Massachusetts Treasurer Joseph P. Malone has refused to review an $800 million Massachusetts Industrial Finance Agency bond deal designed to bail out the state's bankrupt unemployed benefits fund.

Malone said in a letter received by the agency yesterday that he found the timing of its request disingenuous. If the agency wanted the help of his office, it would have sought it "much earlier," he said in a telephone interview the same day.

A proposal currently before the state legislature would allow the agency to sell $800 million in revenue bonds to pay off outstanding federal loans and provide future unemployment benefits without having to borrow federal dollars.

Criticism of the financing from Malone and other members of his office had spurred the agency's executive director, Joseph D. Blair, to send Malone a letter on Dec. 7 asking him to review the proposal.

But in the letter response to Blair, Malone said he did not think the agency was sincere with it invited Malone to review the plan.

"Your letter is another example of the disingenuous approaches which have been made to my office appearing to offer participation when, in reality, what is actually desired is my acquiescence," Malone said in the letter. "I has been abundantly clear that full and open participation in this matter by the treasurer's office was not welcomed by certain legislative leaders."

Malone said in the telephone interview yesterday that if the agency wanted his opinion, it would have asked for it when preliminary discussions began last summer.

"To properly do a review of this kind, you need at least 30 days," Malone said. "They invited me to review the plan, but said they did not want such a review to slow down the process."

Blair rebutted Malone's remarks, saying the invitation to review the plan was "genuine and sincere."

"The treasurer's refusal to look at the proposal is difficult to understand," Blair said.

Blair also said that because of Malone's response, he was written a letter to Gov. William F. Weld asking him to appoint an independent counsel to review the way the financing was developed.

"If the governor decides to accept that course, then I'll support it," Malone said.

Dominic Slowey, administration and finance spokesman, said Weld has received Blair's request and is considering it.

The agency does not need approval from the treasurer's office to sell the bonds. Still, it is possible for Malone to sour the performance of the deal by continuing his criticism of it.

"The treasurer is a very bright person," Blair said. "He understands the ramifications of these sorts of comments. That's what makes them so troublesome."

Continual criticism of a bond deal can cause investors to shy away from the bonds and drive yields up, Blair said. Even a slight rise in yields will lessen the value of the financing to the state.

When asked about the effect of his questions on the deal, Malone said, "An $800 million deal deserves questions. Especially one run by a quasi-public authority with little oversight."

Malone said the agency has not properly answered all of the questions about the sale. He said disbursal of underwriting fees, where the proceeds from the sale will go, and the real savings of the financing have yet to be clearly defined.

For his part, Blair has repeatedly stated the deal will save Massachusetts taxpayers "about $38 million over six years."

Malone, too, said a $38 million savings is enough reason to do the deal. But, he added, it "will be necessary to review the work, do our homework, and make sure it's a real number."

In the letter to Blair, Malone said, "I do not prejudge the transaction nor do I oppose it, despite the fact that many people have incorrectly assumed that I have."

The legislation has been on the calendar since September. Massachusetts state officials said the legislation should be addressed soon.

Peter Lucas, spokesman for Speaker of the House Charles F. Flaherty, said there was "a good chance" the bill would move through the legislature this week. He said there appears to be enough support to pass the bill.

Even if the bill is approved by the legislature, the governor's office has indicated there is still a chance Weld will veto it.

Weld has said the proceeds from the bond sale should go to Massachusetts industries to offset their contributions to the fund, rather than go directly to the fund.

Slowey said that if the legislation is rewritten that way, there is "a good chance," the governor will sign the bill.

Malone said another option the legislature might consider is to approve the measure contingent upon the independent review.

Because of a regional recession, Massachusetts' unemployment pool, which had been fully funded by state industry, has dried up. Since September 1991, the state has been forced to borrow from the federal government to provide benefits for the unemployed of the state. The state is paying 8% on almost $450 million of outstanding loans.

In November, the unemployment rate in the state was reported by the Labor Department at 9%. The national average last month stood at 7.2%.

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