Interest Flap to Temporarily Reduce Payouts

Participants in Orange County’s failed investment pool will receive less money than they expected on Friday because of an 11th-hour squabble between accountants over how much interest has been earned since the county filed for bankruptcy protection Dec. 6.

The latest snafu involves about $20 million. Accountants at Price Waterhouse, working for pool participants, believe they are owed $90 million in interest, but the county’s advisers at Arthur Andersen & Co. peg the figure closer to $70 million.

“That’s just the kind of thing that comes up,” shrugged Patrick C. Shea, attorney for the pool participants’ committee. “We’ll work it out. We’ll figure it out.”

Rather than delay Friday’s scheduled payout of about $2.2 billion to 200 local schools, cities and special districts that placed money in the county investment pool, officials have agreed to repay investors based on their Dec. 6 balances and bicker about the interest later.

“It was the kind of thing that could have slowed down the release of cash, but I think it’s better to release as much as possible,” said Stan Oftelie, chief executive of the Orange County Transportation Authority and chairman of the pool participants’ committee. “We’ll work it out next week.”

Meanwhile, investors are scrambling to put paperwork together for the long-awaited disbursement, which begins at 9 a.m. Friday at the tax collector’s office.

Price Waterhouse faxed each agency a seven-page packet of information this week, including a list of 17 points from the county, a solicitation from the Bank of America offering same-day deposit so no interest will be lost, and a hand-drawn map of Civic Center Plaza to show where the investor line forms.

Each agency must send a notarized letter to Arthur Andersen & Co. approving the release of funds by 7 p.m. today. The person who signs that letter must also have signed a previous distribution order, must show up to get the checks with either a California driver’s license or a passport, and will have to personally sign for the checks.

Though some agencies will receive more than half a billion dollars, the bank has refused to issue checks larger than $99,999,999. So some agencies will receive a packet of checks.

The county has agreed to provide security inside the tax collector’s office but refused a request by pool participants to have officers accompany them--and their money--to their cars.

“It’s going to be very complex,” Shea sighed, joking that the scene might parallel a ticket line for the Super Bowl, complete with beach chairs. “If you had money there, you’d be there.”