The trust recently received a $193,000 payment from the city to fulfill a life insurance deal that the city agreed to for George Sullivan nearly 30 years ago.
The Anchorage Assembly authorized the payment in a vote Feb. 16. After the vote, Assembly members said they were unaware at the time that Dan Sullivan was administrator of the trust.
The Ethics Board was not asked whether a conflict existed, only whether disclosure was necessary, said chairwoman Marissa Flannery, a private attorney.
The board's letter to Sullivan Tuesday said the mayor should have disclosed a potential conflict when he first presented his father's death certificate to the city benefits department to start processing of the life insurance claim in late 2009.
The mayor should have told the Ethics Board about the potential conflict then because city employees who work under his direction would have to act on the matter, the board said.
Separately, the city attorney's office produced an opinion this week saying the city did have an obligation to pay the money to the George Sullivan Trust.
ASSEMBLY REACTION
Debate on the topic spilled over to this Tuesday's Assembly meeting as the Assembly debated two resolutions to check further into potential conflicts.
Assemblyman Dan Coffey, who wanted the Assembly to let the matter lie, called the effort to continue investigating it political.
"What is there about it other than the politics of it that you want us to keep beating this horse?" said Coffey. "This mayor -- not only did he lose his father but he's getting beat up over something he had nothing to do with. I know politics when I see it and I see it loud and clear here."
In the end, the Assembly defeated one resolution and postponed action on the second one to April 13, while referring it to the Ethics Board in the meantime.
The Ethics Board opinion Tuesday was in response to a request for advice from the mayor last week.
Sullivan said in an interview that he did not know at the time he presented the death certificate that the life insurance payment would come from city coffers.
"The whole time up until a few days before the Assembly took action I thought that the policy was Aetna life insurance and had nothing to do with the city," the mayor said.
Sullivan said he takes the ethics board opinion as "advice to me to be more cautionary when you have even the most remote of relationships or conflicting" roles.
NO FINANCIAL CONFLICT
In a memo to the Ethics Board, Sullivan said he delivered a copy of his father's death certificate to the city benefits department but did not participate in any "municipal discussions, e-mails, deliberations or decisions regarding the $193,000."
The Ethic Board did not formally review whether those steps were "sufficient and appropriate," according to the letter Flannery sent Sullivan.
The board also said Sullivan did not have to report his father's life insurance policy on required financial disclosure forms "because you have no financial or economic interest in the George M. Sullivan Irrevocable Life Insurance Trust."
Assemblyman Harriet Drummond at Tuesday night's Assembly meeting asked for an independent legal review of the insurance deal and of Dan Sullivan's roles as mayor and administrator of the trust. The resolution asks Sullivan to return the money, to be held in a special city account until questions concerning the legality of the payout are resolved. Her resolution is the one that the Assembly Tuesday night postponed until April 13 and referred to the Ethics Board.
2002 INTERNAL DECISION
The insurance deal began in 1982 after George Sullivan left office. The Assembly back then voted to give Sullivan life insurance through the city for life at the same premiums and coverage level he had had as mayor. However, in 2002, Aetna, the city's life insurance carrier, said it had no policy for Sullivan and wouldn't cover him, as he was not an active city employee. The city attorney at the time, Bill Greene, said the city had to continue providing the coverage. Others in the administration of then-Mayor George Wuerch agreed.
The matter did not go to the 2002 Assembly but the Sullivan family continued paying premiums to the city.
Sullivan had paid $19,663 in premiums by the time he died last year.
Deputy city attorney Rhonda Westover said the Sullivan insurance deal is the only one of its kind.
In a legal analysis produced for the Assembly Monday, Westover said the city was obligated to pay the $193,000.
The city accepted payments for 28 years, she noted in her written analysis, "did not take action to disavow the obligation, and decided not to inform the Trust there was no specific policy as of 2002 and again in 2007 and 2008."
The trust was therefore led to rely on the assumption that the insurance was in place, and that's legal justification for it, Westover said.
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