Pennsylvania gubernatorial candidate Mark Singel chose not to halt a controversial refunding of certificates of participation last year after state officials warned that canceling the deal would damage Pennsylvania's credibility in the municipal market.
Singel, a Democrat and the stat's lieutenant governor, is locked in a close race with Republican state Sen. Tom Ridge. In recent weeks, the deal has come under federal scrutiny and inspired Republican criticism of Singel.
The state issued the refunding securities in July 1993. At the time Gov. Bob Casey, a Democrat, was undergoing heart and liver transplants, leaving Singel as acting governor. In that post, Singel had to approve certain bond documents before the COP deal could proceed.
According to state legislative sources, Singel questioned the deal's merits just before the state went to market. In fact, several investment bankers approached his top advisers, warning that the issue was too expensive and involved politically connected firms as bond counsel, financial adviser, and underwriters.
Despite his concerns, Singel approved the transaction. In a prepared statement Friday, Singel said the Casey Administration had already organized the sale of the issue, and that a postponement would threaten the state's credibility in the municipal bond market.
"The COPs transaction was negotiated a year before I became acting governor," Singel said in the statement. "I was not privy to those discussions.
"When I became acting governor shortly before the sale of the certificates, I inquired into several areas of concern. I received sufficient assurances from Gov. Casey's staff to conclude that, at that late date and with matters where they stood when I entered, the greater risk to the public interest was posed by stopping the sale and possibly clouding [Pennsylvania's] credibility in the markets."
The COPs refunded lease revenue bonds issued in 1991 to build prisons in five counties. The transaction has drawn the attention of the Securities and Exchange Commission and the Internal Revenue Service.
Ridge could not be reached for comment. A spokeswoman for Singel refused to comment beyond the statement. She also would not answer charges from state Republican officials that many of the firms that worked on the deal are major contributors to the state's Democratic Party and to Singel himself.
For example, the law firm Obermayer, Rebmann, Maxwell & Hippel, special counsel on the transaction, and attorneys at the firm have made contributions totaling at least $56,000 since December to Singel's campaign, campaign records show.
Ballard Spahr Andrews, counsel to the underwriters on the deal, has contributed at least $41,650 to Singel's campaign since August 1993, campaign records show.
Carl Singley, of Singley & Associates, counsel to PNC Bank, the trustee for the issue, contributed $5,000 to Singel's campaign on June 6 of this year.
PNCPAC, the political action committee for PNC Bank, has contributed $6,500 to Singel's campaign, records show.