By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
By New Times
Contrary to what you hear from the official press, the odds are reasonably high that J. Fife Symington III will be media deep-fried and resigned from office well before his gubernatorial term ends in 1999.
By filing for Chapter 7 bankruptcy, Symington has stepped onto a tightrope strung over a vat of boiling oil. And now--for the first time since he took office--there are people who want to shake the high wire every time Symington takes a step.
Arizona is generally forgiving of ethically challenged politicians, and it is certainly possible that Symington could avoid public scalding; he did, after all, skate on a $200 million lawsuit by the Resolution Trust Corporation, then win reelection as an acknowledged deadbeat under federal grand jury investigation.
If history is any indication, though, Symington will not survive--will, in fact, be relegated to the permanent disdain reserved for the Packwoods, Mechams and Nixons of the world--unless he continues his amazing luck in controlling . . .
So far, the Valley's voices of reason have portrayed Symington's bankruptcy carefully, almost sympathetically. It has been an astounding performance of media sensitivity, even by Arizona standards.
One Phoenix TV station, KPNX, Channel 12, reached new lows in bootlicking by following its main bankruptcy story with a lengthy summation of all the "positive" things that have happened in Arizona since Symington took office. Channel 12's authoritative sources for this familiar litany of commercial and social progress: the state Commerce Department, which is headed by a Symington appointee; the Legislature; and Symington's office.
The daily newspapers published a lot of stories about the bankruptcy--ten in the Arizona Republic alone, by my count--the day after it was filed. I am not claiming that reporters consciously suppressed or failed to report what they knew. The most prominent of the first-day stories, however, analyzed Symington in irrelevant, psychobabble clich‚s: Is he a down-to-earth good guy or an upper-crust snob? A debt-dodger or an unlucky businessman?
The positive side of those pairings somehow seemed to get best play, perhaps because it's so much easier to find defenders of the powerful than critics. And the headline for the Republic's lead bankruptcy story was this patently false quote from Symington: "I've lost everything."
Well, no, he has not. If all goes as Symington wishes, he will retain hundreds of thousands of dollars in trust funds that cannot be seized during bankruptcy, and his wife's millions will also remain untouched.
Some of the Fife-as-victim, Fife-as-psychic-mystery coverage approached self-parody. In one story on the bankruptcy, the Republic/Gazette actually quoted its own publisher, who just happened to breakfast with the governor a few hours before the Chapter 7 filing. What a coincidence!
And where were the publisher and the destitute governor having breakfast?
Why, at a low-cost diner known as The Phoenician, a fact the Republic reported without a hint of irony.
The Republic told us what the whole mass of its confused coverage meant the next day in a lead editorial. Fife Symington was a victim of economic forces beyond his control, and his bankruptcy has nothing to do with the governorship. "No one should expect that the bankruptcy filing will alter his admirable record of cutting the expense of government and increasing the costs paid by criminals," the paper intoned.
Symington could not realistically have hoped local opinion makers would put a more positive spin on the occasion of his bankruptcy. Calls for his resignation have been treated as unrealistic partisan rhetoric. The bankruptcy itself has been portrayed as nothing more than a bad personal moment.
Yet that soft presentation of Symington's bankruptcy has created a subtext that could cause more problems for the governor than it has solved. The subtext is this: I have come clean. There is nothing else.
Facts, however, are stubborn things that even the Phoenix media cannot simply ignore. And there are reasons to suspect that Symington will be plagued for months by suggestions that his is not a case of simple bankruptcy, that there are all sorts of questions that must be asked about . . .
Even though Symington's bankruptcy is in its infancy, troubling bits of information have begun to seep from it into public view. These discrepancies are, at this point, little more than that--intriguing anomalies.
Because members of my staff are investigating several of these strange facts, I will mention just one here. It will serve to show just how many withering questions the governor could face over the coming months, as fact after fact dribbles out of bankruptcy court.
In his bankruptcy filing, Symington lists a major accounting firm--Coopers & Lybrand LLP--as a creditor. It is not unusual for a bankrupt to owe accountants money. In this case, however, the bankruptcy petition states the amount owed as "unknown."
Now, accounting firms tend to know how much their clients owe them. It is what accounting firms do. They account. So why is it that the governor does not know how much money he owes to Coopers?
That's an interesting question made more intriguing by a little history. Coopers & Lybrand, you will remember, was also the accounting firm that got two contracts, worth $4.6 million, to set up Project SLIM, the governor's program for downsizing government. It was also the firm that paid a $725,000 settlement, and agreed not to do any business with the state for a couple of years, to end an attorney general's investigation into whether those bids were rigged to go to Coopers.
There exists a remarkable memorandum, written by a Coopers & Lybrand executive, suggesting that Symington was in the loop during negotiations on the second Project SLIM contract. That memo is as close to an admission of bid-rigging as I have ever seen in print. When New Times' John Dougherty wrote about the memo months ago, it begged these questions: How much did Symington owe to Coopers before the Project SLIM contracts were awarded? Has any of that amount been forgiven by that firm? If so, when was the bill reduced, and why?
Those questions are raised all over again--in spades--by a bankruptcy filing listing a debt to Coopers & Lybrand that is "unknown." Of course, there may be a simple explanation for this odd "unknown" debt.
But a series of such unknowns, should they become the subject of media scrutiny, could raise the ambient temperature in the governor's office to uncomfortable levels.
Because of the circumstances of this bankruptcy, there are people who are going to be looking very hard, and very publicly, at just these types of discrepancies. These are people who are determined to follow . . .
Symington was forced into bankruptcy by McMorgan & Co., a San Francisco money manager that has been trying to collect an $11 million judgment that a group of union pension funds obtained against Symington. The debt stemmed from loans the pension funds made for the development of the Mercado, a failed downtown minimall.
It is clear that McMorgan is unhappy with our governor. McMorgan doesn't want to believe his net worth is just $61,000. McMorgan, therefore, wants to explore the financial situation of both the governor and his wife, Ann, who was co-guarantor of the pension funds' Mercado loan. Symington contends that his wife's guarantee only extends to her interest in their community estate--meaning that her significant personal wealth is beyond the reach of the pension funds.
McMorgan doesn't much care what the governor contends. The pension funds were set to begin rooting around in Ann Symington's estate when the governor decided to file bankruptcy.
McMorgan has suggested it may assume an adversary role in the bankruptcy court. It may contend that Symington should not be allowed to erase the $11 million debt to the pension funds through bankruptcy. You see, McMorgan claims that Symington submitted a financial statement indicating he had a multimillion-dollar positive net worth to obtain the loans and then, a year and a half later, reported that he was in the hole by millions and millions of dollars.
Those types of financial games are exactly what the U.S. Department of Justice and a grand jury have been investigating for--Lord knows--years now in regard to Symington's borrowing practices. And after months of apparent inaction, the feds are once again looking at Symington-related documents and deals.
So here's the situation, resignation handicappers:
Eleven million dollars in union retirement funds are gone. McMorgan and the unions appear to be especially upset with the governor's media stance, the Symington-as-victim pose. The unions probably think of the workers who lost $11 million as the victims in this little scenario. The unions see a governor who has raked in millions of dollars in development fees over the last decade or so--and now claims to have a net worth approximately equal to mine. They don't buy it.
Deep Throat told Woodward and Bernstein to follow the money. McMorgan & Co. wants to do just that, in a forum--bankruptcy court--that is public. Tax returns, bank accounts--many, many details that Symington has fought to keep private may be thrown into open court records. Meanwhile, the Justice Department will be sniffing around the edges.
The daily press will be hard-pressed to avoid learning newsworthy information about the governor's sorry financial state.
And three or five or eight months down the line, after a lot of grilling by the local and, perhaps, the national press, Fife Symington could well wind up regretting the following quote:
"We in the business community are being hurt every day because people in the rest of the country perceive us as being a state hopelessly mired in political turmoil."
It was published on November 1, 1987, just a few weeks after Symington called on then-governor Evan Mecham to resign.