Tuesday, March 9, 2010

The Drummond Resolution - AR No. 2010-91

Submitted by: ASSEMBLY MEMBER Drummond

For reading: March 23, 2010

AR NO. 2010–91


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:

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.

Municipal Clerk


Kat said...

Wow! Way to go Ms. Drummond! Thanks Phil!

Diane said...

May the force be with you Ms. Drummond, you are going to need it.

akbright said...

Veto that, Mayor Sullivan.

Anonymous said...

Harriet rocks!


Philip Munger said...


good point

Anonymous said...

I wonder if Dan Sullivan still wants to audit the city's past budget performance?

It might make a nice comparison.

Anonymous said...

With everything that Begish has had to go through re: his budget, Sullivan should have expected this. (I think that Begich did cover something up, and this is why we look into these things.)

I am proud of Drummond's courage and glad that she is doing her job. How many of the other members were bought out by the mayor and for whatever reason had to go with what he wanted but were hoping that someone would stand up on this?

Philip Munger said...

anon @ 9:33,

I don't think anyone was bought out for the vote on giving him the moola that wasn't already in on the take. The non-conservatives on the assembly who voted to give him the $$$ just didn't do their homework. I hope they learn from this episode.

employee benefits said...

Harriet Drummond just sent the posse after Dan "the desperado" Sullivan to retrieve the money he stole from our city’s treasury.

Anonymous said...

Life Insurance companies must register with the State of Alaska and have certain legal requirements. I doubt the City of Anchorage was a registered Life Insurance Company. So the payment was not a Life Insurance payment.

However the City did agree to provide life insurance for former mayor Sullivan and accepted his premium.

Now 20 years later it would be very wrong for them to just give the premiums back.

They made a deal. A legal contract with consideration. It was not free, or a gift.

The city has a legal obligation. Not all contracts need to be in writing.

For what ever reason the city made a deal twenty years ago and they should honor that agreement

The only reason Phil is pursuing this issue is because Danny Boy is going to run against Kid Mark in four years. The Dems just like to send their attack dogs after any Rep for sport. It is good entertainment.

If the Mayor of Anchorage was a Dem then there would be no questions asked.

Chicago style politics followed Sarah Palin to Alaska when she was running for VP and sadly some progressives are continuing the gangsta style.

Look at phil's recent nasty comments about Dr. CBJ., This column lost a lot of credibility with that slim.

The look at the sullivan payment is not really out of bounds. But the motivation appears to be the same. If it is a Rep, then slim em.

Slowly Phil's column is losing credibility.

Anonymous said...

To anon @9:54
I do not see how you can draw any conclusion about Phil's credibility based on his publishing Ms Drummond's resolution request. It is totally legitimate for these questions to be asked and it is Phil's job to make the public aware of such actions. I realize that there are some who believe that just saying something (sometimes over and over again) makes it true but it does not. It does sometimes shape other folk's perceptions but shame on them for being so uniformed and gullible.

Anonymous said...

"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi

I just can't but wonder if Dan is projecting his incompetence onto others. Sure, other people make mistakes but Dan's have a certain "ruling class" quality to them.

clark said...

patrick flynn explained the assembly's action by saying, we felt like there was no way to refuse making the appropriation, based on the information presented. but he was also careful to point out that a legal review had not been conducted or requested. drummond's proposal seeks to rectify that. whether they should have done so in the first place is a good question. seems like they were just left holding the bag. and the wuerch administration is as much to fault as anybody.
i was angry at first that flynn and the others just went ahead and appropriated the money. on the other hand, it might have been the most astute political move they could have made... here you go, dan, knock yourself out! ;

clark said...

my fave comment at the latest ADN story on the sullivan insurance:

"The city is run by a hodge-podge mix of cowards and scumbags.

There appears to be a entire cornacopia of various hustles running all at once here.

A round-robin version of The Spanish Prisoner, a mixed set of the Republican Pigeon Drop, and variations on the Nigerian Lottery scam, with touches of the Madoff Ponzi Gambit here and there."

ha ha! and that's just what's going on now. the commenter isn't even talking about the '60s and '70s!

Anonymous said...

That grifter Sullivan has already cashed the check. Time for a recall. And for the assembly to demand the money back. What a CB.