WASHINGTON -- Fiserv Inc., one of the leading computer service companies in the banking industry, is facing accusations that it violated ethics rules in a government contract.
The allegations are under investigation within the Resolution Trust Corp., which uses Fiserv as a provider of data processing to thrifts in the government bailout program.
Ironically, the former RTC chairman, L. William Seidman, is a director of Fiserv, a Milwaukee-based company with thousands of bank and thrift clients. He is not named in any of the ethics accusations, and apparently is not involved in the matters under investigation.
Contracts in Trouble?
According to a document obtained by American Banker, the RTC has proposed excluding Fiserv and several related companies from RTC contracts. The action could also place Fiserv's current contracts in jeopardy, according to the document.
George D. Dalton, Fiserv's chairman and chief executive officer, said, "It is really a misunderstanding." He dimissed the significance of the case, involving the alleged improper sale of furniture and other equipment, but conceded that his company's reputation could be hurt.
In April, a routine RTC ethics review of Fiserv Joint Venture Inc., the affiliate in which the problems occurred, reported that it was "in full compliance" with the ethics laws it was later accused of violating.
But in a May 5 letter, the RTC told Fiserv, its joint venture partner BanePro Group Inc., and several related organizations that they had violated ethics rules that they had agreed to in a 1991 contract.
The RTC charges came "as a total surprise to us," Mr. Dalton said, ascribing the problem to the affiliated company in Texas. "Some furniture and some art was purchased by our subcontractor from the RTC ... It is not like half a million dollars worth of stuff- we are talking used furniture."
The agency accused the companies, which were managing five failed thrifts for the RTC, of improperly selling roughly $30,000 worth of furniture, fixtures and equipment to employees and related entities.
"This is really a very small part of what we do for a living," Mr. Dalton says. But he added, "My concern is for the reputation of our company."
Mr. Dalton said his Company has reviewed the matter and does not contest the events the RTC described as violations. But Mr. Dalton said a local RTC official had cleared the sales, and that the Fiserv affiliates had paid the RTC-appraised value.
Fiserv officials met Thursday in Washington with the RTC, but by late afternoon, Mr. Dalton said he had not heard the outcome. The agency typically gives a company a chance to contest its accusations before banning it from future contracts.
If the agency bans Fiserv from future dealings, the RTC letter noted, "The RTC may rescind any contracts in existence at the time a contractor is excluded."
Fiserv has 40 contracts with the RTC, worth an estimated $83 million the RTC said.
Fiserv, which had $455 million in revenue last year, was formed in July 1984 and taken public in October 1986. Revenue is expected to climb to $550 million to $560 million this year, Mr. Dalton said.
The RTC set forth its complaints in the four-page letter signed by the agency's top ethics officer, Arthur J. Kusinski. It said that in one instance, the Houston-based Dowling Corp. had used a $24,118 BancPro check to buy furniture, fixtures and equipment from the RTC. Dowling then leased those assets back to BancPro, which is part of the joint-venture contract with the RTC.