud and a buyer who is deceptive by nature, optimistically the possibilities for recovering are slim.

“We cannot work miracles and are not in the business of converting sinners into saints.”