- The Washington Times - Monday, September 13, 2010

A congressional probe is calling for an end to Amtrak’s use of expensive outside lawyers to represent its top employees during administrative investigations, calling the practice wasteful and unheard of across government.

In a joint staff report by ranking Republicans of the Senate Finance and House Oversight and Government Reform committees, officials also called for limits on the use and expenditures on outside lawyers.

Overall, Amtrak’s law department has spent more than $70 million on outside lawyers’ fees three years after an independent government review uncovered a host of problems with the practice, according to a report released Monday.

Citing records obtained through the Freedom of Information Act, The Washington Times reported earlier this month that several top Amtrak officials, including Treasurer Dale Stein and General Counsel Eleanor Acheson, declined to participate in a recent administrative investigation by Amtrak’s inspector general until the government-owned rail service first paid for them to have lawyers.

Amtrak officials said the so-called indemnification policy of providing lawyers for employees was a standard corporate policy, adding that those fees aren’t a matter of public record.

Both Mr. Stein and Ms. Acheson were told they weren’t targets of the inspector general’s probe, but they insisted on having lawyers, records show.

The congressional report said such practices are unusual.

Amtrak should discontinue its policy of providing indemnification for employees, contractors and all other entities in conjunction with an administrative investigation by the Amtrak [inspector general],” the report stated.

Amtrak’s current policy of funding counsel for both sides of an internal, non-criminal inquiry is unheard of in the rest of the IG community and is a waste of Amtrak resources.”

Amtrak officials have declined to comment on the findings concerning the use of outside lawyers in a statement Monday, but they previously defended the hiring of lawyers for several of its top executives.

In a formal response to an inspector general’s report that raised questions about the practice, Thomas C. Carper, chairman of Amtrak’s board of directors, said the executives who received outside legal services were never told they weren’t targets in the investigation; rather, they were told “not at this time.”

Amtrak officials also said the investigation included potential criminal violations, “which clearly invoke indemnification rights.”

The majority of the congressional probe focused on the circumstances surrounding the departure last year of Amtrak’s former inspector general, Fred Weiderhold. The investigation stated that Amtrak forced out Mr. Weiderhold because he was viewed as a threat, having exposed wrongdoing and mismanagement throughout Amtrak.

In addition, the report said Mr. Weiderhold had focused on the practice by Amtrak’s law department of paying out excessive fees to outside law firms.

Since a 2005 review by the inspector general that reported more than $102 million paid out to outside law firms over three years, congressional investigators have learned that more than $74 million had been spent from 2007 to 2009, according to the report.

Mr. Carper, Amtrak’s chairman, “had no knowledge of how much money Amtrak was spending on outside counsel and was unaware of whether Amtrak had any procedures for limiting these costs,” the report stated.

Amtrak said in a prepared statement Monday that it cooperated with the congressional investigation and that the company has made numerous changes to “bring Amtrak OIG in line with the best practices of the IG community.”

“In addition, the minority staff report notes positively that the new IG collaborated with Amtrak management on a protocol detailing the relationship between the new entities, a source of contention with the former IG,” the Amtrak response stated, adding that the company “acted appropriately” concerning Mr. Weiderhold’s departure.

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