Welcome to Keating-Enron Memorial Hospital!

Local Arizona news this week. I have two anecdotes about this particular column. First, the guys at the Tribune wanted a citation or reference for the Keating CC&Rs story; it's been long enough, and Keating is enough of a distant historical figure to them, that they didn't remember his government-subsidized moralizing. (Keating used to run anti-abortion ads using American Continental and Lincoln Savings money -- on the theory that it was a proper business expense because he wanted to have those unborn embryos as future customers. Unfortunately, ACC and Lincoln had a lifespan left at that time roughly the same as the human gestation period.) The guys at the Tribune didn't believe me without backup. Now if only they'd do the same to Marianne Jennings.

Second, it was the Arizona Republic that broke the deed restriction story in 1988; the Cincinnati Post was running some sort of "famous people of the 20th Century in Cincinnati" series in 1999 and repeated the CC&R story, giving credit to "the local newspaper in Phoenix." But that would require the Tribune to acknowledge the Republic's original reporting, and they weren't willing to do it without a copy of the original story (which isn't available online). I also asked that the credit to the Post be "as the paper recounted" or "remembered" in 1999, because the reporting was in 1988, but that didn't make it. Credit where credit isn't due. Competition in the marketplace of ideas--ain't it wonderful?

Newspaper version available here. For a while, anyway.

OFFICIAL TRIES TO IMPOSE HIS MORALITY ON HOSPITAL
East Valley Tribune, Sept. 26, 2004

Maricopa County Supervisor Andy Kunasek is worse than Charles Keating, Jr. -- while the other supervisors are acting like Enron’s management.

For those of you who can’t remember the 1980’s, Keating was a rugged-individualistic-but-government-guaranteed economic colossus. He figured out how to create temporary real estate profits: buy a savings and loan, then lend its federally-insured deposits to your own development schemes.

The S&L crash may be ancient history, but the Keating “legacy” lives on -- in Kunasek’s attempt to dictate terms of the transfer of the county hospital to the new Maricopa County health care district.

As the Cincinnati Post reported in 1999, one of Keating’s master-planned developments had deed restrictions that allowed the homeowners association to seize “adult materials” from private homes. The CC&Rs also mandated that “no owner or tenant shall intentionally terminate a human pregnancy.”

(See, disputes over flying the flag or unpaid assessments are actually an improvement. The most out-of-control homeowners association today isn’t monitoring Internet use. Maybe that’s why conservatives rail against government “control” -- they prefer to control your life themselves.)

Unfazed by Keating’s example, Kunasek insists that the deed transferring the hospital property to the health care district contain an anti-abortion restriction. Never mind that the statute authorizing the district requires that the hospital provide at least the same services as on January 1, 2003. Never mind that the restriction violates the terms under which the county originally got the land from the state. Never mind that the hospital may lose its ability to provide graduate medical education, which requires a full obstetrical program. Never mind that the restriction jeopardizes the hospital’s accreditation and financial health. Never mind that the consultant hired by the supervisors to assist in the transfer told them not to impose the deed restriction.

Kunasek still wants to emulate Charlie Keating by imposing morality through deed restrictions. And Kunasek is worse than Keating, because once a newspaper got the story, Keating backed down, claiming he had nothing to do with the “mistake.” Instead, Kunasek is charging ahead -- with the other supervisors’ consent.

The problem is that each county supervisor is wearing two hats, but ignoring one. County voters will elect new directors in November, but meanwhile the supervisors are the district’s interim directors. In that capacity, they must act in the best interests of the health care district, which may not be the same as a supervisor’s own political interests -- but this conflict of interest is obvious to everybody but them.

If the county and the health care district were publicly-traded corporations, this behavior would be a stock-fraud violation. Kunasek has made it clear that he wants this deed restriction -- against the advice of the county’s own consultants -- not because it’s good for the hospital, but because being anti-abortion is his personal political priority. And it looks like the other supervisors/directors may go along which, in a corporation, would make them liable, too.

The feds nailed Enron’s Andy Fastow on exactly this particular crime. While an officer of Enron, he acted to benefit himself as an investor and officer of Enron’s off-balance-sheet entities. Just like Fastow, Kunasek as director of the health care district is acting to benefit Kunasek as a county supervisor and future candidate for other political office. Fastow went to jail for placing his own interests ahead of his responsibilities to shareholders. Kunasek wants to be rewarded for doing the exact same thing.

And it’s not just Kunasek. The other four supervisors know what Kunasek is doing, but they’re going along despite his and their conflicts of interest. Maybe Enron’s Ken Lay can pretend that while he was CEO he really had no idea of what was happening (and that's why they paid him the big bucks). But the other supervisors can’t. They know, and they know better.

It would be nice if the supervisors would manage the new health care district for the next few months better than Lay and Fastow ran Enron. But it apparently isn’t going to happen. So in addition to the deed restriction, they should require changing the hospital’s name to something more appropriate -- like “Keating-Enron Memorial.”