Bentsen’s Son Is Subject of Probe by Resolution Trust After Default

The Resolution Trust Corp. is investigating whether Lan Bentsen, son of Treasury Secretary Lloyd Bentsen, violated the agency’s contracting rules while managing RTC property, after a company in which he is a principal defaulted on $54 million in loans inherited by the agency.

The RTC’s ethics officer, Arthur Kusinski, said that at his request the contracting compliance office is conducting an investigation of all of Lan Bentsen’s contracting activities with the agency.

A separate, narrower inquiry by the RTC inspector general has concluded that one of Lan Bentsen’s firms, Lan Bentsen Interests (LBI) of Houston, had legal and ethical conflicts that should have barred it from doing work for the RTC. The inspector general’s draft audit, which said LBI defaulted on $54 million in loans made by a savings and loan that later collapsed, is critical of the agency’s failure to hold Lan Bentsen to contract standards.

In the larger investigation, officials are trying to determine whether the loan defaults by LBI were disclosed as required by RTC regulations covering companies that have contracts with the agency. In addition, federal law prohibits the RTC, the federal agency that is disposing of the assets of failed thrifts, from doing business with individuals or companies that have defaulted on loans or caused a loss of more than $50,000 to a failed savings and loan.

Lan Bentsen said he is surprised by the RTC’s investigation. “I have never once been approached by the RTC and (told): “You’re in conflict’ ” with agency requirements, he said.