Critics question grants

Steele had role in disbursement of settlement funds

March 12, 2006|By JENNIFER SKALKA | JENNIFER SKALKA,SUN REPORTER

When the state received a generous settlement from Monumental Life Insurance Co., a Maryland firm accused of race-based pricing policies, there was no discussion about how the money would be spent.

Instead, then-Maryland Insurance Administration Commissioner Alfred W. Redmer Jr. turned to one person for advice about distributing the $250,000 award: Lt. Gov. Michael S. Steele.

What followed was a private exchange that led to four groups receiving surprise checks. Redmer wrote a letter to Steele requesting suggestions about groups worthy of the cash, which was followed by an e-mailed response from a top Steele staffer promoting the lieutenant governor's picks.

The organizations, two each in Prince George's County and Baltimore, were notified of the windfall in letters briefly outlining the details of the Monumental settlement - and identifying Steele as their benefactor.

"On behalf of Lieutenant Governor Michael S. Steele, it is my pleasure to inform you that we have selected the Global Developmental Services for Youth, Inc. to receive $50,000 of the settlement as an unrestricted donation," Redmer wrote in one letter dated Jan. 12, 2004, and sent on Maryland Insurance Administration letterhead.

Similar letters and awards went to three other groups at the same time. The Coppin State University Development Foundation received $50,000, as did the Bowie State University Foundation. The Greater Baltimore Urban League received $100,000.

Steele's office said it did not know why or how the lieutenant governor's name was included on the letters. A spokesman for the lieutenant governor said that decisions about the Monumental money were made by the insurance administration, not by Steele.

Critics say that giving what was essentially state money to groups promoted by Steele raises questions about favoritism and whether a more formal process should have been established for distributing the proceeds.

Del. Rudolph C. Cane, an Eastern Shore Democrat and head of the Legislative Black Caucus, said other needy state schools and groups should have been considered.

"It is unusual for a government official who leads and sets the example for the use of funds in the state of Maryland to be one of the greatest violators of the principle of being fair to the whole state," Cane said. "Partiality has been shown by using state settlement funds to cover his election base."

Other states receiving settlement money spent it in different ways. Kansas created a scholarship fund for minorities, and Pennsylvania placed its cash in the state's general fund so that all taxpayers would benefit.

There are no indications that Maryland's disbursements violated any rules. A consent order gave states broad discretion in how to spend the money.

Steele, now a Republican candidate for U.S. Senate, was not officially seeking higher office when the Monumental money was distributed two years ago. A few months later, he was tapped for a prominent speaking role at the Republican National Convention in New York. His star was then - and is now - on the rise.

Prince George's County and Baltimore are battlegrounds in any race for statewide office, with the state's African-American vote anchored in those communities.

"It's clearly not appropriate for the lieutenant governor to use this as a political slush fund and be doling it out to politically important constituents," said Mary Boyle, press secretary for Common Cause in Washington. "And the question is not at all whether these are worthy causes. This is public money, and why should it be handed over to the lieutenant governor to dole out as he pleases?"

Maryland received a total of $265,000 from a $2 million aggregate payment from Monumental distributed to states. In addition to the four grants, $15,000 went into the general fund for spending on state programs.

The settlement also included about $37 million in adjusted benefits for more than 500,000 policyholders.

Redmer, now chief executive officer of a Delaware health care company, sought Steele's input in a letter dated June 12, 2003. In it, he advised Steele of the settlement and said: "I would appreciate if you could provide me with any names of organizations that might benefit from this contribution."

Zachary McDaniels, deputy chief of staff in Steele's office, listed the four organizations and their contact information in an e-mailed reply. "We are deeply grateful that you have asked for our input on this matter," he wrote.

In an interview, Redmer said he didn't recall whether he sought recommendations from anyone other than Steele.

"He is somebody that I respect," Redmer said. "I admire the guy. I know that he is obviously very active in the African-American community."

Darlene Frank, a spokeswoman for the Maryland Insurance Administration, said that as far as she knows, suggestions were solicited only from Steele.

Redmer said he included Steele in the award letter because he wanted the groups to know that they were recommended by the lieutenant governor.

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