Authority of Panama Canal Company to Collect Interest on Cash Deposited with U.S. Treasury

The question presented in this decision 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.

GAO concluded that offsetting credit for imputed interest on funds of the Panama Canal Company on deposit with the Treasury is not allowable under present law. If the Company desires to reduce its interest burden, there are several alternative actions it might take. It can reduce the size of its $40 million contingency fund by paying a portion of the fund into the Treasury to reduce the size of the Government's net direct investment. (Company spokesmen, at a meeting with us on November 12, 1975, contended that the Office of Management and Budget requires it to maintain that large a reserve fund. There is no written documentation of that requirement and we have been unable to confirm its existence to date.) The Company might also seek legislation similar to the Act of August 25, 1959, supra, which deemed the funds in the Company's account in the Treasury as paid to the Treasury to be a divident with a corresponding increase in borrowing authority. This alternative would be advantageous to the Company if repayment into the general funds without increased borrowing authority would create difficulties in meeting its liquidity requirements. Finally, the Company could request the Secretary of the Treasury to waive the requirement that the $40 million fund be maintained in a non-interest paying account in the Treasury, pursuant to 31 U.S.C. 867,supra. GAO expressed no opinion on the desirability of this alternative from the point of view of United States financial interests.