By New Times Staff
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Ray Stern
By New Times Staff
By Stephen Lemons
By Chris Parker
Lewis testified he had never before granted loans like this in his long career as a banker.
Why did he give Symington such a sweet deal?
"To facilitate the sale of property and to get such cash as we could back," he told the jury.
Prosecutor George Cardona asked about Symington's financial statement.
Lewis testified that he never looked at it because it wasn't needed.
"The primary purpose of the loan was to get money from Shimizu," Lewis said.
Southwest Savings recovered about $26 million of its investment when Shimizu purchased the land beneath the Esplanade's two office towers and the Ritz-Carlton hotel. That left the thrift on the hook for $30 million, plus accumulating interest.
The loans to Symington's partnerships were a pittance to Southwest Savings. Lewis testified that the interest earnings Southwest could get on the $26 million Shimizu paid for the land would eclipse the amount of the loans to Symington in just four months--making it a good deal for Southwest Savings even if Symington never repaid the loans.
And Symington didn't repay the loans--he got Shimizu to repay them a few years later, after he became governor.
Robert Hunt is the chairman of one of America's biggest contracting companies, HuntCor, Inc. His company has built such notable projects as the Superdome in New Orleans and America West Arena. It is currently building Bank One Ballpark in downtown Phoenix.
With 50 years of construction experience under his belt, Hunt has seen all kinds of developers. He quickly recognized Symington's game of borrowing money to pay off his personal obligations.
Symington hired HuntCor to be the construction manager for the Camelback Esplanade, a project that could be worth millions for HuntCor.
In August 1985, Symington was embroiled in a nasty dispute with an Esplanade business partner, I. Jerome Hirsch. Symington wanted Hirsch out of the project, but Hirsch wouldn't go unless there was plenty of cash incentive.
As usual, Symington couldn't pay. So he asked Hunt for a short-term loan of $1.8 million that he would use to pay off Hirsch.
Hunt's company already was working for Symington in the predevelopment phase of the project. If Symington couldn't settle with Hirsch, the whole deal could be jeopardized, and HuntCor could lose a multimillion-dollar construction-management contract.
So Hunt made the loan. And he did so without looking at Symington's financial statements.
"I strictly looked at collateral," Hunt testified.
The collateral was half of Symington's share in the development phase of the Esplanade, equivalent to a 10 percent stake in the project.
Symington soon came calling again. This time he asked for another $400,000 to cover additional payments to Hirsch because a termination agreement between Symington and Hirsch had not yet been signed.
Hunt agreed to advance the money, but did so reluctantly, according to documents presented to the jury.
On December 4, 1985, the same day Hunt lent Symington the additional $400,000, Hunt sent Symington a terse letter making it clear that no more money would be forthcoming.
"We will NOT make any more capital contributions, loans, or letters of credit, or any other financial commitments to Phase I of the Esplanade project over and above what we have concluded as of this date," Hunt's letter stated. To emphasize the point, Hunt underlined the entire paragraph.
But Hunt wasn't finished.
"If there is any additional financing, short-term loans, letters of credit, or whatever needed, please don't knock on my door," he wrote.
Just in case Symington didn't get the message, Hunt concluded, "I surely hope the project can proceed as we have discussed, but as I have told you, we have reached the end of our financial rope insofar as financing of the project is concerned."
Hunt testified he expected Symington to repay the loan, in cash. Symington did not repay the loan.
Instead, Hunt obtained 50 percent of Symington's share in the Esplanade project--and by this time Symington's position had slipped so far that he was required to pay Southwest Savings about $56 million before other partners would see a dime of profit.
The Esplanade continued its slide into financial oblivion in the ensuing years, eventually forcing Hunt to write off the $2.25 million lent to Symington.
Despite the fact that Symington had cost their companies millions, both Lewis and Hunt expressed admiration for the governor and said they believed that Symington is an honest businessman.
After four weeks of testimony, their positive assessments of the governor and testimony of their willingness to lend Symington millions of dollars without studying his personal financial statement have been rare bright spots for the defense.
But a dominant theme has emerged for trial observers who've managed to follow the jumble of loan papers, financial statements and broken promises: Fife Symington had an uncanny knack for getting people to lend him money. He also had a habit of not repaying those loans.
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