Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 16, 1990 TAG: 9003162224
SECTION: VIRGINIA PAGE: B-1 EDITION: METRO
SOURCE: MARGIE FISHER RICHMOND BUREAU
DATELINE: RICHMOND LENGTH: Long
The surprise removal of Sen. Hunter Andrews of Hampton and Del. Robert Ball of Richmond was the latest development in the controversy over the proposed merger of RF&P railroad and CSX Corp.
The state holds about 20 percent of RF&P stock through its pension system, and the sale or trade of that stock to CSX requires approval of the General Assembly. That body is to consider the issue when it reconvenes for its annual veto session April 18.
Last month, Gov. Douglas Wilder blocked what he considered to be an effort by Andrews and Ball to get the assembly's speedy approval of the railroad merger.
The governor, who spent much of the legislative session engaged in thinly veiled warfare with Andrews, also took the unusual step of asking Attorney General Mary Sue Terry to investigate whether the two top-ranking legislators had violated the state's conflict-of-interest laws in their handling of the merger proposal.
Andrews, who owns stock in both CSX and RF&P, has dismissed the suggestion of a conflict, noting that his stock earns him less than $10,000 per year, the minimum needed under state law to trigger a conflict of interest.
Andrews - Senate majority leader and chairman of the Senate Finance Committee - and Ball, chairman of the House Appropriations Committee, also have dismissed the allegation by Wilder that they had tried to speed the sale of the state's RF&P shares during the regular assembly session.
Wednesday, Wilder installed his longtime political confidante, Jacqueline G. Epps, as chairwoman of the $11 billion state pension system to replace Charles B. Walker - a Republican who resigned under pressure from Wilder last month.
The governor charged that Walker had a conflict of interest because he headed the retirement system board while also serving on a special RF&P committee that recommended the merger.
Thursday morning, with Epps presiding and with top Wilder aide Walter McFarlane in attendance, the retirement board met in closed executive session for more than two hours.
When it emerged, Epps read a statement saying it was the consensus of the board that Andrews and Ball should be replaced as the state's RF&P directors. Replacing them will be Epps, a lawyer and Democratic Party leader in Richmond, and Mark T. Finn, a board member who heads a money management firm in Virginia Beach.
In her statement, Epps said the action was "not intended to be a reflection on the integrity of Sen. Andrews and Del. Ball or to suggest that they acted improperly."
But Epps said the board felt "our fiduciary responsibility to 58,000 state retirees and the $11 billion retirement fund - and, indeed, to the small investors in the RF&P - requires us to do what is necessary to eliminate any appearance of impropriety."
Andrews could not be reached for comment.
But, Ball said Thursday, "I didn't give a rip about serving on the board anyway." But he also said, "I think it was handled in a right sloppy manner."
Ball said he was given no warning that the action to remove him was coming. "I think they should have called me ahead of time."
Ball said, however, that he does not care as long as the retirement system trustees made clear they were not accusing him of impropriety. He said the merger talks were well under way before he was named an RF&P director.
He said he did his best to evaluate it and, "I just came to the conclusion that it was a good deal for RF&P stockholders. I still think it's a good deal."
Wilder's press secretary, Laura Dillard, would not say if Wilder had specifically suggested that Andrews and Ball be removed as the state's RF&P representatives.
"All I'm going to say is that the board obviously took the action it felt was in the best interest" of the board and state retirees, Dillard said. "The governor respects that decision."
McFarlane refused to say if Wilder had sent him with the recommendation to replace Andrews and Ball. He said he attended the meeting because Wilder is "very concerned about the RF&P situation and is trying honestly and thoroughly to determine if [the CSX offer] is a good deal or a bad deal."
But "the board is independent" and acted as such, McFarlane said.
Among those voting to replace Andrews and Ball were two state officials: Edward Mazur, the state's comptroller, and Karen Washabau, director of the Department of Planning and Budget. They serve in their state jobs at the pleasure of the governor.
Earlier this week, the state hired a New York-based financial analyst to evaluate CSX's offer of $34.50 per share for the RF&P stock and to report its findings to Wilder and the retirement system board.
Wilder and others have said that they believe CSX's $385 million offer is too low, considering the value of the RF&P property holdings, which include prime Northern Virginia real estate.
CSX, which owns 50.1 percent of the voting stock of RF&P, is one of the nation's largest transportation companies.
RF&P, chartered in 1834 as the Richmond, Fredericksburg and Potomac Railroad, operates a 113-mile track from Richmond to Washington, as well as a profitable real-estate subsidiary. As was common when governments were trying to encourage railroad construction in the 19th century, the state bought some of the RF&P stock when it was founded.
The shares were moved to the retirement system portfolio during the 1970s.
by CNB