Another Tollway Agency Flap

A candidate to give bond refinancing advice to the Transportation Corridor Agencies has dropped out after a controversy, but a question remains about judgment at the agency. Why did it want someone who had been fined for his role in the county bankruptcy?

Surely there were enough other good financial people available. After a flap about the selection, Douglas S. Montague’s firm on Wednesday withdrew from consideration to advise the tollway agency on the Foothill and Eastern corridors. Montague is a former investment banker who the Securities and Exchange Commission said violated federal securities law. The collapse of the county investment pool in 1994 left the tollway agency with a loss of $74 million, one of many victims.

Agency board chairman Mike Ward, an Irvine councilman, had defended the recommendation as analogous to a driving situation in which a motorist is chastened by a speeding ticket. (Montague did not admit guilt for his role in the bankruptcy and promised to obey securities laws in the future.)

Later, Ward apologized to fellow board members, saying he had allowed them to be “blindsided.” Colleague and Mission Viejo Mayor Susan Withrow, the other member of the two-person committee that chose Montague, defended the selection.

But after losing such a large amount of money in the bankruptcy, extreme caution is in order. The board should remember that the county’s suit against the advisor’s former employer is still pending.

This is the same agency that had turmoil over salaries and perks for top executives. And it was not so long ago that the agency called attention to the importance of financing when spending on staff salaries came under fire.