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Conflicting interests



Glenda Hood wasn't the only one who needed a truth squad during the recent mayoral campaign. So many rumors, half-truths and cheap shots were uttered over issues ranging from taxes to racism to light rail that voters, much more than the candidates, needed a functioning BS meter.

Among the rumors was that two-time incumbent Glenda Hood had somehow arranged during the late 1980s for SunTrust Bank to forgive a loan owed by the Hood family business. The idea was that Hood had violated state conflict-of-interest laws by using her influence (not as mayor, but as a commissioner) in negotiations with the bank. Nobody has ever said what SunTrust received in return. There's only the notion that bank officials must have winked and nodded at Hood during council meetings when SunTrust had business with the city.

Rumors of the loan first surfaced from callers to AM radio host Doug Guetzloe's show. They might have stayed rumors except that Hood's challenger, Commissioner Bruce Gordy, in what might have been the defining moment of a nasty campaign, said he was taking the high road in not talking about "Guetzloe's allegation about SunTrust loans even though senior SunTrust officers have met with me at their request on this."

There's no use bashing Gordy's odd, self-contradictory nondenial denial, which cost him credibility and began a fight with the Orlando Sentinel over whether he actually spoke to bank officials. Hood's March 14 election victory was enough proof that Gordy should have handled the issue better.

With the election over, the issue for anyone with a curiosity in local politics is the story of the loan. It was never entirely clear whether Hood and her husband, Charlie, received favoritism from SunTrust. Was there a loan? Was it forgiven? Were ethics laws broken? And if so, can constituents do anything about it?

The answer is that, yes, the Hoods did borrow more than $4.42 million from SunBank, which changed its name to SunTrust in 1995. And there's strong evidence Hood Management Services, Charlie Hood's now-defunct company that secured the loans, could not pay back half of the money. But because of the way the state's ethics code is written, it doesn't appear that Glenda Hood violated conflict-of-interest laws -- either by voting on issues involving SunBank (or SunTrust) or by being an elected official whose husband's company had a debt forgiven by a bank that did business with the city.

The proof that Charlie Hood secured the loans comes from documents filed with the Orange County Recorder's Office. Records show that Charlie Hood signed 10 promissory notes for $4.42 million with SunBank National Association, dating from Jan. 30, 1981, to Jan. 21, 1986.

We were hoping Charlie Hood would discuss the loans with the Weekly. He declined, saying he wasn't interested in talking about 10-year-old loans that had no bearing on his present life.

"Frankly, you're truly wasting your time talking to me," Charlie Hood said. He suggested we write a story based on the promissory notes filed as public record.

The problem is, public records don't say when -- or if -- the loans were repaid. In what appears to be a restructuring of the debt from the promissory notes, Charlie Hood signed a mortgage with SunBank in August 1986 that furnished the bank with Orange County property as collateral on the notes. The outstanding loan amount was $3.7 million.

In October 1988, Hood Management Services sold the family business, Hood Tractor Company, for $1.3 million. In October 1990, Hood Management Services sold property it held in Brevard County for $114,058.

Assuming the proceeds from these two sales went to SunBank, what happened to the remaining $2.3 million of the $3.7 million debt?

Other documents show that Charlie Hood's company was faring poorly and could not repay its loans. Kubota Tractor Corporation filed suit in Orange County Circuit Court against Hood and his two business partners, son Charlie III and brother John Hood, alleging that Hood Management Services failed to repay a $330,081 promissory note. If Charlie Hood couldn't repay $330,081, how could he repay $2.3 million?

That's the crux of the argument for critics of Glenda Hood who say the loan must have been forgiven.

But what the critics fail to note is that the state's ethics laws are more liberal -- or less restrictive -- than many people realize. The way the laws are written, Glenda Hood would have done nothing wrong even if the loan was forgiven.

For example, there's nothing precluding Glenda Hood from voting on a company that does business with her husband. The Ethics Commission has ruled a number of times that ethics laws were not violated when a public official voted on issues where a spouse was involved.

In 1985 the commission ruled that a Marion County commissioner was allowed to vote on matters her husband, an attorney, presented to the board. In 1983, the commission ruled that a Miami City Council member could vote on matters involving a hospital even though the council member's husband was a hospital vice president.

More relevant to the Hoods' case, the commission ruled in 1980 that a Duval County school-board member could vote on measures affecting companies doing business with her husband's accounting firm. In the case, the commission pointed out that the husband was not "personally involved with the client" and he would not directly benefit from the wife's vote.

Such is the case with the Hoods. It was, after all, SunBank -- not Hood Management Services -- that appeared before the Orlando City Council. Charlie Hood received no direct benefit, such as a fee or commission, when Glenda Hood voted on issues that affected SunBank.

It should be noted that public officials can benefit from their position in office. They just can't receive a "special private gain." The difference between the two is that a "special" benefit is more obvious, more direct. Glenda Hood could not vote to reward her husband a contract to sell tractors to the city, for example. But she can vote for a contract for the bank that lends Charlie Hood money to purchase tractors wholesale.

The other issue is whether Glenda Hood received some sort of gift in the form of the forgiven loan. State laws outline a number of areas where politicians cannot accept or solicit gifts, secure special privileges or be compensated for doing favors. But none of the three ethics laws that might pertain to Glenda Hood appears to cover her situation.

The Solicitation or Acceptance of Gifts law, for example, says that "no public official, employee of an agency or candidate for nomination shall solicit or accept anything of value including a gift, loan, reward, promise of future employment ... based upon the understanding that the vote, official action or judgment of the public officer, employee, local government attorney or candidate would be influenced thereby."

Look closely at the law. It says nothing about the spouse of an official, candidate or employee. The law governs the behavior of only the government official. And Glenda Hood was not an officer of Hood Management Services, an important distinction according to the Gifts Law.

In any event, the forgiven loan is a moot point unless someone can prove that there was a quid pro quo. In other words, if Glenda Hood's husband received a $2.3 million forgiven loan, SunBank had to have received something tangible, something obvious in return. That is what the Ethics Commission would look for in deciding conflict of interest.

If the bank did forgive the loan, officials received precious little in return. Since September 1984, city commissioners voted approximately 17 times on business affecting SunBank (or SunTrust). Most of the votes were about such mundane things as easements or the allotment of parking spaces.

In January 1992 and again in December 1995 the bank was awarded the General Bank Services Contract, which allows it to cash city payroll checks for 6 or 7 cents per transaction. The contract is hardly lucrative. It is service-oriented, providing SunTrust with no large deposits, substantial fees or commissions. Some banks don't even bother to respond to the city's request for proposal when the contract becomes available. Those that do are awarded a contract that gives them little more than bragging rights.

Further, the contracts were awarded by a selection committee, and all city commissioners voted in favor of the measures.

If SunBank really wanted to be a player in Orlando's money game, it would be custodian of any of the city's three pension funds -- the police, fire or general employee plan. In 1980, the funds were worth $50 million. Today their value is $600 million.

In fact, SunBank was a custodian between June 1987 and February 1995. But the bank lost the job managing 10 to 12 percent of the fund because of poor performance. SunTrust hasn't been involved in the funds since.

Even if it were, selecting the funds is a nonpoliticial process, one almost completely removed from the City Council or Glenda Hood's influence. The funds hire a consultant to narrow down a list of financial institutions. Each of the funds has an independent board composed of 15 people who oversee the selection process and make final decisions on the funds' custodians. Two of the boards, the police and fire, select a custodian without the consent of the City Council. Commissioners approve the general employee fund's custodian but have failed to accept the advice of its board only once in the past 20 years.

The bottom line is that, without further information, no quid pro quo can be established between Hood and SunBank.

But even if there were more information, the statue of limitations has long since run out on the Hood-SunBank transactions. Conflict-of-interest laws cover a five-year time span. Charlie Hood's loans were allegedly forgiven sometime between 1986 and 1993, too late for anyone to do anything with now.

As Charlie Hood himself might say, it's truly a waste of time to try.


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