Officials of a federal agency created to sell property from insolvent savings institutions traveled in high style and awarded no-bid contracts to former business associates all while receiving six-figure salaries and bonuses, a congressional report charges.
The House Banking Committee found the Federal Asset Disposition Association, based in San Francisco, "to be an organization out of control" that had "mushroomed into a bloated bureaucracy."Among the potential conflicts and abuses alleged in the report:
The owners of an executive search firm that recommended former FADA president Roslyn Payne for her job later received $650,000 in contracts from FADA through another firm that they owned.
Ms. Payne charged the agency for the personal travel of herself and her husband and double-billed for some travel expenses.
Robert Axley, former chief legal counsel of the agency, ran up a hotel bill of $1,200, including laundry, at a hotel in San Francisco, even though he lived in the city.
Neither Ms. Payne nor Axley had a published home telephone listing in the San Francisco area, and calls to their former office went unanswered Saturday. However, The Washington Post quoted Ms. Payne as calling the report's allegations "outrageous."
House Banking Chairman Fernand J. St Germain, in a statement accompanying the report, published Friday in the Congressional Record, called for FADA to be abolished "as soon as possible" and its duties re-absorbed by the Federal Savings and Loan Insurance Corp.
"We haven't the time to wait . . . to rework the unworkable," St Germain said.
Gerald Carmen, who took over as FADA chief executive in February, said in an interview Friday that he is taking about six months to consider whether the agency should continue in its present structure. However, in the meantime, he promised, "problems that are real and exist, we're going to fix."
The purpose of FADA, created by the Federal Home Loan Bank Board, which regulates 3,147 federally insured S&Ls, is to bring in money for FSLIC, the financially-strapped fund that guarantees S&L deposits up to $100,000.
Instead, the report the result of a seven-month investigation said:
"FADA . . . has not been, and in all likelihood could never be, a cost-effective solution."
It has evolved into a bureaucracy "outside all prudent checks and balances."
"Quality performance was nearly nonexistent."
FADA employees awarded "sole-source contracts . . . to former business associates" and still "maintain active interest in real estate investment and development firms, and ties to the savings and loan industry that would not be appropriate for government employees."
FSLIC "employees and contractors (who criticized the agency) often felt threatened and intimidated."
"Meanwhile, FADA officials lived first class and received excessive salaries and bonuses all at the expense of FSLIC."
FADA, according to the report, has more than $5 billion worth of assets loans and real estate in its care, yet had managed by the end of 1987 to sell only $124 million of the property.
The report said it was "difficult to determine" how much money FADA has wasted, but it said the agency has directly charged $20 million from receiverships of failed S&Ls and passed on $51 million more in charges from subcontractors. Despite that revenue, the agency has lost $15 million through the end of last year, the report said.
Since its creation in late 1985, FADA has spent $22 million on a staff that has grown to more than 380, $3 million of that for the 1987 salaries of its 32 top officials, the report said.
Ms. Payne, the former FADA chief executive officer, received $325,000 in salaries and bonuses in 1986, a third more than the salary of the president of the United States, the report noted.
FADA has spent $1.8 million on travel over and above travel to manage assets in its care including hotel rooms at more the $200 a night, the House committee said.
It said that Ms. Payne used her FADA credit card to buy airplane tickets for herself and her husband and included the charge on her expense form, although FADA accountants refused to pay the bill.
Between January and May 1987, Ms. Payne received $800 through double-reporting expenses and did not repay the money until the overpayment was pointed out by congressional investigators, the report said.
Also cited as a "potential conflict of interest" were the $650,000 in payments to the San Diego-based ConAm Corp., an asset management firm owned by Lester Korn and Richard Ferry.
They also own Korn-Ferry International, an executive search firm that was paid $125,000 to come up with a list of candidates for FADA president. The list included Ms. Payne.