Monday, September 26, 2005
Editorial: Frist's suspicious 'seeing-eye' trust
The Senate majority leader's sale of his stock in a family company was conveniently timed.
From the RoundTable blog
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Senate Majority Leader Bill Frist would have people believe that a sudden pang of conscience -- after a decade in the Senate -- caused him to divest himself of shares in HCA Inc., the nation's largest for-profit hospital chain, in June.
Frist didn't want anyone to think he had a conflict of interest if he pursued new health care initiatives, his office said.
And it was pure coincidence, sheer good fortune on his part, that shortly after he sold his stock, share prices tumbled when the company released a disappointing earnings report.
HCA was founded by Frist's father. His brother serves on the board of directors.
It would, of course, be a crime if Frist was acting on information from his brother or other HCA officers when he directed the administrator of his blind trust to sell all his HCA stock.
They call that insider trading.
In addition, there is the question of how blind a trust can be if Frist is able to sell stock whenever he chooses.
Fred Wertheimer, president of Democracy21, told The Washington Post, "The notion that you have a blind trust but you can tell your trustee when to sell stock doesn't make any sense. It means you have a seeing-eye trust and not a blind trust."
Senate ethics rules would allow Frist only to direct the liquidation of an asset that creates a conflict of interest, or the appearance of one "subsequent to the assumption of duties" by the senator.
But Frist's duties haven't changed recently. And, though he has been criticized over the years for continuing to hold HCA stock, the issue hasn't been raised in well over a year.
During his time in the Senate and as Senate majority leader, Frist has never shied from health-related issues, such as caps on malpractice damages and the mammoth prescription drug benefit for Medicare.
What could create a sudden conflict of interest now?
That's a question the Senate Ethics Committee and the Securities and Exchange Commission, which subpoenaed HCA last week, need to answer.
