- The Washington Times - Tuesday, October 12, 2010

As the Republican nominee for Maryland’s comptroller, William H. Campbell is campaigning on his experience as a top financial officer at federal agencies, including Amtrak.

But newly disclosed records are raising questions about his handling of a financial crisis inside the government-funded rail agency two years ago.

Mr. Campbell was chief financial officer for Amtrak when the subprime mortgage meltdown began to trigger fears inside the agency about a series of nearly decade-old lease deals.

Under the leasing arrangements, which were brokered before Mr. Campbell’s tenure at Amtrak, the rail service sold hundreds of rail cars to various investors, who in turn leased them back to Amtrak while taking tax breaks on their depreciation value.

While transit agencies across the nation were engaged in similar deals as a way to raise cash, the arrangements ran into trouble during the subprime mortgage meltdown in 2008 when insurers backing the deals, such as American International Group (AIG), saw their credit ratings downgraded, which in turn put Amtrak at risk of default.

Amtrak, through Mr. Campbell’s office, hired the consulting firm Babcock & Brown for advice on how to resolve the lease deals. But that hiring later came under scrutiny when officials learned the firm had previously been retained by two of the same banks involved in Amtrak lease deals.

Looking into potential conflicts of interest in the hiring of the firm, investigators for Amtrak’s Office of Inspector General later concluded in a report, first obtained by The Washington Times earlier this year through the Freedom of Information Act, that Mr. Campbell and Amtrak’s treasurer, Dale Stein, never sought legal advice before deciding that there wasn’t a conflict.

“Dale Stein and William Campbell did not inform a Department of Transportation official of the potential conflict of interest on the part of Babcock & Brown even after specific inquiry of the DOT official,” investigators wrote in their report.

“Amtrak officials must not withhold information from federal government officials,” the report continued. “In certain circumstances, this action could rise to the level of a criminal violation of law. OIG has not concluded that a criminal violation occurred in this instance.”

In a telephone interview, Mr. Campbell said he did not recall being questioned specifically about any potential conflicts and added that Mr. Stein assured him the firm had no conflicts. He also said he wasn’t primarily in charge of handling the leases issue.

An Amtrak spokesman last month told The Times there was nothing amiss in hiring Babcock & Brown, calling it “appropriate” and saying it “did not constitute a conflict of interest.”

The inspector general’s investigation also found that Mr. Campbell did not fully understand how the leasing arrangements worked: “Campbell told OIG that he did not understand the defeased lease situation,” investigators summarized after their interview with Mr. Campbell.

“Campbell advised that he did not know how the defeased leases were treated on Amtrak’s financial statements, did not understand the loop debt and did not know what the rolling stock was valued at,” investigators wrote. At one point, according to investigators, Mr. Campbell said outside consultants provided a drawing on how the leases worked.

Mr. Campbell said during the interview he makes no apologies for seeking detailed explanations for how the leasing arrangements worked, noting they were brokered years earlier before he and other Amtrak officials arrived.

“I don’t apologize for that one bit because I have not seen anything like it,” he said. “I was the person who raised my hand and said these [leases] are bad managementwise. I didn’t know exactly what I was looking at, but I knew it didn’t look good.”

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