| For other news stories & posts on this topic, see my bibliography on all things Sullygate. |
A comment by Assemblymember Harriet Drummond, on my Sullygate timeline post earlier today [Ref #1] alerted me to the fact that a second resolution besides her own, by Assemblymember Matt Claman, will be introduced at the March 23 Anchorage Assembly meeting. This resolution, she said, would send “the whole mess [of the payout to the George M. Sullivan Irrevocable Life Insurance Trust] to the Ethics Commission in addition to asking for the return of the $193,000 until things are clarified.”
“We may choose to take up both of these resolutions together,” she said. “At any rate you won’t have to wait long into the night to see what happens so do come.” The Assembly meeting begins in the Assembly Chambers located in the Loussac Library at 3600 Denali, Room 108 beginning at 5:00 PM. It will also be broadcast in Anchorage on Channel 10 with rebroadcast the following Friday and Monday at 5:00 p.m.
I’m providing the full text of both resolutions in this post; here’s a little menu for easy navigation.
Agenda | Drummond resolution | Claman resolution | Note | References
Anchorage Assembly’s March 23 agenda
Harriet Drummond’s resolution
This shows as item 9.B.2 on the March 23 agenda:
- Resolution No. AR 2010-92, a resolution of the Anchorage Municipal Assembly to authorize engaging the services of independent legal counsel to review and report to the Assembly on the legal and contractual obligations, if any, and the authority of the Assembly, if any, regarding payment of $193,000 in municipal funds to the George M. Sullivan Irrevocable Life Insurance Trust, and providing for an appropriation, Assemblymember Drummond.
I previously discussed this resolution in an earlier post on March 10:
Assemblymember Harriet Drummond, the sole member of the Anchorage Assembly who voted on February 16 against the $193,000 “insurance” payout, released a resolution yesterday which at this point is scheduled for reading at the Assembly on March 23, 2010. The resolution calls for investigation by an independent legal counsel into the numerous legal & ethical questions surrounding the $193,000 payout. [Ref #2]
That post also discussed Mayor Dan Sullivan’s reaction to the resolution:
Responding to release of the resolution, Mayor Sullivan yesterday told KTUU Channel 2 News,
It’s unfortunate that Ms. Drummond is playing politics with the death of my father. For 28 years, in good faith, we made payments to meet the obligation of this contract. Five administrations have had no problem with this. [Ref #3]
However, Mayor Sullivan and city attorney Dennis Wheeler have so far failed to produce a copy of any contract, or anything indicating that the Anchorage Assembly had authorized the Municipality of Anchorage itself to act as an insurance company. As explained in my original post on this issue, the 1982 Anchorage Assembly and the Commission on Salaries and Emoluments both intended that George Sullivan would be covered under the Municipality’s group insurance plan — neither Assembly nor Commission contemplated that the Municipality itself would act as an insurance provider or that the Municipality itself would pay a death claim out of public monies. Mayor Sullivan and city attorney Dennis Wheeler have also failed to produce any paperwork showing that any Assembly from 1982 to the present authorized the Municipality to act as an insurance company on behalf of George Sullivan and his family. [Ref #2]
Here’s its text:
Submitted by: ASSEMBLY MEMBER Drummond
For reading: March 23, 2010
ANCHORAGE, ALASKA
AR NO. 2010–92
A RESOLUTION OF THE ANCHORAGE MUNICIPAL ASSEMBLY TO AUTHORIZE ENGAGING THE SERVICES OF INDEPENDENT LEGAL COUNSEL TO REVIEW AND REPORT TO THE ASSEMBLY ON THE LEGAL AND CONTRACTUAL OBLIGATIONS, IF ANY, AND THE AUTHORITY OF THE ASSEMBLY, IF ANY, REGARDING PAYMENT OF $193,000 IN MUNICIPAL FUNDS TO THE GEORGE M. SULLIVAN IRREVOCABLE LIFE INSURANCE TRUST, AND PROVIDING FOR AN APPROPRIATION.
WHEREAS, pursuant to Assembly Memorandum No. AM 76-2010, the Assembly was requested by and on behalf of the Mayor to appropriate One Hundred Ninety Three Thousand Dollars ($193,000.00) from the Areawide General Fund (Fund 101) for disbursement to the George M. Sullivan Irrevocable Life Insurance Trust; and
WHEREAS, Assembly Memorandum No. AM 76-2010 declared that disbursement would be made under a life insurance contract; and
WHEREAS, Assembly Memorandum No. AM 76-2010 did not disclose that the George M. Sullivan Irrevocable Life Insurance Trust was administered by the Mayor in his private capacity as the son of George M. Sullivan and Trustee of the life insurance trust; and
WHEREAS, Assembly Memorandum No. AM 76-2010 did not disclose that no life insurance policy was in place and no written life insurance contract existed; and
WHEREAS, AR 2010-33 was passed and approved by the Assembly, on February 16, 2010, authorizing disbursement subject to receipt of proper documentation from the George M. Sullivan Irrevocable Life Insurance Trust; and
WHEREAS, the full circumstances purporting to legally obligate the Municipality to make a payout of $193,000.00 in public funds are more complicated than provided in the summary under AM 76-2010; and
WHEREAS, the payout of $193,000.00 in public funds for life insurance without a life insurance policy in place has raised many concerns in the mind of the public and one or more Assembly Members, including these questions:
- What is the legal basis for asserting the existence of a life insurance policy or contract?
- What is the legal basis for asserting a contractual obligation in the absence of a written contract?
- What is the legal authority of the Salary and Emoluments Commission to authorize an employee benefit after employment has terminated?
- Were the legal requirements, procedures and process under Charter Section 5.08 (c) properly followed? [See note below]
- What, if any, is the extent of a municipal obligation to make payment of $193,000 in life insurance without a life insurance policy?
- What is the current Assembly’s authority to approve or disapprove a life insurance payment in the absence of a life insurance policy?
- Is this disbursement recognized in the FY 2010 General Government Operating Budget?
- What process should be used under the Ethics Code to ensure that an elected public official does not sit on both sides of a municipal transaction?
- Under what public purpose are public funds being disbursed as life insurance? and
WHEREAS, the current Mayor is also actively serving as Trustee of the George M. Sullivan Irrevocable Life Insurance Trust, creating a situation in which he serves on both sides of a significant financial transaction involving public funds; and
WHEREAS, as Mayor, the incumbent is required to represent and act in the Municipality’s best interests; and
WHEREAS, as Trustee of the George M. Sullivan Life Insurance Trust, the Trustee has a fiduciary duty to the Trust to represent and act in the best interests of the Trust and its beneficiaries;
NOW, THEREFORE, the Anchorage Assembly resolves:
1. Because the events surrounding the creation and administration of a special benefit for the Honorable George M. Sullivan occurred after he was no longer in office and over the course of several mayoral successions without a full and public review before the Assembly, the Assembly authorizes an independent legal review to include the following:
- The authority of the Salary and Emoluments Commission, after the mayor or other elected official has left elected office, to authorize a special life insurance benefit;
- Whether a special life insurance benefit was legally effectuated for George M. Sullivan, when, and by whom or under what actions;
- The legal obligations and risks to the Municipality concerning the special life insurance benefit (prior to payment);
- The authority of the Mayor to request an appropriation when the Mayor also currently serves as Trustee of the George M. Sullivan Irrevocable Life Insurance Trust, without disclosure of the potential for conflict of interest;
- The public purpose under which disbursement of public funds is allowed as life insurance proceeds, without a fair market life insurance policy or premium payments.
- The authority of the Anchorage Assembly to approve an appropriation of public funds for this purpose.
2. The services of independent legal counsel shall be selected by the Internal Auditor, the Municipal Clerk and Assembly Counsel under a small procurement contract not to exceed [$5,000 – $10,000], and an appropriation of [$ 10,000] for this purpose is approved.
3. Until the Assembly is assured by independent legal counsel that payment of $193,000.00 in public funds is legally appropriate, the Mayor, in his private capacity as Trustee for the George M. Sullivan Irrevocable Trust, is respectfully requested to return any funds disbursed under AR 2010-33 to a special account to be held by the Municipality.
PASSED AND APPROVED by the Anchorage Assembly this ______day of ____________, 2010.
______________________________
Chair
ATTEST:
____________________________
Municipal Clerk
Matt Claman’s resolution
This shows as item 9.B.7 on the March 23 agenda:
- Resolution No. AR 2010-105, a resolution of the Anchorage Municipal Assembly, regarding payment of $193,000 in municipal funds to the George M. Sullivan Irrevocable Life Insurance Trust, Assemblymember Claman. (addendum)
Here’s its text:
Submitted by: ASSEMBLY MEMBER CLAMAN
Reviewed by: Assembly Counsel
For reading: March 23, 2010
ANCHORAGE, ALASKA
AR NO. 2010–105
A RESOLUTION OF THE ANCHORAGE MUNICIPAL ASSEMBLY, REGARDING PAYMENT OF $193,000 IN MUNICIPAL FUNDS TO THE GEORGE M. SULLIVAN IRREVOCABLE LIFE INSURANCE TRUST.
WHEREAS, pursuant to Assembly Memorandum No. AM 76-2010, the Assembly was requested by and behalf of the Mayor to appropriate One Hundred Ninety Three Thousand Dollars ($193,000.00) from the Areawide General Fund (Fund 101) for disbursement to the George M. Sullivan Irrevocable Life Insurance Trust; and
WHEREAS, Assembly Memorandum No. AM 76-2010 declared that disbursement would be made under a life insurance contract; and
WHEREAS, Assembly Memorandum No. AM 76-2010 did not disclose that the George M. Sullivan Irrevocable Life Insurance Trust was administered by the Mayor in his private capacity as the son of George M. Sullivan and Trustee of the life insurance trust; and
WHEREAS, AR 2010-33 was passed and approved by the Assembly, on February 16, 2010, authorizing disbursement subject to receipt of proper documentation from the George M. Sullivan Irrevocable Life Insurance Trust; and
WHEREAS, the full circumstances purporting to legally obligate the Municipality to make a payout of $193,000.00 in public funds are more complicated than provided in the summary under AM 76-2010; and
WHEREAS, the current Mayor is also actively serving as Trustee of the George M. Sullivan Irrevocable Life Insurance Trust, creating a situation in which he both signs the check as Mayor, and receives the funds as Trustee, thus serving on both sides of a significant financial transaction involving public funds;
WHEREAS, the payout of $193,000.00 in public funds for life insurance without a life insurance policy has raised many concerns in the mind of the public;
WHEREAS, as Mayor, the incumbent is required to represent and act in the Municipality’s best interests; and
WHEREAS, as Trustee of the George M. Sullivan Life Insurance Trust, the Trustee has a fiduciary duty to the Trust to represent and act in the best interests of the Trust and its beneficiaries; and
WHEREAS, prior to submitting AR 2010-33 to the Assembly, the current Mayor did not refer the matter to the Municipal Ethics Board to determine whether he had a conflict of interest in representing the Trust in dealings with the Municipality;
NOW, THEREFORE, the Anchorage Assembly resolves:
Section 1. Until the Assembly and the public are afforded an open and full disclosure to assure that payment of $193,000.00 in public funds is legally appropriate, the Mayor, in his private capacity as Trustee for the George M. Sullivan Irrevocable Trust, is respectfully requested to place all of the $193,000.00 in funds in an escrow account with instructions to the escrow agent to maintain the escrow until full disclosure and review by the Ethics Board under the Ethics Code and Section 2 of this Resolution is complete, and the Assembly has the opportunity to take action after requirements concerning mayoral disclosure and Ethics Board action on potential conflict have first been met. The Mayor, in his private capacity as Trustee for the George M. Sullivan Irrevocable Trust, may request that all of the $193,000.00 be held in a special, segregated account by the Municipality, in lieu of a third-party escrow agent.
Section 2. The current Mayor shall submit the question of whether he had a conflict of interest, and if so, how the conflict should be managed, to the Ethics Board for public hearing, complete review, and written report.
PASSED AND APPROVED by the Anchorage Assembly this ______day of ____________, 2010.
____________________________
Chair
ATTEST:
____________________________
Municipal Clerk
Note
Among the questions asked in Drummond’s resolution are:
- What is the legal authority of the Salary and Emoluments Commission to authorize an employee benefit after employment has terminated?
- Were the legal requirements, procedures and process under Charter Section 5.08 (c) properly followed?
Here’s the relevant portion of the Municipal Charter, with the provision she’s asking about in bold:
Section 5.08. Commission on salaries and emoluments.
(a) There is established a commission on salaries and emoluments of elected officials. The commission is composed of five members appointed for terms of four years. The commission shall be composed of at least one business executive, one representative of a nonpartisan voters’ organization, one person with experience in public administration, and one representative of a labor organization.
(b) No member of the commission shall be employed by the municipality during the term for which he is appointed, nor shall he hold elective municipal office during his term or within one year thereafter.
(c) The commission shall establish the compensation, including salaries, benefits, and allowances, if any, of elected officials. A decision of the commission to adjust the compensation of elected officials shall not affect seated elected officials, but shall affect those elected officials seated after the election following approval of the decision. A decision of the commission not affecting the compensation of elected officials takes effect at the beginning of the next fiscal year of the municipality. A decision by the commission is subject to initiative and referendum in the same manner as an ordinance.
(d) The commission shall afford an opportunity for the public to be heard before rendering any decision that changes the compensation of an elected official. At least every two years, but not more frequently than every year, the commission shall review the compensation of elected officials. The commission shall render its decision with respect to salaries not later than 30 days before the end of the fiscal year of the municipality.
Reading paragraph (c) it is indeed clear: Although former Mayor George Sullivan remained technically a muncipal employee through October 1982 until his accrued leave ran out, his term in office as an elected official ended on January 2, 1982, when Tony Knowles took office — nearly two months before the Commission on Salaries & Emoluments passed its Resolution 82-1 on February 24, 1982. At that time, he was no longer an elected official. So this is a pretty good question: did the Commission have any legal authority to adjust the compensation of someone who was no longer an elected official?
Thus, the resolution calls for the requested independent legal review to determine
The authority of the Salary and Emoluments Commission, after the mayor or other elected official has left elected office, to authorize a special life insurance benefit[.]
References
- 3/20/2010. “A Sullygate timeline: 1982-2010″ by Melissa S. Green (Henkimaa).
- 3/10/2010. “Sullygate update: A bibliography, Shannyn Moore’s guests, & Drummond’s resolution” by Melissa S. Green (Henkimaa).
- 3/9/2010. “Assembly member questions legality of insuring late Sullivan” by Mike Ross (KTUU Channel 2 News); emphasis added
