Bank calls Pascal's bid for board unethical Baltimore Bancorp's suit cites duties as state official

May 11, 1991|By David Conn

The parent of the Bank of Baltimore yesterday launched an indirect attack in its proxy war against a group of dissident shareholders by filing a lawsuit alleging ethics law violations against one member of the group, a close aide to Gov. William Donald Schaefer.

A day after publishing advertisements in local newspapers that said the dissidents lacked banking expertise, Baltimore Bancorp filed a lawsuit yesterday against Robert A. Pascal, the chairman of United Propane Inc. and Mr. Schaefer's appointments secretary.

The suit, filed in Baltimore City Circuit Court, says that as the appointments secretary, Mr. Pascal "has the power to influence regulation of . . . the Bank of Baltimore, or at least to influence the executive personnel who regulate that state-chartered bank" and that his election to Baltimore Bancorp's board of directors would breach the Maryland public ethics law.

The lawsuit seeks an injunction against Mr. Pascal's election to the board of the bank company while he continues to serve as appointments secretary to the governor.

In that position, Mr. Pascal "manages the process by which the governor makes appointments to staff positions in executive and other agencies, as well as to state boards and commissions," including the state Bank Commissioner, the lawsuit states.

In a more direct attack, the bank company also said it had filed a letter with the Board of Governors of the Federal Reserve System questioning whether the dissident shareholder group had complied with federal banking laws

in their attempt to take over the board of the company.

"Normally, people seeking to acquire control of a banking institution file a notice for prior clearance under the Change in Bank Control Act," Harry L. Robinson, chairman and chief executive of Baltimore Bancorp, said in a statement.

"We are surprised that the . . . group has failed to do so and are seriously concerned that the election of the group's nominees as directors, without prior notice to and approval from the Federal Reserve, would violate federal law."

Mr. Pascal is on a slate of 16 shareholders trying to take over Baltimore Bancorp.

The group is headed by Edwin F. Hale Sr., head of Hale Container Line Inc. and owner of the Baltimore Blast soccer team.

Mr. Hale said last night that the state ethics commission told Mr. Pascal informally that his election to the board would not violate any ethics rules and would represent no conflict of interest.

"It looks like they're only doing this to block a shareholders' vote," Mr. Hale said. "They're afraid to have an election."

A spokesman for Mr. Hale, Stanley J. Kay, added, "We firmly believe that we are in compliance with all federal and state banking regulations concerning our nominees and all other issues in this proxy fight."

The group launched the proxy fight earlier this year, reportedly because of their dissatisfaction with the company's rejection of a $17-a-share buyout bid last year from First Maryland Bancorp.

Before First Maryland's April 1990 offer, Baltimore Bancorp stock traded at $10.25 a share. The stock ultimately reached $15.25 a share, and then fell to below $4 after the offer was rescinded. The stock closed yesterday at $8.75 a share, up 12 1/2 cents.

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