Tuesday, January 31, 2006

Gallagher's Conflicting Interests

Today's St. Petersburg Times includes a report by Joni James that "In his last year as Florida's elected insurance commissioner, Tom Gallagher invested millions of dollars in insurance-related stocks... ." The information comes from Gallagher's 2002 tax returns.

James is not reporting that Gallagher traded insurance company stocks in any companies with business before him when he was Insurance Commissioner. Not yet, anyway. The emphasis in the story's lede is "insurance-related."

But you can almost hear the suspenseful sound of a rising bass clef in James' hints there may be more shoes to drop:
Gallagher's tax returns, posted on his gubernatorial campaign's Web site this month, show ... along the way, Gallagher has not been shy about buying and selling stocks whose interests overlap with his role near the top of state government.
The potential conflicts James has uncovered so far arise in two ways. First, at the time Gallagher was state Insurance Commissioner he also was a voting member of the State Cabinet. In that capacity, he voted with other cabinet members to approve a pipeline for non-insurance companies in which he held stock, such as AES Corp., which calls itself "the global power company."

Second, James reports Gallagher did "have a $3.2-million stake in Brown & Brown Inc. of Daytona Beach" and "a $12,225 stake in Mutual Risk Management of Bermuda" while he was Insurance Commissioner.

Mutual Risk has since gone to that Great Consolidation in the Sky, courtesy of the Park Group, Ltd. holding company. Brown & Brown of Daytona Beach calls itself "an independent insurance intermediary that provides a variety of insurance and reinsurance products and services to corporate, public entity, institutional, trade, professional, association and individual clients."

Another SPTimes reporter, Adam C. Smith, comments on the newspaper's blog, "For a guy long planning to run for governor, Tom Gallagher seems to have been surprisingly oblivious to potential conflict of interest problems."

Not only that. According to the SPTimes, Gallagher's trading in stocks of companies he had some hand in regulating as a Cabinet member may have been against the law.
In a 1991 opinion, the Florida Commission on Ethics said it was a conflict of interest and against state law for the state's elected comptroller, who then regulated banks, to hold bank stocks he inherited.

Gallagher said Monday he was unaware of the 1991 opinion. * * *

Nor did he ever consider his investment in a handful of insurance companies a conflict of interest.
That last is difficult to swallow. Gallagher didn't even consider there might be a potential conflict of interest? Can the chief financial officer of Florida and a candidate for governor of the state be that incurious?

Little wonder that the state-owned Citizens Property Insurance is riddled with self-dealing managers and administrators. When the head of the herd is paying no attention, manners tend to deteriorate down the entire length of the trough.

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