A U.S. representative from Virginia has asked the state attorney general to investigate the business practices of toll road operator Macquarie Bank.
In a letter dated Oct. 15, Rep. Frank Wolf, R-VA, a 14-term representative, asked Virginia Attorney General Robert McDonnell to investigate the financial workings of the parent bank whose subsidiary, Toll Road Investor Partners II, operates and collects tolls on the privately built Dulles Greenway.
The state commissioned the Greenway decades ago, but it was not built until 2003 and required financial backing from the private sector. The Macquarie subsidiary paid $533 million in 2005 for the right to operate the roadway and collect tolls for 51 years, when the Greenway will become property of the state.
TRIP II, a consortium of Macquarie Bank subsidiary Macquarie Infrastructure Group and other private investors, submitted an application in 2006 to increase tolls on the Greenway and implement congestion pricing during peak traffic times. The State Corporation Commission approved the increases in September of this year and the new tolls took effect in October.
Greenway tolls are scheduled to increase each year from $3 to reach $4 by 2012 for passenger vehicles in addition to congestion pricing being added during morning and afternoon rush hours. Truck tolls are based on the number of axles. A five-axle truck traveling the entire length of the Greenway currently pays $10.25, and the increase will take that total to $14 by 2012.
Wolf wants the toll increase overturned and the toll operator investigated.
“It is imperative that Macquarie’s financial records be scrutinized to ensure the firm has not violated the public trust by potentially circumventing our laws in order to raise tolls on the Greenway,” Wolf wrote.
Click here to read Wolf’s letter.
TRIP II officials responded by saying the need for toll increases is legitimate.
“All of the information provided to the SCC by TRIP II in relation to its toll increase application was factual, complete, accurate, and is on the public record,” company officials stated in October on the Dulles Greenway Web site, www.dullesgreenway.com.
During a public comment period prior to the approved increases, the State Corporation Commission received 600 public comments, most of which were in opposition to toll increases.
Wolf and several state lawmakers have also expressed concern.
In his letter to the attorney general, Wolf cites an Oct. 2 article in Fortune magazine in which editor-at-large Bethany McLean writes about Macquarie. Her article included the claim, attributed to Jim Chanos, that Macquarie was “engaging in an old-fashioned Ponzi scheme.”
Webster’s Dictionary defines a Ponzi scheme as “a fraudulent investment scheme in which funds paid in by later investors are used to pay artificially high returns to the original investors, thus attracting more funds.”
Macquarie officials have rebutted those assertions. Click here to read the Fortune article and click here to read Macquarie’s rebuttal.
– By David Tanner, staff writer