April 25, 2024

TARP Paid Millions in Unsupported Legal Fees, Report Says

The special inspector general for the Troubled Asset Relief Program said auditors questioned $8.1 million of a sampling of $9.1 million in bills from four law firms paid by Treasury’s Office of Financial Stability.

The firms submitted bills with either no descriptions or vague descriptions of the work performed, unsupported expense charges and administrative charges that were not allowed under their contract, the inspector general’s report said.

The most striking examples of problematic bills were from Simpson Thacher Bartlett, the report said.

“Simpson Thacher billed O.F.S. $5.8 million in fees and expenses with bills that provided no detail whatsoever as to the work performed,” the report said.

Later, however, the report mentions that Simpson Thacher provided corporate law advice related to bank bailout investments and the sale of Citigroup stock.

In a statement that made no direct reference to the report, Simpson Thacher said “Our team of highly qualified lawyers worked closely with the Treasury staff on a daily basis to structure and implement TARP programs that played a key role in stabilizing the U.S. financial system.”

The watchdog, which investigates waste and fraud in the bailout program, also examined bills from Cadwalader Wickersham Taft, Locke Lord Bissell Liddell and Bingham McCutchen, formerly McKee Nelson L.L.P.

The report said that although auditors questioned bills from all of the law firms, it did not mean that all of the fees and expenses were unreasonable.

“These services were of high quality and critical to the success of our programs,” a Treasury Department spokesman, Mark Paustenbach, said. “We believe the procedures we followed ensured that taxpayers received good value.”

As of March, the office that runs the relief program had paid the four firms legal fees and expenses totaling more than $25.5 million, the audit said.

“O.F.S. should determine the allowability of $7,980,215 in unsupported legal fees and expenses paid to the law firms,” it concluded.

The report also recommended that Treasury try to recover $91,482 in “ineligible” fees and expenses paid to Simpson Thacher.

But the report did not question the quality of legal work done by the firms and noted that Treasury had negotiated billing rates equal to or lower than those obtained by other federal agencies and substantially lower than the respective firms’ standard rates.

Article source: http://feeds.nytimes.com/click.phdo?i=228912aa31dd4e6681c80c8fd872f0f3

DealBook: Energy Transfer to Buy Southern Union for $4.2 Billion

Southern Union Company's Trunkline liquid natural gas terminal in Lake Charles, La.Panhandle Energy/Associated PressSouthern Union Company’s Trunkline liquid natural gas terminal in Lake Charles, La.

Energy Transfer Equity announced on Thursday that it would buy the Southern Union Company for about $4.2 billion in stock, in a deal that will create one of the country’s biggest natural gas pipeline companies.

Under the terms of the acquisition, Energy Transfer will issue special new stock units worth $33 apiece for each share of Southern Union. After the deal closes, those units, which will pay at least an 8.25 percent annualized yield, can be exchanged for either cash or 0.77 Energy Transfer common units.

That is a nearly 17 percent premium to Southern Union’s closing price on Wednesday.

Energy Transfer will also assume about $3.7 billion of Southern Union’s debt.

The merger is the latest among energy companies, which have sought to consolidate over the last year in an effort to gain greater scale.

With the acquisition of Southern Union, Energy Transfer will expand its holdings to more than 44,000 miles of pipelines, with about 30.7 million cubic feet of natural gas capacity.

Energy Transfer said that the purchase would immediately add to its payouts to stockholders, having identified $100 million in operational cost savings and $25 million in additional one-time savings.

The deal is expected to close in the first quarter next year.

Energy Transfer was advised by Credit Suisse and the law firms Latham Watkins and Bingham McCutchen. Southern Union received advice from Evercore Partners and the law firms Locke Lord Bissell Liddell and Roberts Holland.

Article source: http://feeds.nytimes.com/click.phdo?i=b01f8b23e0780f11d5280b0ceb96aaee