Frist Accumulated Stock Outside Trust
AP: Frist Accumulated Stock Outside Trusts
By LARRY MARGASAK and JONATHAN M. KATZ, Associated Press Writers 45 minutes ago
Outside the blind trusts he created to avoid a conflict of interest, Senate Majority Leader Bill Frist earned tens of thousands of dollars from stock in a family-founded hospital chain largely controlled by his brother, documents show.
The Tennessee Republican, whose sale this summer of HCA Inc. stock is under federal investigation, has long maintained he could own HCA shares and still vote on health care legislation without a conflict because he had placed the stock in blind trusts approved by the Senate.
However, ethics experts say a partnership arrangement shown in documents obtained by The Associated Press raises serious doubts about whether the senator truly avoided a conflict.
In that case, the HCA stock was accumulated by a family investment partnership started by the senator's late parents and later overseen by his brother, Thomas Frist. The brother served as president of the partnership's management company and as a top officer of HCA. Sen. Frist holds no position with the company.
The senator's share of the partnership was placed in a
Edmond M. Ianni, a former Wilmington, Del., bank executive who established blind trusts for corporate executives, questioned why the senator's brother was able to manage assets "when the whole purpose of a blind trust is to ensure lack of not only conflict of interest — but appearance of conflict of interest?"
"What I find most appalling is the Senate calls it a qualified blind trust when it's not blind,"
Frist's interest in Bowling Avenue Partners and the
Those documents show Thomas Frist was listed as the "general partner" and "registered agent" of Bowling Avenue Partners. He also was listed as president of the partnership's management company.
Thomas Frist founded HCA, the nation's largest for-profit hospital chain, with his and the senator's father. He currently is the company's chairman emeritus.
Frist advisers confirmed the senator's brother could influence investment decisions in the
"His interests in the family partnership were not held by his Senate blind trusts because Senate rules did not permit it. Senator Frist did not control the assets in this partnership and he annually disclosed his interests to the public as required," Frist spokesman Bob Stevenson said.
Thomas Frist did not return repeated phone calls to his office at HCA seeking comment.
Bowling Avenue Partners' HCA shares became marketable securities when the estate of Frist's mother was settled in probate. Frist then began transferring those shares in stages from the
The value of all the transferred shares, calculated on the dates they went into the Senate trusts, was between $775,000 and $1.57 million, according to letters the trustees sent to Frist and the Senate. That stock was on top of millions of dollars in various investments Frist already owned in the Senate blind trusts.
With his background as a heart surgeon as well as majority leader, Frist has been at the forefront of legislation that would affect the hospital chain. Among the issues: a Medicare prescription drug benefit and limits on medical malpractice lawsuits.
Frist kept HCA stock in Bowling Avenue Partners and the
His investments in Nashville-based HCA are being investigated by federal prosecutors and the Securities and Exchange Commission after an AP report that the senator had asked administrators of his Senate blind trusts to sell his HCA holdings.
Frist ordered the stock sold June 13 and all sales were completed by July 1. HCA stock peaked on June 22 and then gradually declined. On July 13, it dropped 9 percent.
Reports to the SEC showed insiders sold about 2.3 million shares of HCA stock worth at least $112 million from January through June 2005.
Frist has denied having insider company information when he ordered the stock sold in June. The profit the senator made from the sales is not known.
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