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Sullygate: If there is a contractual agreement, Mayor Sullivan, show us the contract
Celtic Diva’s
Blue Oasis
Alaska Dispatch
Alaska Commons
For other news stories
& posts on this topic,
see my bibliography on
all things Sullygate.
Damn, I hate when I want to do my own writing, but along comes some political situation poking its thumb in my eye so hard I have no choice but to remove it. Well, nothing for it but to roll up my sleeves & go at it.
It’s a long story. But it is kind of interesting. Please read on.
At issue is a putative insurance payout of $193,000 from the Anchorage municipal treasury to a trust — the George M. Sullivan Irrevocable Life Insurance Trust — led by George M. Sullivan’s son, Anchorage Mayor Dan Sullivan, which was approved by the Anchorage Assembly by a 9-1 vote on February 16. The thing is fishy enough that over the past two weeks it’s been the subject of a story apiece in the Anchorage Daily Planet [Ref #1] & the Anchorage Press [Ref #2] & no less than three stories in the Anchorage Daily News (two by Sean Cockerham [Ref #3, 4], one from the Associated Press [Ref #5]). There’s also been commentary in the blogs Progressive Alaska [Ref #6], The Mudflats [Ref #7], & Immoral Minority [Ref #8]. I’m sure we’ll see more — the one I’m writing right now, f’r instance. Haven’t read ‘em? — there’s a complete list of references with links at the bottom of this post. As is my habit when writing posts like these.
The most comprehensive reporting on the putative insurance payout comes from Sean Cockerham, who in my book continues to rank at the top of the Anchorage Daily News‘ dwindling reporting staff — at the top statewide, for that matter. As mentioned, he wrote two stories on the putative insurance payout, a brief one called “Benefits for a former official” [Ref #3] and a longer, more comprehensive one called “City life insurance payout for former mayor raises questions — $193,000: Assembly honors ‘82 deal that puts city money into George Sullivan’s trust” [Ref #4]. The latter is especially essential reading if you’re at all interested in this matter.
[Correction 3/8/10: David Hulen of the ADN, who was editor on Sean Cockerham's stories, wrote to tell me that both stories were posted at the same time, with the shorter story as a sidebar to the longer one. For some reason the timestamps on the stories as they appeared on ADN's website made it appear that one was posted two or three hours before the other.]
I’ll use some of its opening paragraphs to set the stage:
No kidding.
Now, three times so far I’ve called this a putative insurance payout. That’s because, like Harriet Drummond, I don’t buy that the Municipality of Anchorage is an insurance company. And as I’ve read through the over 230 comments left at the ADN website on that story, I’ve gotten pretty weary of those repeating the meme that Dan Coffey used in that passage above: the $193,000 payout honors a “commitment”. Or an “obligation.” Or, as Mayor Sullivan himself told Sean Cockerham, repeating City Attorney Dennis Wheeler’s claim,
Really? Then show us the contract.
But they can’t. Because, as Cockerham reported,
Now here’s where I get geeky. The Anchorage Daily News was kind enough to provide PDFs of Muni documents that are pretty darn helpful in understanding this story. But for some reason they didn’t put them in chronological order, or give them a table of contents, or anything. And, well, I find chronological order & tables of contents to be kinda helpful. So, being the publication specialisty geek that I am, I spent some time this evening downloading the PDFs & rearranging them. And adding bookmarks as tables of contents so they’re easier to navigate. I’ll be referring to them frequently from here on out, so here they are:
[Update 3/8/10: David Hulen of the ADN told me that ADN posted the PDFs exactly as they were provided to ADN by the Municipality as a result of public records requests.]
Let’s start at the beginning. Mayor George Sullivan ended his last term in 1981. Assembly Resolution AR-30, dated January 19, 1982, resolved
But what was the same rate and the same coverage? In a memorandum dated February 18, 1982, Susan Lindemuth, Manager of Records and Benefits, wrote in a memo,
But big question: would the insurance company go with the plan? Minutes for the February 24, 1982 meeting of the Commission on Salaries & Emoluments state,
After a short recess, Susan Lindemuth responded to those concerns:
The Commission ultimately passed its Resolution 82-1, which provided life insurance coverage to Sullivan at the the same rate — presumably the “$86.85 per month or $1,042.20 per year” cited in Susan Lindemuth’s February 18 memo — and the same coverage as on January 1, 1982 ($193,000). Sullivan would bear the full cost of providing the insurance coverage — i.e., he’d pay the premiums. [Ref #9, page 9]
Several months later, on November 10, 1982, minutes of the Salary & Emoluments Commission show that there were already problems with the resolution as passed:
Susan Lindemuth replied with a memorandum on November 17, 1982:
This, of course, went contrary to Section 2 of Resolution 82-1, which established that Sullivan would bear the full cost of the premiums — as Judy Flitter, who provided staff support to the Commission, subsequently pointed out in a memorandum on November 22, 1982 –
So problem solved: in spite of the “at the same rate” provision of Section 1 of the resolution, Sullivan had to pay the full premiums himself.
But turns out that wasn’t the biggest problem with resolution. In fact, it appears that Susan Lindemuth’s reassurances to the Commission on February 24 that “there is no problem as far as the insurance company is concerned in continuing George Sullivan in the insurance program after his completion of service with the Municipality” was incorrect. Though nothing in the record we have so far tells us exactly when this problem was discovered.
But wait, you might ask. Didn’t Sean Cockerham’s ADN story tell us when it was discovered? Here’s the relevant passage:
But here’s the thing: the real point of discovery that Aetna wouldn’t cover Sullivan wasn’t 2002, when the Wuerth administration came up against the problem. The real point of discovery was sometime between 1982 and 2002. Someone — we don’t yet know who — made a decision to place the premiums in a city account, presumably because the insurance company would not take them, because Sullivan was not on their rolls.
As of January 30, 2002, Susan Lindemuth was apparently under the impression that Sullivan was still covered by Aetna under the Municipality’s group plan, or at least so she said. In an email to Karen Moore, she wrote,
As the life insurance rates changed over the years, he was informed and paid the appropriate premium amount…or the kids paid on his behalf.
But Lynda Gable of Aetna — identified in one email by Karen Moore as “long time account executive for Aetna’s MOA coverage” [Ref #10, p. 9] — who received a copy of Susan Lindemuth’s email, informed Karen Moore –
Later that day (January 30), Karen Moore told David Otto –
– implying that she believed Susan Lindemuth knew Sullivan wasn’t covered by Aetna & that someone, perhaps Lindemuth, had already decided on an alternate way to pay Sullivan’s eventual death claim: from MOA funds.
Here’s the thing: no one had authority to find alternative methods to provide Sullivan with life insurance except the Assembly and and Salaries & Emoluments Commission. As soon as anyone learned — Susan Lindemuth? somebody else? — that Aetna wouldn’t cover him, that person should have informed the Commission & the Assembly so that they could decide what to do, because they were the only people who were legally empowered.
Remember: it was an Assembly decision to ask the Commission if it would provide Sullivan with life insurance in the first place; & it was the Commission’s decision to actually provide it. But the Commission based its decision on the understanding that Sullivan could be included in the group insurance plan. It did not contemplate having the Municipality itself act as an insurance provider. It did not contemplate having the the Municipality itself pay a death claim. Whoever decided between 1982 and 2002 during the Knowles, Fink, or Mystrom administrations to take that route — without apparently passing the word along to the relevant people in the Wuerch adminstration — took upon themselves authority that did not belong to them — that belonged only to the Assembly & the Commission. It was not legal.
At least, that’s my best guess. I’d like to know what an attorney independent of the Mayor’s office would say.
If I’m right, the Wuerch administration, by formalizing the “MOA is now an insurance company” arrangement — assuming one could call the flurry of emails in early 2002 “formal” — also took upon itself authority that it did not have: it did not inform the Assembly. It did not inform the Commission. It was not legal.
At least that’s my best guess, once again.
But guess I’m right. By February 4, 2002, several high-level people in Wuerch’s administration were coming to an agreement that an option Karen Moore had presented — to set up a sub-fund for the premiums and pay out the difference upon Sullivan’s death “and with Assembly approval” [Ref #4, page 9] — was the best option. One member of that group, Kate Giard, the city finance director, wrote to the others:
An illegal commitment unless the Assembly approves it. But the Assembly in 2002 did not approve it. Sean Cockerham:
To the best of my knowledge, based upon the record that has been disclosed so far, the Assembly was not even made aware that there was an issue.
But there was at least one Assembly member who had to have known there was a problem: the former mayor’s son, Dan Sullivan — who was the guy, after all, who brought the whole deal to the Wuerch administration’s attention in the first place when he came in to pay the life insurance premium in January 2002. [Ref #4]
Now, I’m not supposing that Dan Sullivan was privy to all the emails going on back & forth between the various members of the Wuerch administration about the situation, but I find it difficult to believe that he, an Assembly member, was entirely ignorant of what was going on next door in the executive branch on an issue that was of vital interest to him & his politically connected father. Surely Karen Moore didn’t keep him in the blind that they were trying to work out a problem regarding the insurance, or about what their solution was. At the very latest, he would have learned in 2009, when he became mayor, & his father died shortly thereafter. At that point he & his administration had access to all the relevant documents — & would certainly have been looking at them after his father’s death. He had to have known that the solution Wuerch staffers had come up 8 years before wasn’t — y’know — a legal commitment. At least not yet.
Okay, so jump ahead to just a couple of weeks ago, February 16, 2010: the Assembly approved it. Making it, finally at last — eight years after Kate Giard wrote that bolded sentence — a legal commitment.
But recall why they did so:
Why would they think there was a contract when there wasn’t one?
Perhaps it could be because of the memorandum of February 2, 2010 prepared by the MOA Department of Law, approved by Municipal Attorney Dennis Wheeler, and submitted by Mayor Dan Sullivan to accompany the resolution asking for the payout:
Again: what contract? As I think I’ve clearly established by now, there wasn’t one. Not only was there not a contract, but the entire deal was, as Kate Giard wrote in 2002, an illegal commitment unless the Assembly approved it.
The strategy was, clearly, mislead the Assembly into believing there was a contract in order to push them towards voting in favor of the disbursement. By voting yes, they made the commitment legal. And simultaneously — conveniently for the Mayor-Slash-Trustee — authorizing the payout. Had they known the full story, they may well have voted differently.
Or maybe they wouldn’t have. But they should have been told.
There’s some other misdirection in the memorandum, too. For example,
Technically true: early 2002 was when the Wuerch administration was “informed” by Aetna. But the phrasing is ambigous, making it easy for readers (that is, the Assembly) to believe that up until then, Aetna had him covered. Or that Aetna wasn’t completely flabbergasted when Karen Moore asked them about him.
Besides, as I think I’ve established, there are clear signs that someone at the Muni knew before 2002 that Aetna wouldn’t cover George Sullivan; and the 2002 email correspondents knew it. Remember what Lynda Gable of Aetna wrote to Karen Moore –
Remember what Karen Moore wrote to David Otto –
Then remember that Dennis Wheeler and the Department of Law had access to this email record when they wrote the memorandum. In fact, they had to have it, because it was the email record that instructed them what the Wuerch administration had decided about how to handle the death payment after George Sullivan’s death.
So why were they so cagey in making it sound as if Aetna simply changed its coverage in March 2002? Well, one would hardly want to bring the truth to the Assembly’s attention, because otherwise its members might question this –
But since Aetna didn’t cover Sullivan since some unknown date prior to 2002 — who set those premiums? And why were those premiums so much lower than what they were in 1982? Remember that the Salaries & Emoluments Commission originally charged that Sullivan’s coverage would be at the same rate and the same coverage as it was on January 1, 1982; and that Susan Lindemuth had informed the Commission that the rate was “$86.85 per month or $1,042.20 per year”. Who decided in November 1995 (that would be during the Mystrom administration) to “vary” the annual premium by subtracting $486.36 from the 1982 rate? I can guarantee you it wasn’t Aetna.
One wonders how much higher that total would have been had someone-who-is-not-Aetna not “varied” the annual premium to such a low amount.
Clearly something rather shady was going on for quite awhile with this life insurance policy, spanning the administrations of three Anchorage mayors — Tony Knowles, Tom Fink, Rick Mystrom — even before it got to Wuerch’s.
This was done by somebody. It’d would be nice to know by whom. But it’s easy to know for whom. As recorded in the minutes of the Commission on Salaries & Emoluments on February 24, 1982,
Cheers for Ms. Gotham.
And cheers for Harriet Drummond, who, alone among the 10 Assembly members voting on the putative insurance payout on February 16, voted no.
Update 8 Mar 2010
More stories/blog posts have been written since I posted my story on March 5. Most important in terms of the questions it asks is Phil Munger’s March 5 post, “Did Wheeler Commit Fraud and Extortion at the February 16th 2010 Anchorage Assembly Meeting?” On Sunday, Phil posted a poll which asks “ Should Fast Sully Return the Dough?“ Also on Sunday, The Mudflats posted a letter written by Anchorage resident Thomas Van Pelt to the Assembly and Mayor Sullivan questioning the appropriateness of the payout.
I’ve added these & other posts to a secondary bibliography below my main reference list, & will continue adding to that list as further posts come to my attention.
References
Additional stories (posts I missed first time around, or posted after my story was written)
Update 3/10/2010: I’m now maintaining this continuing bibliography on my Sullygate page, so go there for links to later stories.
Related posts: