News from Patrick Flynn

Matters of (the George Sullivan) Trust

It’s been over a week since the Assembly received a report from the Department of Law addressing some of the issues regarding the life insurance policy benefiting former Mayor George Sullivan’s trust.  We’ve also received an advisory opinion from the Board of Ethics concluding that current Mayor Dan Sullivan erred in not disclosing his position as trustee, something that was not made known until after Assembly action on disbursal of the funds in question.  And at our next meeting we’ll take up Harriet Drummond’s proposal to seek external legal advice on the matter.

I’ve been giving the associated issues a lot of thought and am torn on how to proceed.  It comes to this; do I think the information received from the Department of Law and the Board of Ethics is sufficient or should I support Ms. Drummond’s resolution and seek an external review?  For me there’s no clear cut answer.

In reviewing the available facts it appears at least four mistakes occurred during the decades-long process that led to the disbursal of these funds:

  1. Back in 1982 the Assembly should never have passed the resolution calling for the extension of life insurance benefits to George Sullivan.  I don’t dispute that former Mayor Sullivan led an extraordinarily distinguished public service career but using public resources to extend special privileges almost invariably leads to, at the very least, the perception of impropriety.
  2. When it first became apparent that the city’s private insurance carrier (Aetna) would not carry a life insurance policy for a former employee, in 2002, then-municipal attorney Bill Greene’s assertion that the city had to continue providing coverage without any apparent attempt to seek redress stuns me.  In my opinion his decision that, “there is no option to not provide the coverage,” represented an abdication of his duty to our city.  That said, once other municipal officials went along with Mr. Greene’s interpretation I do think the obligation was cemented.
  3. As mentioned above, Mayor Dan Sullivan’s failure to disclose his role as trustee continues to surprise me.  I’ve witnessed him recuse himself on at least one other matter and Assembly members regularly provide disclosures on the record for even tenuous connections to issues before us.  I cannot understand why he wouldn’t have thought to do so, especially since I don’t think the outcome would have changed dramatically.
  4. Finally, I take responsibility for the fact that the Assembly failed to get more of the information now available on the table prior to voting.  We relied on the Department of Law’s summary but should have asked for more details, and I apologize that we didn’t.

So now what?

On one hand I honestly feel that a third-party review of this issue will reach the same conclusion reached by myself and the Department of Law; like it or not, the city was/is obligated to make this payment.  On the other hand, I also feel that the third-party review of financial matters in the waning months of the Begich administration will find no significant evidence of impropriety.  And since I supported the latter intellectual consistency suggests I should support the former, right?  Yet some might argue that, even if something was amiss in either circumstance, there likely isn’t any action the Assembly could take in response.  A reasonable point, but others argue we should at least get all the facts on the table.

What I don’t want to suggest is that anyone in the Department of Law erred, I think they gave the best advice they could.  That said, I am told they initially advised the mayor he didn’t have a conflict without referring the matter to the Board of Ethics and, after the mayor ultimately consulted that board, municipal attorneys now advise us that everything related to this issue needs referral to the Board of Ethics.  In short, they’re in a tough spot.

I have a little more time to mull this over, and will continue to do so.  If you have suggestions I’d love to hear them!



This contribution was made on Saturday, 03. April 2010 at 11:12 and was published under the category Other. You can follow comments on this entry through the RSS-Feed.

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  1. Patrick,

    What really concerns me is that hardly anyone is talking about this very fact: that at some point during the 1990s, someone within the administration illegally cut the premiums paid by the Sullivan family in half. IN HALF. From roughly $1100 monthly (which was already absurdly low, given that the man was nearly sixty years old and in poor health) to somewhere around $500-$600 per month.

    Who cut this premium in half? And what was it possibly based on? Obviously it was not based on market value, nor was it possibly based on advice from any insurance company (as we later found out that there was no active insurance policy). It seems pretty clear to me that someone broke the law, and now us taxpayers are having to pay the price.

    We need an investigation to determine this one fact. Who decided to cut the premium payment in half, and under what authority?


    Comment: David – 03. April 2010 @ 12:06 pm


    Comment: BUD KNOX – 03. April 2010 @ 12:34 pm

  3. I’m not so sure I see your dilemna. Mayor Dan Sullivan got an opinion from the Alaska Department of Law–which said that he had no conflict of interest–and therefore didn’t need to disclose his role as family trustee when former Mayor George Sullivan died. So, Dan didn’t reveal that fact until it was time to collect the money on behalf of the trust.

    Harriet Drummond voted against honoring this obligation and now you are apologizing because you “should have asked for more details” before all but one member of the Assembly voted to pay this obligation. The only “additional information” that the Department of Law missed telling Mayor Sullivan was that there was another agency, the Board of Ethics, that he could also go talk to. Of course that agency had to determine that Dan should have asked for their opinion, too, but nothing would have changed.

    If the majority of the Assembly had decided not to honor this agreement, it would have likely lost in court and gotten to pay court costs, too.

    No matter what government agency a citizen goes to for service or information, there is always another agency they could also go to for more of the same bureaucratic run-around. Mayor George Sullivan served this community with honor and distinction. Mayor Dan Sullivan has represented his family in a matter which happened to coincide with his role as mayor.

    I think you are correct to determine there is nothing the Assembly can or should do in this situation beyond the partisan finger-pointing that has already happened. If the Alaska Department of Law hasn’t found anything wrong with what Mayor Begich did, then I suspect that august agency will not likely now try to make Mayor Sullivan a hero by challenging what rightfully belongs to his family.

    Aren’t there some potholes around Anchorage that the Assembly can make sure get filled about this time of year?

    Comment: Donn Liston – 04. April 2010 @ 9:14 pm

  4. Patrick:

    I concur with the argument that the 1982 the Assembly erred in granting the extension of the Life Insurance benefits to Mayor Sullivan. However, that aside, the resolution did pass by a majority vote, the terms of the agreement was concurred with the Sullivan’s thus binding the Municipality to its obligations. The Sullivan’s continued making good faith premium payments, therefore the Municipality’s obligation remained valid. While Aetna Insurance Company did not have to oblige the Municipality’s obligation to the Sullivan’s and did ultimately cancel the coverage as was Aetna’s choice; the Municipality’s obligation to the Sullivan’s remained so long as the Sullivan’s continued to make the required premium payments. It appears from the record that a number of previous Administrations did review the issue and continued the agreement without proposing any modifications; thus the Sullivan’s have every reason to believe as long as they continued to make the required premium payments, the contract with the Municipality remained valid. While I believe the 1982 Assembly was wrong in making the agreement with the Sullivan’s, the 2009 Assembly is required to fulfill the terms of the 1982 Agreement.

    Unfortunately, I do not understand Mayor Dan Sullivan’s confusion regarding his potential conflict of interest in his Trustee responsibility for the Sullivan Family Trust and his obligations as Mayor of the Municipality. Clearly, he can not act for one entity (Sullivan Family Trust) without acting on behalf of the other (Municipality of Anchorage) at the same time. There is an obvious conflict of interest on his behalf. The opportunity to recuse himself from the issue as Mayor was an easy choice, his ability to recuse himself from acting as the Trustee for the Sullivan Family Trust and pass this responsibility to an other member of the Trust was equally an easy choice. It appears that he is trying to hide behind the Department of Law opinion. Unfortunately, he did not recuse himself in either case, thus he now leaves the voters a simple message that he is incapable of understanding right from wrong and opens up the door to question his integrity. I am not sure this is a path anyone wants to take.

    Douglas Johnson.

    Comment: Douglas W. Johnson – 05. April 2010 @ 7:22 pm

  5. The voters who thought it was alright for Mayor Begich to sell a gullable Assembly on fat five year union contracts–as the national economy was headed into a recession– to promote his own political ambitions, and then eave the Muni with an excess of $17 million hole as soon as Begich got out of town, may now say Mayor Sullivan is “incapable of understanding right from wrong” because of a perceived conflict of interest in his roles as Mayor and Trustee for the Sullivan Family Trust.

    I don’t think I know any Anchorage voters with such tortured logic but I bet some of them read this blog. That’s why such outrage about Sullivan is posted here.

    When it comes to measures of integrity the comparison is laughable, but nice try!

    Comment: Donn Liston – 06. April 2010 @ 8:42 pm

  6. Patrick:

    One question that has yet to be answered was the source of the $193,000 used for the payment to the Sullivan Family Trust. Unfortunately, during January, the Mayor chose to eliminate $150,000 from the Fire Department’s operating budget that funded the Swift Water Boat Rescue Team and the HAZMAT Response Team. In addition, the Mayor also eliminated the salary ($35,000) for the part time Municipal employee that operated the Oscar Anderson House. This opens the question to where these funds have been allocated.

    However, dates of the program and salary cuts and the date of the request for payment of the $193,00 for the Sullivan Family Trust are all sequential. Therefore, the conclusion can be made that the cuts funded the majority of the payment and the conflict of interest did occur. However, hopefully the funds instead were directed by the Mayor to street maintenance for pothole repairs and thus eliminating any questions regarding the integrity of all current and past Mayors.

    Comment: Douglas W. Johnson – 06. April 2010 @ 10:13 pm

  7. The Sullivan’s should never have been paid this money. There was no contract. There never was. If I give you $10 to jump to the moon, and you take my $10, we still do not have a contract. It’s called bad faith bargaining, and that’s what we have here. The Sullivans and the City knew, in 1982, that the city is not an insurance company. The City never should have accepted the premiums, and the Sullivans (especially the Sullivans!) had no reasonable expectation that the city was a provider of life insurance, and the Emoluments Commission overstepped their boundary by providing something to a non-employee, regardless of how good that employee was.

    Give the premiums back to the Sullivans, with interest, and get the $193,000 back as well. Let the Mayor sue the city–he’ll look absurd and will lose the case because it was bargained in bad faith by both parties. This is pretty basic contract law stuff–don’t let folks scare you into thinking otherwise.

    Comment: Mel Slurrup – 08. April 2010 @ 9:37 pm

  8. […] two weeks after the Westover’s memorandum, Assembly Chair Flynn wrote on his blog, In reviewing the available facts it appears at least four mistakes occurred during the […]

    Pingback: Sullygate: Why we need an independent investigation – 12. April 2010 @ 6:50 pm

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