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B-114839-O.M. 1 (1976-01-09)

handle is hein.gao/gaobadpsa0001 and id is 1 raw text is: UNITED STATES GOVERNMENT GENERAL ACCOUNTING OFFICE Memorandum TO Regional Manager, Dallas Office THRU Director, FOD - Stewart D. McElyea FROM General Counsel - Paul G. Dembling SUBJECT: Authority of Panama Canal Company to Collect Interest on Cash Deposited with U.S. Treasury. B-114839-OoM. The question presented is whether the Panama Canal Company has any legal authority under the Government Corporation Control Act ,or the legislation establishing the Panama Canal Company to, in effect, collect interest indirectly on the funds which it is required to deposit with the United States Treasury. The Panama Canal Company is a wholly owned Government corporation and is subject to the Government Corporation Control Act, 31 U.S.C. § 841 et sea. (1970),., Sec-tion 867 of the Act requires Government Cor- porations to keep their banking and checking accounts with the Treasurer of the United States (or, with approval of the Secretary of the Treasury, with a Federal Reserve bank or a bank designated as a depositary or fiscal agent of the United States). It makes no provision for the pay- ment of interest on those accounts, 31 UoS.C. § 867 (1970), nor are we aware of any other statutory authority which would allov Government cor- porations to receive--or the Treasury to pay--interest on Government corporation funds deposited in the Treasury. In our view no Government agency or instrumentality required to keep its funds with the Treasury is entitled to receive interest thereon in the absence of specific statu tory authority. Although unable to collect interest directly for the above reasons, on approximately $40 million which the Company maintained with the Treasury as a contingency fund, the Company devised a system to collect such interest indirectly at the beginning of fiscal year 1975. It im- puted a payment of interest from the Government, applying the same rate at which the corporation is required to pay interest to the Government on its net direct investment and subtracted the imputed interest from the month-end balances on deposit with the Treasury. This credit for interest from the Government was recorded in the Company's accounts as revenue. Thus the interest payments which the Company was required to make to the Treasury on the Government's net direct investment in the Company were reduced by approximately $i.8 million,

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