Shot
In The Dark > Story Index "Welcome
to Politics in Minnesota"
Mike Hatch,
American Bankers and the Twin Cities Media
Part 4: "Confusing,
deceptive, inappropriate, inconsiderate"Once
you get past the January 6 meeting, things get confusing.
In February, Patrick Nelson (Deputy
Commerce Commissioner) finally negotiated a settlement with American
Bankers. There would be a $200,000 fine, and a $1.8 million
reimbursement for investigative expenses.
According to the Attorney General's
office, the machinery set in motion by American Bankers' donation to
the Republicans (but, apparently, not the one made to the Democrats)
led to a huge reduction of the settlement - from the $3.5 million
agreed to in the summer of 2002.
But according to sources at the
Commerce Department that are familiar with the inner workings of this
story, Commissioner Wilson felt that, since American Bankers had
backed out of the original settlement on August 7, the next stop would
be trial. The source says that, rather than waste Commerce
Department resources on a trial, the Department would be better off
settling for a lower amount, while still exacting a fine, as opposed
to a gift to charity (which would not be listed as a
fine).
The Media Chimes In
At some point after the settlement
was finally reached - in late February or early March of 2003 - Ron
Eibensteiner got a call from "a reporter". He wouldn't say
which one.
"He asked me if I'd gotten a
check from American Bankers", says Eibensteiner, who say he
denied getting the check. "The reporter told me he had a
copy of the thank you letter for the check", says
Eibensteiner. "I asked him to fax me a copy - he wouldn't
do it".
Eibensteiner continued "the
reporter asked me if I knew Ron Jerich. I said
no".
According to Eibensteiner, he then
had a staffer find a copy of the letter in the outgoing correspondence
file. "I called the reporter, and clarified our
process" - the process by which checks are sent to the RNSEC
office, and generate an automatic form letter to the
donor.
On March 5, 2003, the Pioneer Press ran
the first story on the subject. The article relied
heavily on statements by Jim Bernstein, the former Commerce
commissioner.
After the story ran, Eibensteiner
says, he got a call from another reporter. "He was howling
with laughter", says Eibensteiner. "He had a copy of
the letter. He asked me, do you know who this [Ron Jerich]
is? Ron Jerich is a friend of Mike Hatch!".
"It was a clear setup from the
start", Eibensteiner says. "Hatch tried to blackmail
[Glenn Wilson] with my letter. The whole thing was contrived
between Hatch and Jerich, to play in case Tim Pawlenty won the
election".
As this is written, nobody involved
with the Pioneer Press story has responded to my request for
comment.
The Audit
On March 10 and 12, the Senate
Commerce and Utilities Committee held hearings on the brouhaha,
hearing testimony from Bernstein, Hatch and Wilson. They
referred the matter to the Legislative Auditor.
On March 14, Governor Pawlenty and
the legislative leadership (Republican House speaker Steve Sviggum and
Senate Minority leader Dick Day, and DFL House Minority leader Matt
Entenza and Senate majority leader John Hottinger) also sent a letter
to Jim Nobles at the Legislative Auditors Office, requesting an audit
of the settlement.
The Audit
Report was released on May 21, 2003. It's 33 pages (plus
about fifty pages of appendices) that reads like...well, an audit
report. But it reached some interesting conclusions. It
agrees with Hatch's assertions that American Bankers had reached an
agreement "in principle" with Bernstein, and that the
company opted for a political approach. It found no evidence
that the Department of Commerce had had contact with Ron Jerich after
January 8 that might have influenced the settlement. It also was
bothered by the lack of publicity for the settlement until after the
story broke in the media.
The report also concludes that
Hatch's actions in this case were not illegal, but were troubling
nonetheless.
The report was concerned that the
Attorney General apparently presented an illegal settlement to Wilson.
"Attorney General Hatch told us that on January 8, 2003, he was he was fully aware that it was not legally possible for American Bankers to make a contribution to to a charity as part of a settlement, but he did not disclose that fact to those
attending the January 8, meeting. According to Attorney General Hatch's testimony to us, he did not make more of the he
legal problem associated with a charitable contribution from American Bankers Insurance because he
wanted to get the proposal "on the table" . And he said he invited Mr. Neimeic (sic) and Ms. Brainerd to the
meeting with Commissioner Wilson and Mr. Jerich so there would be "witnesses" that an offer had been made.
The Legislative Auditor found this
troubling. While Hatch presented this in his testimony as merely
presenting the offer, saying "Lawyers are like
realtors", he said in his testimony to the Auditor, and
"All offers have got to be presented to the client. It was
important to me that they make their offer to the client
immediately. I wanted to get the bar set", the legislative
auditor noted the Attorney General is not a neutral agent.
According to his own statements, he was aware that the
"charity" proposal was illegal under Minnesota law (which,
the Auditor noted in his report, forbids state officials from even pursuing
such arrangements).
The Audit Report also noted the
impropriety of inviting Commissioner Wilson to the January 8, alone
and unprepared for anything but a "meet and greet", for such
a complex matter.
Finally, the report noted with little
comment the Attorney General's claim to have taken the letter from Ron
Jerich during the October 5th lit drop, except that the evidence
tended to support Ron Eibensteiner's statements, that the check was
sent to the RNSEC (as per Minnesota law) and that the letter was an
automatic form letter. Legislative Auditor Jim Nobles noted in a
phone interview that the letter was quite obviously a form
letter. "Form letters have a certain generality, with
details interspersed", said Nobles. "In the report, we
characterized the letter as a form letter, and I concur with
that. The letter had no specificity."
Questions
Mike Hatch says that he invited Dick
Niemiec and Mary Brainerd - representing Blue Cross and HealthPartners,
both major players in mental health care in Minnesota - to the January
8 meeting to serve as witnesses to the deal. So if what was
going to be presented required "witnesses", why did the
Attorney General call the meeting a "meet and greet" to
Commissioner Wilson? Why did he not tell Wilson that
"witnesses" were going to be necessary?
And indeed, wouldn't a
"witness" from either the Attorney General's Office or the
Department of Commerce - or both - have been more appropriate than
bringing in people who happened to be from two organizations that
would benefit from the proposed illegal settlement?
Coda
Ron Eibensteiner met Attorney General
Hatch at former Senator Bob Lessard's annual fish fry - a bit of a
Minnesota government institution, by most accounts. The fish fry
happened sometime after the story broke in the media.
According to Eibensteiner, he
approached Hatch about the brouhaha - especially the form
letter. Eibensteiner says Hatch smiled and answered:
"Welcome to Politics in
Minnesota, Ron."
|