Two years later, in March 2022, Andrew Herscowitz, an executive at the U.S. International Development Finance Corporation, told the Senate Foreign Relations subcommittee on Western Hemisphere issues that the United States, now under President Joe Biden, had recently loaned $100 million to CABEI, and that the investment helped one-up China. Washington’s disbursements to the bank “advance U.S. foreign policy objectives,” he said.

The officials described CABEI through a U.S. lens, but the bank is an intrinsically Central American institution. It is jointly run and partially funded by a group of governments in the region, five of which—Guatemala, Honduras, Nicaragua, El Salvador, and Costa Rica—created it in 1960 in the name of integration and reclaiming sovereignty. Those countries aimed to escape the shadow of superpowers and fund their own growth by pooling money to lend to each other. CABEI’s membership and financing capacity expanded over time, as it accrued public and private backing from the United States as well as Europe and Asia. Between 2000 and 2018, the bank approved loans totaling about $30 billion.

But in the past decade, CABEI has faced mounting criticism in both Washington and Central America. Environmentalists such as Berta Cáceres said the bank funded infrastructure projects that violated Indigenous rights and fomented violence. (Cáceres was murdered in Honduras in 2016.) Democracy watchdogs tracked member governments lending themselves money as they fell to autocrats, such as Nicaraguan President Daniel Ortega and Salvadoran President Nayib Bukele, who then propped themselves up on the largesse of CABEI.

Last year, the Organized Crime and Corruption Reporting Project (OCCRP), which partners with global media on cross-border investigations, obtained a trove of internal bank documents. The organization probed deeper, conducting interviews with a multitude of activists and experts who include current and former CABEI executives. The reporters submitted Freedom of Information Act requests and scraped the bank’s webpage, working with 11 Central American, U.S., and Asian outlets to report on the ground. I joined the effort early this year in El Salvador and Honduras as an independent journalist.

OCCRP and its media partners began publishing the investigation in late October, exposing a slate of problems in the bank. Above all, the journalists found, CABEI has become an easy source of cash for regional authoritarians; they labeled it with the colloquial moniker “the dictators’ bank.”

The journalists’ evidence also revealed financial mismanagement and little oversight over how countries spend CABEI funds. Reporters reviewed internal audits that showed the bank ignored red flags when investing in projects, and that its loans had been used to pay bribes and buy votes. Some members of CABEI’s leadership sounded an alarm in 2021, when they wrote an internal letter warning of the bank’s deteriorating financial health and poor transparency practices. El Salvador—whose government took CABEI money earmarked for pandemic relief and spent it instead on making bitcoin a national currency—exemplifies the bank’s issues.

When presented with OCCRP’s revelations, outgoing CABEI President Dante Mossi defended his leadership and the bank. “CABEI is not a political institution,” he told reporters. “We do not have the mandate to determine the form of government of any member country,” he said, adding that the bank’s finances are “better than ever” and denying that its practices make its funding prone to corruption. (Mossi’s successor, a Costa Rican industrial engineer named Gisela Sánchez, was elected on Nov. 17 and will begin her five-year term on Dec. 1.)

What the investigation revealed has serious implications for CABEI—but it also begs reflection from Washington, which has used the bank as a tool of statecraft for decades.

In 1984, a congressional commission chaired by former Secretary of State Henry Kissinger recommended—unsuccessfully—that the United States become a CABEI member. This would have entailed a more significant financial commitment on Washington’s part—making it a shareholder so that, in the commission’s vision, the funds would fortify the bank’s power to reinvigorate the Central American private sector, a perpetual U.S. foreign-policy goal.

In 2004, the bank’s chief economist suggested the same, citing potential financial benefit to CABEI, to no avail. Three years later, the bank’s president, who is its administrative authority and legal representative, again petitioned the United States to join—this time because, he claimed, internal CABEI sympathies were tipping toward Venezuela, an antagonist of Washington.

But the United States never joined CABEI. Instead, for half a century, it has seen the bank as a small geopolitical chessboard. Washington doesn’t play directly but it helps fund the game through means such as loaning CABEI money as humanitarian and development relief; connecting the bank with the U.S. private sector; and partnering with the bank to cost-share aid works, including housing and highways.

Some in Washington increasingly believe that game is about thwarting Beijing. They point to China’s growing presence in Central America. Once home to many Taiwan-friendly governments, the majority of the region’s administrations now recognize Beijing over Taipei; only Belize and Guatemala retain diplomatic relations with the latter. Most Central American countries have, or are negotiating, free trade agreements with China, and most have joined its Belt and Road Initiative.

Beginning in the early 1990s, CABEI inducted 10 additional members whose economies largely dwarfed those of the five founders. Taiwan, South Korea, Spain, and Mexico were among the new shareholders that made millions of dollars in capital contributions, boosting the bank’s credit rating and thereby ensuring it access to cheaper money when it sought outside financing.