Loans obtained through or with an element of fraud, or which are used for purposes other than those intended, including diversion to the benefit of a few influential individuals. In some cases the borrower has no intention of using the loan for its stated purpose, and the lending institution may even be aware of this.
In the Philippines the Bataan Nuclear Power Plant loan, worth US$2.5 billion is cited as one of the most blatant examples of a fraudulent transaction in that country.