Mike Hatch, American Bankers and the Twin Cities Media - Part 5

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.

Posted by Mitch at July 2, 2003 10:35 AM | TrackBack