
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, November 20, 1993                   TAG: 9311200033
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-10   EDITION: STATE 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Short

FOREST SERVICE CUTS LOSSES ON DEFAULTS

The Forest Service has given up collecting nearly half the $300 million owed by timber purchasers for government contracts they defaulted on during the 1980s, a congressional audit said Friday.

The Forest Service is fighting to recover $124 million, most of it owed by 14 unidentified companies, the General Accounting Office said. The GAO also said that from 1982 to March 1993 the Forest Service collected about $42 million, or 14 percent, of the money owed by defaulting companies.

The companies bought high-priced timber on national forests only to see lumber prices crash from 1979 to 1981.

The Forest Service has taken steps to make sure wholesale timber defaults don't cost taxpayers a bundle in the future, including requiring down payments and larger bond guarantees, the audit said.

But the GAO, the investigative arm of Congress, said in the report to three House committees that tougher standards are needed.

"The losses sustained by the Forest Service, together with the relative lack of success in collecting damages stemming from these defaults, points to the need to better protect the government's financial interests in timber sale contracts," the audit said.

Of the $124 million the agency still hopes to recover, $118.7 million is owed by the 14 purchasers. The largest individual tab totals $24.8 million.

The remaining $136 million "is uncollectable for various reasons, such as the bankruptcy or death of the purchaser," the GAO said.

by CNB