| For other news stories & posts on this topic, see my bibliography on all things Sullygate. |
Last Friday early early in the morning after staying up most of the night writing it (okay, I’ve caught up on my sleep, but just gotta belabor the point) — I posted my first post about the Sullivan “life insurance” issue — “Sullygate: If there is a contractual agreement, Mayor Sullivan, show us the contract.”
Since then there have been further developments:
1. Bibliography of all things Sullygate
There have been a bunch more posts & even a couple of new stories about the issue since I wrote my post about it last week. I was adding new items to the bibliography at the bottom of my original page, but after awhile it seems more sensible to just have the bib as a separate page. See the complete bibliography, complete with links, on my Sullygate page. I’ll add to the bibliography as new items come out. If I’m missing anything, please comment on the bib page & include a link. Or you can send me a private tweet to my Twitter account @yksin or a private message via my Facebook page.
2. “Moore Up North” for Saturday, March 10, 2010
Shannyn Moore’s weekly television show “Moore Up North” broadcast on Saturday, March 6 ( taped the prior Thursday, March 4) included as guests former Anchorage mayoral candidate Eric Croft, current Anchorage Assembly Member Harriet Drummond, & state Senator Bill Wielchowski.Discussion of the Sullivan “insurance” payout begins about 4 minutes into Part 3 of the video:
Video of the complete show is now available on Shannyn’s blog. There is further discussion of the Sullivan “insurance” at the tail end of Part 4 & during Part 5. The rest of the show is worth watching too — parts 2 & 3 especially go into depth about the problem of dismal voter turnout in elections.
3. Drummond’s resolution AR No. 2010–91 calling for independent investigation of Sullivan “insurance”
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. The full text of the resolution is already available on several other blogs, but I’m going to go ahead and post it here too (see below). I’ve also uploaded a PDF copy of the resolution.
4. Mayor Dan Sullivan’s response to release of Drummond’s 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. [3/9/2010. “Assembly member questions legality of insuring late Sullivan” by Mike Ross (KTUU Channel 2 News); emphasis added]
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.
5. Harriet Drummond on the Shannyn Moore radio show
Assemblymember Harriet Drummond was a guest this morning for the first hour of Shannyn Moore’s daily radio show on KUDO 1080 AM discussing the $193,000 payout and Drummond’s resolution. Drummond explained (among other things) that at the February 16 Assembly meeting — at which the payout was authorized — she asked who the head of the George M. Sullivan Irrevocable Life Insurance Trust was, & received no answer. She did not learn that Mayor Dan Sullivan (George’s son) headed the trust until Sean Cockerham’s Anchorage Daily News story came out last week.
Now it seems that Assembly Chair Patrick Flynn is working with the Mayor’s Office and the municipal Department of Law (Dennis Wheeler) to find more paperwork related, & that the search for paperwork might delay discussion of her resolution. Asked at the end of her guest spot what we the listeners could do about this situation, she said: call the Mayor’s office, call the Department of Law, & tell them to expedite finding those documents.
There is no reason that all relevant documents — for instance, this supposed “contract” that Mayor Sullivan keeps claiming exists — should not be available for Assembly & public examination by March 23.
In fact, that “contract” should have been in the hands of all Assembly members before they took the vote on February 16.
Update: A new item
6. New Sean Cockerham article at the Anchorage Daily News
A new story has just been posted at ADN’s website:
- 3/10/2010. “Insurance deal draws increased scrutiny” by Sean Cockerham” (Anchorage Daily News).
The article discusses Harriet Drummond’s resolution and Assembly Chair Patrick Flynn’s decision to ask for further information from the municipal Department of Law:
Assembly Chairman Flynn said this week that not all the facts were known when the Assembly voted on Feb. 16 to appropriate the $193,000.
“I’ve heard from a couple of my colleagues who said, ‘We’re finding things out in the paper we didn’t know, and we’re getting questions (from the public) about things we didn’t get answers to previously, and we probably need a little bit more information,’” he said.
Flynn said he didn’t know, for example, that Mayor Dan Sullivan is the trustee. The city attorney’s Feb. 2 memo asked the Assembly to appropriate $193,000 “to the trustee of the George M. Sullivan Irrevocable Life Insurance Trust” but did not identify the trustee.
Flynn said the review he requested from Deputy City Attorney Rhonda Westover will describe why the city attorney’s office didn’t find that disclosure was necessary. He said it would also give more detail on how the administration determined the city was obligated to make the payout.
Flynn wants this review completed before making any decision on the resolution:
He said he didn’t expect to support Drummond’s call to hire an outside investigator before the review is completed. Flynn said he wants Westover’s report on a regular Assembly agenda, and that means it likely won’t be ready until early April.
But Drummond says that resolution should be taken up on March 23:
Drummond said her resolution should come up at the Assembly’s March 23rd meeting. It asks the mayor to return the money to the city “until the Assembly is assured by independent legal counsel that payment of $193,000 in public funds is legally appropriate.”
Here’s the part that really gets me:
Dan Sullivan said Tuesday that it wouldn’t possible for him as trustee to give the money back. “The funds have been disbursed…it would be violating my fiduciary responsibility to disburse it in any other means other that what is outlined in the trust.”
Here again we have the conflict of interest between Sullivan the trustee & Sullivan the mayor. Especially since — still – he has not produced a copy of the contract.
Sullivan will not list the beneficiaries of the trust, saying that it’s not public information.
Sullivan said all he did was fulfill his duty as fiduciary as trustee to file the paperwork to execute the terms of the trust, which completes an agreement with the city that’s been in place for almost 30 years. Sullivan said he never made it a secret he was the trustee, he paid premiums to the city on behalf of his father, and he disclosed his role to the city attorney’s office as well as the city department of employee relations.
How many times must it be said? Where’s the contract? Show us the contract! Nothing has yet been shown to us to indicate that the Assembly or the Commission on Salaries & Emoluments contemplated anyone other than a licensed insurance company — which the Muni is not — to cover George Sullivan’s life insurance.
Drummond is proposing that the Assembly spend up to $10,000 for an independent legal counsel to look at numerous issues surrounding the payout to the Sullivan trust. “Dan Sullivan is on both sides of this issue. He is the mayor of the City of Anchorage and he is the trustee of the trust that he’s asking the city to pay $193,000 to. I think there’s a serious conflict of interest there,” Drummond said.
No kidding. Ethical confusion much? Troubling appearance of possible public corruption much?
The investigator would examine whether it’s truly a contractual obligation, whether the mayor could request the money without disclosing a conflict of interest, and how the city’s Commission on Salaries and Emoluments had authority to grant a special life insurance benefit for someone who was no longer in public office, according to Drummond’s resolution.
The commission did so in 1982, after being asked by the Assembly to consider it in gratitude to George Sullivan and with the concern he wouldn’t be able to get private life insurance.
But let me say it one more time:
- In 1982, neither the Assembly nor the Commission contemplated the Municipality of Anchorage itself acting as a life insurance company. They intended Sullivan to be included on the MOA’s group insurance plan with Aetna.
- In 1982, neither the Assembly nor the Commission contemplated the Municipality of Anchorage itself paying off a $193,000 claim from public monies.T hey intended Sullivan to be included on the MOA’s group insurance plan with Aetna.
- Nor has any evidence yet been presented that the Assembly or Commission since 1982 made any legal contract or legal agreement obligating the Municipality to act as an insurance company, authorizing it to accept premiums as if it were an insurance company, or obligating it to make a payout from public monies.
As has been suggested elsewhere — for example, by Shannyn Moore’s guests on last Saturday’s “Moore Up North” — this matter demands investigation not only by an independent counsel, by also by the Alaska Division of Insurance, which regulates the insurance industry in Alaska.
Drummond’s resolution (released March 9, 2010; for reading at the Assembly on March 23, 2010)
See also the PDF of the resolution, which is better for printing.
Submitted by: Assembly Member Drummond
For reading: March 23, 2010
ANCHORAGE, ALASKA
AR NO. 2010–91
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?
- 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:
- 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 authority of the Anchorage Assembly to approve an appropriation of public funds for this purpose.
- 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 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.
- 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
