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THE GOVERNOR'S 800-POUND GORILLA

Page 10 of 13

And it worked.
The Washington, D.C., politicians were ignorant, absent or partisan. Under the headline, "Symington enjoyed gentle treatment from House panel," Kim Kelliher of the Arizona Daily Star analyzed the governor's Congressional appearance on February 20.

Describing the uninformed questions of the subcommittee chair, Representative Carroll Hubbard, Democrat from Kentucky, Kelliher wrote, ". . . the 18-year veteran of Congress admitted later that he had not studied the lawsuit or read the complaint."

The other representatives on the committee, all Republican, were described lobbing softballs to the governor.

"For instance," wrote Kelliher, "Representative Frank Riggs, a freshman Republican from California, began his dialogue by asking the governor to expound upon his years as a 'successful real estate developer.'"
Headlines throughout Arizona declared Symington the victor over Congress: "Symington takes on Capitol Hill," "Self-dealing charges against governor put to rest at hearing," "Symington alleges panel chairman biased," "Symington defends role with S&L, berates RTC."

Reporters were now covering the Southwest story as if the Congressional probe was a conspiracy of Democrats to embarrass the Republican Symington. In all honesty, much of the press coverage of Symington and Southwest has been on a par with Congressional questioning.

When the damaging RTC memo was leaked to the Washington Post, local papers did syndicate the bombshell story. But the Arizona Republic also turned over to the governor its Sunday opinion section, Perspective, so that Symington could write a lengthy reply characterized by its misleading irrelevance to the regulators' criticism.

Little wonder, then, that several months afterward, when Dowd went after the head of reporter Mary Jo Pitzl, the lawyer was quick to kiss the ring of Republic editors who have been cited nationally for their fawning coverage of the governor: ". . . Fife Symington believes he has always been treated fairly by the editorial section and editors of your paper."

Although John Dougherty at the Mesa Tribune has resumed looking into the governor's business dealings recently, the remainder of the media, from the state's largest daily to its weekly, has been largely silent on Symington's financial affairs.

Cowed by Dowd's campaign of intimidation and put off by the complexities of financial reporting--the longest article in the Arizona Republic on the Southwest collapse has been Symington's self-defense--journalists Mary Jo Pitzl and Kim Sue Lia Perkes were able to say, quite accurately, at a recent media round table that the story of the RTC and Symington had largely disappeared from the press.

Even the MacNeil/Lehrer show that got me my threatening letter from Dowd was far from being a penetrating look at Symington's role in the collapse of Southwest Savings. The comments on PBS were a mere sound bite in a telecast focused upon Arizona's larger-than-average share of misfortunes.

On June 9, on the MacNeil/Lehrer NewsHour, I said of Symington: "Here was a guy who, while he sat on the board of an S&L arranged for that S&L to give him the largest single loan in its history, okay. And with a total investment of $400 on his part, he then cut himself checks for approximately $4 to $5 million; erected a white elephant that sits primarily vacant, okay; has gone into default, dragged the S&L down with it . . ."

In his letter of demand for retraction, Dowd pounced on my characterization of the deal as a loan in default.

And he is correct.
In his Congressional appearance last winter, Symington informed the committee: "The RTC alleged that the Camelback project was Southwest's largest 'borrower.' It was this allegation that I stated was blatantly false. The Camelback project is not a 'borrower' transaction. It is a joint venture that was set up to acquire and develop the Camelback Esplanade. Southwest is an equity partner. As such, the Camelback project represented Southwest's largest 'investment' up to that time."

But Symington and Dowd are trying to take our eyes off the ball when they ask us to focus upon this distinction. The collapse of Southwest Savings and the $197 million lawsuit by the RTC that targets Symington are not matters that hinge upon the characterization of the financial instrument--loan or investment--though it is an investment.

The lawsuit points out Southwest sank $31.25 million into land acquisition for the Esplanade and another $23 million for zoning, planning and architectural costs. Millions more went into capitalized interest. When Southwest collapsed, the Esplanade and Symington deal represented the S&L's largest single loss, $40 million according to the RTC.

Not only did Symington and Southwest flout industry regulations, the lawsuit charges that Symington screwed Southwest and its depositors on the terms of the deal.

"The joint venture was inherently unsafe and unfair to Southwest [which] assumed virtually all of the risk of project failure but stood to receive only half the profits from the sale of the land. "At the same time Symington and his partner [Jerome] Hirsch put up a total of $432 yet stood to make 38 percent of the profits."
In other words, the S&L advanced $54 million plus millions more in interest, but got only 50 percent of the deal, while Symington and his partner put up $432 and took 38 percent. (The remaining 12 percent went to the original owner of the land.)

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Michael Lacey
Contact: Michael Lacey