WASHINGTON On its way to ringing up more than $1 million in overcharges, Arthur Andersen & Co. overbilled the government $120,000 just for sending it the tab.

After a nine-month investigation, the Resolution Trust Corp.'s Office of the Inspector General concluded that the firm's overbilling amounted to more than one-sixth of the $5.7 million Andersen charged on a property valuation contract.

The Big Six accounting firm also overcharged the government by billing junior employees' work at more senior employees' rates, the report said. That included charging for a clerical worker's time at a junior professional's rate -- a difference of $40 an hour.

In a statement, Arthur Andersen said, "We dispute the findings of the OIG report and are confident that we will successfully resolve any differences of opinion."

The RTC has awarded the firm 146 contracts with an estimated $94 million.

More than 100 of those, with $59 million in billings, have been completed.

The alleged overcharges the inspector general found came in a four-year contact awarded in a stabcrossed asset sales deal announced with fanfare in August 1991.

The RTC planned to save taxpayers money by abandoning its building-by-building sales approach. So it pooled hard-tosell commercial properties it acquired with failed thrifts and decided to sell each pool to a single investor group.

The thrift bailout agency was to sell a $500 million portfolio -- one-fifth of which comprised money-losing hotels and office buildings -- to a New York investors group. The ground-breaking deal with Patriot American Investors LP was eventually closed

but months late and $200 million short of its sales target. "Patriot American was supposed to be the kickoff deal, but it turned out to be the only deal," an RTC spokeswoman said.

As part of the Patriot deal, the RTC hired Arthur Andersen to fairly value the giant pool of properties it hoped to sell. Patriot eventually paid $126 million for 25 commercial properties with a book value of $291 million, the RTC spokeswoman said.

The report gives laundry lists of the accounting firm's billing. mstakes.

For instance, Andersen reportedly billed the RTC for $6,836 in travel expenses for employees of the firm who did no work on the RTC contract. It also found that the firm had underbilled the RTC by $978 in allowable photocopying charges.

And the inspector general said the RTC should reject $297,462 in charge because the firm failed to submit original supporting documents --'such as original airline ticket receipts instead of photocopies of travelers' itineraries.

In the report, the inspector general Urged the RTC to disallow the $1 million in alleged overcharges, which the agency has already paid Andersen.

The RTC said it would retain outside counsel to investigate the Andersen contract further and to decide whether to disallow any of the charges.

Andersen said in a statement that the RTC had not requested the return of any fees paid.

This is not the first time Arthur Andersen and the RTC have crossed swords.

In July 1993, the accounting firm reached a $65 million global settlement with the agency to settle all charges related to its past work for savings and loans that later failed.

Andersen neither admiaed nor denied guilt.

The properties Patriot bought in the deal included New Orleans' Bourbon Orleans Hotel, San Antonio's Bexar Savings office tower, Houston's Katy Freeway office building, and Dallas' 3100 Monticello office building.

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