State Auditor Joseph DeNucci faulted the MBTA yesterday for a series of complex financial maneuvers designed to save the cash-strapped agency money, maneuvers he said drove up borrowing costs by $55 million.
In an audit released yesterday, DeNucci's office said that between 2000 and 2005, the MBTA tapped into the capital markets to buy and sell some of its debt in 12 transactions worth $1.63 billion.
But some of the deals failed to meet expectations, and, in one instance, the MBTA had to pay $25 million to terminate the contract. He said the agency had to borrow more money to pay off the new expense.
"It appears the MBTA was willing to accept short-term cash for long-term debt," DeNucci said in a written statement, "and then paid millions of dollars in termination fees when the interest rates changed and became unfavorable to the authority."
Jonathan Davis, MBTA deputy general manager and chief financial officer, disputed DeNucci's conclusions. When expenses, revenue, and interest rates are calculated in a different fashion, he said, the MBTA actually boosted revenue by $2 million because it got out of an increasingly expensive investment vehicle quickly.
The MBTA began investing in markets after the state stopped directly funding the agency in 1999. It currently has $5.1 billion in debt.
John Ellement can be reached at ellement@globe.com.
