Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, August 7, 1993 TAG: 9308070183
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
SOURCE: By DAVID M. POOLE STAFF WRITER
DATELINE: LENGTH: Medium
Terry, the Democratic nominee for governor, told The Washington Post this week that if she is elected, she would seek to make it illegal for legislators to sit on boards of state-regulated companies.
Cranwell defended his role with International Guaranty Insurance Corp., which is seeking permission to sell private mortgage insurance in Virginia.
"There is absolutely no conflict of interest, a violation of the law or anything inappropriate going on," Cranwell said in an interview Friday.
But a Botetourt County Republican who is running against Cranwell this fall said the presence of five powerful legislators on the company's board is a blatant ploy to gain preferable treatment from state agencies.
"Dick Cranwell's influence as majority leader is instrumental to the whole scheme," said Bud Brumitt of Troutville.
International Guaranty was organized by George E. Murphy Jr., who has been the chief lobbyist for Blue Cross/Blue Shield.
The company is seeking to join seven companies in the nation that sell private mortgage insurance, which protects lenders but is paid for by home buyers who cannot afford down payments of 20 percent.
The company's 12-member board of directors includes some of the General Assembly's biggest hitters: Sen. Hunter Andrews, D-Hampton, chairman of the powerful Senate Finance Committee; Del. Lewis Parker, D-Mecklenburg, chairman of the House Corporations, Insurance and Banking Committee; Del. Alan Diamonstein, D-Newport News, chairman of the House General Laws Committee; and Del. Alson Smith, D-Winchester, a senior member of the House insurance committee.
There is nothing illegal in legislators' involvement with International Guaranty. But the arrangement has drawn criticism from consumer groups and editorial writers.
Gov. Douglas Wilder, a Democrat, told the Daily Press of Newport News last month that deals like International Guaranty underscore the need for ethics reforms that he sought - without success - from the General Assembly earlier this year.
Julie Lapham, director of Common Cause of Virginia, said the potential for unethical deals was great in a "small universe" such as private mortgage insurance, which is sold by a handful of companies to banks.
"It's quite a pull to say to business people, `Look who we have on our board of directors. We're pretty much guaranteed that banks in Virginia are going to use our insurance,' " she said.
Lapham said the presence of powerful legislators on the International Guaranty board will make the General Assembly less likely to regulate private insurance mortgage rates, which some consumer groups say gouge borrowers.
"The bottom line is that they are there because they are politicians and they can pull strings," she said.
Cranwell, who chairs a house committee that controls tax laws, said his political clout had nothing to do with his opportunity to invest $25,000 in International Guaranty.
Cranwell described Murphy as a friend with a solid track record as an insurance executive. In the 1970s, Murphy organized a private mortgage insurance company, which he later sold to a Norwegian firm.
"I told George that I thought [forming a new company] was an opportunity to make money," Cranwell said.
He hotly denied Brumitt's charge that the deal was a conflict of interest.
"I think clearly it's a personal attack on me," he said, "because it's clearly no violation of the law in any shape or form - and my opponent knows that.
"I can deal in what the law is. I cannot deal in what I would characterize as someone else's view of what a politician's conduct should be."
Cranwell, a lawyer who has served in the General Assembly since 1972, said banning lawmakers from the boards of state-regulated companies would destroy Virginia's tradition of a part-time, citizen legislature.
"I have done nothing wrong," he said. "I have done nothing illegal. If Mary Sue thinks it's inappropriate, she ought to pick up the phone and call me."
Terry spokesman Jay Marlin said the former attorney general stood by her view that the International Guaranty deal is inappropriate.
"She said, `They are very honorable legislators,' but she just happens to disagree with them in this case," Marlin said.
Keywords:
POLITICS
by CNB