Advice to TGH renews accountability debate

The counsel of TGH board member James Warren III could open a door for his employer.

By DAVID KARP

© St. Petersburg Times, published May 5, 2000

TAMPA -- At the last meeting of Tampa General's finance committee, hospital board member James Warren III showed up with something to discuss.

Warren, a first vice president at Solomon Smith Barney, is not a member of the finance committee but wanted to attend the meeting anyway.

The finance committee was set to select one company to manage the hospital's investments and pension fund for its 3,000 employees. Hospital administrators had recommended that the job go to CapTrust Financial Inc., but one of the two other companies also seeking the job happened to be Warren's employer:

Smith Barney.

Without mentioning his firm's name, Warren argued that the hospital should consider whether it needed the type of services CapTrust Financial was offering. He asked the committee to restructure the deal to avoid paying for investment adviser services, such as the services CapTrust Financial wanted to provide.

In an interview this week, Warren said he didn't know the contract issue was on the agenda that day. He said his suggestion was not intended to help his firm win the contract.

"I did it in the interest of the financial well being of the hospital," Warren said. "I don't care who gets it. It doesn't matter to me."

He said he was only offering another way to structure the deal and told the committee it should invite more requests for proposals from other firms.

But Warren's suggestion could also be seen as helping Smith Barney's chances. CapTrust Financial was offering the type of investment adviser services that Warren said aren't needed.

Now a decision on the contract has been delayed, and the hospital board could re-open the process to other bidders.

County commissioners, who have been pushing to open Tampa General's inner workings to public scrutiny, said Warren's involvement would have never happened in an open setting.

"When you meet out of the sunshine, there is no way to account for decisions," Commissioner Jan Platt said. "They are not accountable -- and that has been the problem all along."

The hospital, which converted from a public hospital to a private non-profit in 1997 to avoid Florida's Government-in-the-Sunshine laws, has been fighting a lawsuit to open its meetings to the public.

Its board on Thursday also told commissioners that it would not accept a proposal to give the commission more oversight over the hospital. The Legislature today is expected to pass a package of bills giving TGH about $23-million in taxpayer dollars.

"The more open the meetings are, the less suspicion there is about the way things are run," Commissioner Pat Frank said.

But hospital board members said people have no good reason to suspect Warren's involvement in the contract.

"We had a very valuable board member who offered his own expertise based on his own experience," said hospital attorney Jim Kennedy, who attended the meeting. "That is exactly what you want."

Warren argued that the hospital did not need to pay for an investment adviser, who would then hire another firm to actually invest TGH's funds. The hospital only needed to hire a money manager, he said.

"He was concerned about a duplication of funds," board member Jim Jimenez said. "I don't think there is an insider game going on."

At the meeting, Warren asked Kennedy to draft a conflict-of-interest statement for him. "He preceded everything by saying, "You guys know I work for Smith Barney,' " Jimenez said.

After being contacted by the Times, Warren said he would abstain from voting on the contract.

Monty Humble, an attorney who specializes in non-profit corporate work, said there's disagreement about whether a board member should participate in meetings about an contract that might financially benefit him.

"People are all over the lot on that issue," Humble said. "Some people say he is influencing the board, and other people say here is the guy who knows the most."

It's clear, though, that non-profit board members should file conflict-of-interest statements and abstain from voting on issues that might benefit them, Humble said.

Kennedy said Tampa General's conflict policy follows the Internal Revenue Service's rules. The board's bylaws comply with Florida law, which requires board members to disclose conflicts.

But Kennedy would not provide the Times with the policy, even though board member Dr. Margarita Cancio had asked Kennedy for permission to release the policy and her disclosure statement to the Times.

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