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Hatch disputes Commerce commissioner on insurance company donation
March 12, 2003

Hatch says he spoke to Commerce Commissioner Wilson about the insurance company's contribution. "I made it clear that I thought American Bankers was trying to undermine the administrative process and it was very important for the department not to fall into a trap." (MPR Photo/Michael Khoo)

DFL Attorney General Mike Hatch Wednesday reinforced allegations that a Florida insurance company used political donations to secure more lenient treatment from Republican Gov. Tim Pawlenty's administration. Hatch says American Bankers Insurance had agreed in principle to pay a $3.5 million fine for deceptive business practices last summer, but later withdrew from negotiations and funneled $30,000 into the gubernatorial campaigns of Pawlenty and DFLer Roger Moe. Hatch also says Pawlenty Commerce commissioner Glenn Wilson was aware of the donations when he settled last month for a smaller, $2 million penalty. Wilson denies the allegation.

St. Paul, Minn. — Hatch told the Senate Commerce Committee that last summer, American Bankers was willing to settle the case against it for $3.5 million, provided the agreement was kept secret. Hatch presented a letter from the company's local attorney outlining the proposal -- and he says the company's abrupt end to negotiating indicates the firm was willing to take a gamble in the political arena.

"There's no other explanation, because we were all startled. When somebody walks out of the room -- they come in and they walk out of the room -- and then the next thing I know, we've got corporate money being funneled into gubernatorial races, something -- it's as plain as the nose on your face what was going on," Hatch says.

American Bankers later directed $15,000 each to Gov. Pawlenty's campaign and to his DFL rival, Roger Moe. Hatch says he suspected the worst when he learned of the donations, and alerted incoming Commerce Commissioner Glenn Wilson to the potential conflict.

	Commerce Commissioner Glenn Wilson

Hatch says that in January he showed Wilson a letter from the state GOP, thanking the company for its political contribution. Wilson, however, says that's not true.

"No, I didn't see the letter," Wilson says.

Last month, Wilson settled the case against American Bankers for $2 million. Hatch questioned why the administration would settle for less than the company had offered last summer. Wilson says his only concern was reaching an agreement that revoked the company's license for five years, that levied a substantial fine, and that avoided costly court delays.

"We were engaged in a court case that could last two to four, maybe even five years. To say the least, we were not doing real well. And if we lost, the taxpayers got zero," Wilson says.

Wilson notes the final settlement is three times as large as any penalty levied against an insurance company in state history. And commerce officials say it's unfair to say the settlement was whittled down from $3.5 million to $2 million, since none of the proposals traded during the summer was ever signed.

Tim Thornton, an attorney for American Bankers, wrote the letter that Hatch produced as evidence of the company's willingness to settle for the higher amount. But Thornton says the letter was not quite an offer for $3.5 million. He says $1 million of that amount was to be withheld if the state reneged on a confidentiality agreement.

Does anybody really believe that this Florida corporation was taking a sudden interest in Minnesota politics out of the interest of good citizenship? - Attorney General Mike Hatch

"There was never a straightfoward $3.5 million offer. The letter speaks for itself," Thornton says.

Senate Commerce Committee chair Ellen Anderson, DFL-St. Paul, says she'll call on the Legislative Auditor's office to conduct further investigations into the deal. Anderson says Hatch's testimony was shocking.

"We need to have an investigation. This needs to go the next level," says Anderson. "There's very serious allegations that have been raised here. And we need to get to the bottom of them and try to restore some public trust in our public institutions."

Gov. Pawlenty says he still believes Wilson's version of events, including his insistence that he knew nothing of the donations prior to the final settlement.

"But even if he did, it's not illegal. You know, the question is whether there was undue influence," says Pawlenty. "There are people around here who have accepted all kinds of contributions during their campaigns, and then take actions or inactions on legislation or other matters. We don't run around and accuse all them of conflicts of interest. So we have to make sure we have a consistent standard here."

Pawlenty says, however, that he supports a full hearing into the events, and will co-sign a letter to the Legislative Auditor asking for an inquiry. Pawlenty says he hopes such an investigation will dispel any controversy surrounding Wilson, who has yet to be confirmed in his post.

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