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In The Dark > Story Index "Welcome
to Politics in Minnesota"
Mike Hatch,
American Bankers and the Twin Cities Media
Part 5: Disappearance of Impropriety Imagine
the scenario: The Star-Tribune finds a major political figure
doing something that has that appearance of impropriety - for
argument's sake, let's say it's a Republican. Let's
say they found evidence that, say, John Ashcroft had worked behind the
SEC's back to broker a deal to allow ENRON to avoid the public stigma
of paying a fine for their transgressions, in exchange for a large
donation to, say, the National Rifle Association. Do you suppose
it'd get thorough, vigorous coverage? Perhaps assigned to one of
the Star-Tribune's excellent reporters, or even a small team, with a
simple brief; find everything there is to find? So
why did the local media cover the American Bankers story the way they
did? Second
Hand News No
matter how big the newspaper, there are never enough local writers to
fill the whole daily issue. Almost every newspaper, in addition to
using press services like the AP and Reuters, will rerun articles from
other, especially major, newspapers. The
Minneapolis Star/Tribune reruns a lot of NY Times articles. I
checked a six-day assortment of issues, from June 20 to June 25,
2003. Counting the A Section, Metro, Business and Variety (I
ignored the Sports section), the Star/Tribune ran a total of 21
stories with New York Times bylines (among many others from the LA
Times, the Chicago Tribune, and of course several press services) in
those six days. 17 of these articles ran in the A section
- articles on topics ranging from Canadian prescription drugs to
British soldiers being killed by terrorists in Basra to
the fate of Saddam Hussein. This
is, say local sources who closely follow the news, a fairly typical
week - a local source close to this story who follows the local press
very closely estimates the Star/Tribune runs two dozen stories from
the NY Times in a given week. On
May 11, 2003 the front page of the New York Times included
an article [currently in the paper's paid-access database]
entitled "Strong-Arm Shaking of Charities Raises Ethics
Qualms", by Stephanie Strom. The article, which spotlighted
a troubling trend among some state attorneys-general to force their
own appointees onto the boards of non-profits and charities, fingered
Hatch in particular as an egregious example - the article included a
photo of Hatch (captioned "Attorney General Mike Hatch of
Minnesota has conducted several high-profile investigations of
nonprofit health care organizations"). Among the article's
findings:
No other attorney
general has drawn more attention for such appointments than Mike
Hatch of Minnesota, who as conducted two high-profile investigations
of nonprofit health care organizations accused of profligate
spending and lax board oversight. In
2001, Mr. Hatch reached a settlement with one, Allina Health System,
that resulted in it spinning off operations to a new subsidiary
company, Medica Health Plans. He then selected eight
"special administrators" as Medica's board of directors,
and the court signed off on them the next day. Four
of the appointees had been contributors to Mr. Hatch's
campaigns. Theodore Deikel, a multimillionaire businessman
[and official at Petters group, which recently bought Fingerhut] whom Mr. Hatch named as chairman of the Medica board, had been host
of a fund-raising event for Mr. Hatch two weeks before his
appointment. Mr. Deikel and his wife, Beverly, had also
contributed $500 each to Mr. Hatch's political campaigns, and three
of his four children contributed $1,000 apiece, the maximum allowed
under Minnesota law. Asked
whether those contributions and the contributions of other Medica
appointees posed a conflict of interest, Mr. Hatch said, "It
could, but I don't think it does".
The story was of
immediate local interest; the Star-Tribune routinely runs stories
about issues with much less direct local impact. So
why didn't the Star-Tribune run this article, which happened to be
critical of Mike Hatch? Local
Play I
searched the newspapers' online archives, as well as the story records
of the major local news-gathering TV stations and MPR. I found
the following stories (leaving out editorials
and op-eds): Star-Tribune: A
June 12
piece by Conrad DeFiebre which noted the perceived illegality of
Hatch's proposal, and commented on this contradictions between Hatch's
and Wilson's testimony to the Legislative Auditors. A
May
23 piece by David Phelps (no longer available online without
charge) that noted the basic findings of the Auditor's report,
including a second-paragraph note that the report found Hatch's
activities questionable. That,
it seems, was it. Pioneer
Press After
the original
March 5 story by Hank Shaw and Tim Huber, which we've already
discussed, the Pioneer Press ran the following:
- A March 6 piece by
Hank Shaw, with American Bankers' response to the allegations
- A March 7 piece by
Hank Shaw about the call for the Auditor probe,
- an accompanying
editorial saying the probe would be a very good thing indeed
- A March 8 Hank
Shaw story noting that Minnesota law may have prohibited the
donation from American Bankers (as already noted in Part
2 of this story)
- A March 13 story
from Bill Salisbury which notes the broad outline of the story;
the conflicting accounts of Mike Hatch and Glenn Wilson, Wilson's
comment that he didn't believe the $3.5 million donation to
charity was legal, and so on. But Salisbury also says
"Hatch says he learned about the campaign contributions last
fall from Ron Jerich, a longtime political ally and lobbyist who
had just been hired by American Bankers. Jerich received the
thank-you letter from state GOP chairman Ron Eibensteiner and gave
a copy to Hatch." This, clearly, contradicts even
Hatch's own testimony on the subject, and begs the question; where
was Salisbury getting the story from? Since the only people
who'd have known any details of the letter's path once it
left the GOP office, up until Hatch's testimony to the Legislative
Auditor, were in Hatch's office, one wonders to what extent
Salisbury was being used by Hatch to impart his spin on the story.
- A March 14 piece
by Hank Shaw on proposed legislation to make roundabout corporate
contributions (like American Bankers' donations to the RNSEC and
Democratic Governor's Conference) illegal.
- A May 23 piece by
Hank Shaw about the auditor's report.
- A companion May 23
editorial about the Auditor's report.
- A June 12 piece by
Hank Shaw about the Senate hearings, which, alone among his pieces
on this story, at least noted the inconsistencies in the various
stories.
- June 20 Op-Eds
from Mike
Hatch. Hatch's piece is curious - in one paragraph, he
essentially admits to pursuing an illegal settlement: "After becoming aware of the contributions, I told American Bankers that the contributions were wrong and could constitute a quid pro quo if the company settled for less than it had offered prior to making the contributions."
Note that this doesn't jibe with what he told the Legislative
Auditors in his deposition, where no mention of impropriety is
made. His editorial continues: "I told the company to renew the August offer and it did, except that it wanted the money paid to a charity so that the payment was not disclosed as a fine to other states.
Since the offer was oral, I wanted it immediately made to an official of the Pawlenty administration, Commissioner Wilson, and I wanted witnesses to the offer. Since I had just completed a mental health meeting with two insurance executives, I asked them to attend the meeting where the offer was made."
Later in the piece, he says "I don't believe my request to the two executives was a ruse or deceptive. I told them that American Bankers wanted to offer $3.5 million to a charity.
I don't believe I am required to tell them that such a settlement cannot be permitted under the law."
[Emphasis added].
Hatch ends the editorial with this: "My mistake wasn't in inviting two insurance executives to the meeting with Commissioner Wilson. My mistake was not to make a record of the meeting. I knew that American Bankers was corrupt. I did not know,
however, that the Commerce Department was as well."
- Another June 20
op-ed, from Legislative Auditor Jim
Nobles. Nobles asks some questions that might have been
more normally expected to have been asked by the news media:
"The attorney general testified that he knew that settlement money from American Bankers could not be contributed to the charity because he knew such a diversion would be illegal. So, why were the representatives of the charity invited (and not informed about the legal problem)?"
Nobles finished by saying "If you do not know — or accept — that the Attorney General Hatch was being deceptive on Jan. 8, you can reasonably conclude he broke the law. But if you accept — as I do — that he was being deceptive, you would conclude as I did that the attorney general's actions were disturbing, but not illegal."
- A July 1 editorial
by Senator David Haan, a member of the Legislative Audit
Commission. The money quote: "It is unconscionable that Hatch, the highest-ranking law enforcement officer in the state, should continue to recklessly and irresponsibly assert allegations of corruption that are without basis in fact."
Minnesota Public
Radio
A search of MPR's
news archives showed two stories:
- A March
10 piece by Michael Khoo about Jim Bernstein's testimony to
the Senate Commerce and Utilities committee.
- A March
12 piece by Michael Khoo which essentially carried Mike
Hatch's allegations verbatim. Khoo did do a fair job of
presenting the counterarguments - American Bankers counsel Tim
Thornton's denial that there was a settlement, as well as
Wilson's initial response - as they were known at that time.
However, MPR seems not to have followed up on the
story.
A search of the other
news outlets - Channels 4, 5 and 11 - showed that none of the TV or
radio correspondents did much but report on the happenings at hearings
and pass on the comments of the principals.
Questions
So, among everyone in
the Twin Cities media, why didn't one single reporter ask:
- Why did Mike
Hatch, by his own admission (in his Pioneer Press editorial) not
have a record made of his conversation on January 8 with Glenn
Wilson? This was, as everyone knows, a legally-touchy area,
flirting with the edges of state law. I have yet to meet a
lawyer, much less as accomplished a lawyer as Hatch, who wouldn't
have made sure such conversations, if above-board, were on the
record. Why the exception in this case?
- Why, indeed, would
Mike Hatch have made an offer that skirted the edge of the law in
the first place?
- Hatch, in his
testimony to the Legislative Auditor and in his editorial
in the Pioneer Press, says that he brought up the notion of
settling the case with the $3.5 million contribution to charity to
show that the company was willing to settle for $3.5
million. Leave aside the obvious appearance of
impropriety for a moment - why did Mike Hatch put his
client (on legal matters), Glenn Wilson, in that sort of a
predicament?
- Why,
indeed, has no reporter asked Mike Hatch why he asked Glenn Wilson
to a meeting that was, at least according to some sources, a
"Setup" and an "Ambush"? There is at
least credible evidence that Wilson was invited, alone, to a
"meet and greet", not expecting to be asked to settle a
complex legal issue.
- Why did not one
single reporter in the Twin Cities media note Ron Jerich's long,
friendly relationship with Mike Hatch?
- Why did not one
single reporter in the Twin Cities inquire into how Mike Hatch
actually got the letter from Ron Jerich? In early
press reports, Jerich "gave" the letter to Hatch, while
in Hatch's deposition under oath to the Legislative Auditor, it
appeared (in a comical sequence) that he took it, ostensibly
without Jerich's knowledge.
- Why did the
Minneapolis Star-Tribune devote (by my search) exactly two
articles to this story?
- The final
settlement and consent decree between American Bankers and the
Department of Commerce was signed on February 24, 2003. By
Ron Eibensteiner's account, the unnamed reporter called him in
late February - almost immediately after the settlement was
signed. The reporter had the form letter from Ron
Eibensteiner to American Bankers in his possession, and knew the
details of the consent decree - at a time when the knowledge of
the details of the case was limited to a small number of people at
the Department of Commerce, American Bankers, and the Attorney
General's office. The first Pioneer Press story on the
subject ran March 5. How did the story get to the reporters
that fast? Why doesn't this seem odd to anyone in the local
media? Nobody would comment on the first conclusion to jump
to mind - that Mike Hatch fed the story directly to the media for
his own political benefit, against Tim Pawlenty. On other
stories in the past few months (the Gang Strike Force, the Sexual
Predators), it has been argued he's done the same.
- Why does the
Star-Tribune go so easy on Mike Hatch? They ignored the
NYTimes' March 11 story featuring Hatch, and they seemed to all
but ignore the entire American Bankers flap.
- In a partisan,
political vein - does anyone think that once the appearance of
impropriety surfaced (as, indeed, it briefly did for Glenn
Wilson), a Republican Attorney General would have gotten away with
such light scrutiny from the local press?
Observations
You don't have to
talk to a lot of people - mostly but not universally Republicans - to
hear that the Star/Tribune has a Pro-Hatch bias. It's one of
those ephemeral concepts - it's impossible to "prove."
But the Star/Tribune left the story pretty much alone.
The Pioneer Press, on
the other hand, ran a total of 14 stories and editorials on the
subject. They generally followed the theme of the March 5 story
- that this was a straight-up issue of low-grade political corruption
on the part of the Pawlenty administration. There were eight
articles and editorials during the first two weeks after they broke
the story. But once the Legislative Auditor's report came out -
and raised serious questions about the paper's original premise - the
coverage petered out, with only two more stories, an editorial, and
three op-eds.
I'm not going to say
"The Star/Tribune wants to protect Mike Hatch from
criticism", or "The Pioneer Press had their conclusions
handed to them straight from the Attorney General's
office." That would be unsupportable, and impugn the
integrity of some excellent reporters. I'm not going to do
that.
But it seems that,
when the story was still playing as "Hatch Good, Corruption
Bad", the story got a lot more media play than when it turned
into a subtler game, that involved explaining to the readers that Mike
Hatch may have proposed an illegal settlement, and used his connection
with Ron Jerich to spin the incident to embarass the Pawlenty
Administration.
Once it turned out
that there was plenty of impropriety to spread around, the story
disappeared. As we've seen, the story deserved more.
No Comment During
the course of this story, I got comments, information, and questions
answered either on the record or on background from quite a number of
people. I sought, but as the final installment of this story is
written did not get, comments from several key players in this
story: Ron Jerich, figures at American Bankers, HealthPartners,
Blue Cross, the Attorney General's office and officials of the
Minnesota DFL party. I
also have received no response to questions about this story
from reporters at the Star-Tribune or the Pioneer Press (except for
one reporter, whose response was more or less analogous to "kiss
my ass"). As
this is a blog, I will run any comments I receive from any of this
story's principals.
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