RTC Rakes Price Waterhouse : Casey Blasts It for 67-Cent-a-Page Copying Charge

The head of the embattled Resolution Trust Corp. strongly criticized Price Waterhouse in testimony before Congress on Friday, saying it was “an egregious act” for the giant accounting firm to charge the RTC 67 cents a page for copying millions of pages of records.

At the same time, however, RTC President Albert V. Casey admitted that there is no legal way for the federal agency to alter its contract with Price Waterhouse. The documents were from the files of Homefed Bank of San Diego, which was declared insolvent and taken over by the government last year.

Casey’s surprising criticism of one of his agency’s important contractors came at a contentious Senate hearing where the RTC’s inspector general also warned that the agency is likely to be hit by future embarrassments and scandals.

For Casey, who said this week that he is leaving his job on April 1, it was a harsh farewell from skeptical members of the Senate, where he was once praised as the hard-nosed executive needed to finish the nation’s thrift clean-up. The RTC was created by Congress in 1989 to clean up the nation’s savings and loan mess.

The flap has proved to be a major embarrassment for the RTC as the Clinton Administration prepares to ask Congress for at least $25 billion to complete the job of cleaning up the rest of the nation’s insolvent thrifts. The RTC has already spent $84 billion doing its job.

RTC Inspector General John Adair denounced RTC under Casey’s leadership as a “deadline-driven organization” where haste to sell the assets of failed thrifts had generated tremendous waste of federal funds.

Pressure to sell “took precedence over contracting and other procedures intended to ensure efficient, economical and prudent operations,” Adair told the regulation subcommittee of the Senate Governmental Affairs Committee.

“If this deadline-driven atmosphere is not tempered with prudent planning and serious attention to cost containment and accountability, I can assure you that I will be before you, or other congressional committees, to again report on problems such as these,” Adair said.

In another attack on Casey’s leadership, subcommittee Chairman Joseph Lieberman (D-Conn.) charged that the RTC has “broken faith with the American taxpayer. It is time for accountability and personal responsibility to come to all levels of the RTC. It is truly time for a day of reckoning and resolution at the RTC.”

Casey told the hearing that Price Waterhouse has agreed to cut its copying bill by $4 million--an amount that will reduce the average price-per page to 37 cents. But that is still more than three times the amount charged by Xerox Corp. for similar work done for the RTC.

However, Price Waterhouse “had no legal liability to give us anything,” and the $4 million reduction is “just a plain old give back,” Casey noted. Price Waterhouse has already collected $17 million under a contract originally estimated to run $5 million.

The accounting firm Friday defended the massive contract, under which it copied more than 10 million pages of documents, saying the job was more complicated than it sounded.

The documents had to be very carefully handled because the Justice Department has issued a subpoena to examine the records for possible misdeeds in running Homefed, according to comments by both Casey and the accounting firm.

Price Waterhouse agreed to cut $4 million from the price because, as a spokesman put it, the firm “concluded that it was in the public interest to renegotiate our contract . . . to more accurately reflect our mutual understanding of the real magnitude of the assignment.”