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American Express Yanks Ark. Cards

March 14, 2002

LITTLE ROCK, Ark. (AP) _ American Express sent a message to the state of Arkansas recently: Sorry, card rejected.

In a sweeping action that came without warning, the company suspended all 6,400 of the state employee corporate cards because of unpaid charges totaling more than $800,000, half of that overdue at least four months.

Holders of the cards _ from staffers in the governor’s office to low-level administrators _ found out about the action at restaurants, hotels and airports. Some were stranded, and one University of Arkansas official had to find another way to buy lunch for someone he was trying to recruit to the faculty.

``It was embarrassing,″ said David Martinson, an account administrator for the university. ``People had to make lots of accommodations to work around it.″

Cards in good standing were reinstated within days of the Jan. 30 suspension, but the experience has a state committee re-examining the special accounts that let cardholders charge personal purchases as well as those for state business.

American Express said the corporate cards, used by Fortune 500 companies and nearly every state government, allow employees to cover anticipated travel and business expenses without obtaining money in advance.

The employees must meet standard credit and salary requirements to qualify for the cards, but are solely responsible for paying off their charges.

American Express spokeswoman Melissa Abernathy said the mass suspension was extremely rare but necessary. She said that in eight years with the company, she has never before encountered such an across-the-board suspension of a state corporate account.

Arkansas accounting administrator Tom Smith said about 1,000 state workers were delinquent, some more than 120 days, and the state’s contract with American Express gives it the right to suspend all cards without notice if more than 1 percent of cardholders are more than two months past due.

Smith said he did not have a breakdown on which agencies had the most employees with delinquent accounts, what the charges were for or why the bills had not been paid.

Officials said it was not the state’s fault. They said the state reimbursed its employees for their expenses in a timely fashion.

``We were paying them properly,″ said Department of Human Services spokesman Joe Quinn. ``The money would go into their personal hands, and some of them were getting behind paying the credit card company back.″

The state committee is considering using some other method of paying employee expenses. A travel-advance fund is a possibility.

The state is also considering canceling its 16-year deal with American Express.

``If we’re going to have the risk of having people stranded traveling, we need to re-evaluate what we’re going to offer to employees,″ said Tim Leathers, deputy director of the state Department of Finance and Administration.

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