For Immediate Release: : April 8, 1996
For Further Information Contact: Rene Parker or Rich Dubois at firstname.lastname@example.org or Telephone (617) 441-2900
Boston -- The Center for Insurance Research made demand today of the board of directors of the John Hancock Mutual Life Insurance Company on behalf of a representative policyholder seeking changes in corporate structure and reimbursement to Hancock by the board for the millions in dollars in losses resulting from the company's illegal lobbying activities.
The policyholder demand, served on the board of directors at Hancock's annual meeting in Boston today, also calls for the identification and removal of corporate directors, officers and employees responsible for approving or condoning the illegal activities, which resulted in $1.01 million in fines by the Department of Justice and the State Ethics Commission in 1994.
"Two years after one of the darkest episodes in Hancock's 134 year history, the Board of Directors has still failed to hold accountable all responsible directors, officers and employees for its million dollars in losses, and has failed to address the problem that Hancock is run by a totally insulated, unaccountable, and self-perpetuating Board which accounts for this illegal conduct," said Jason Adkins, executive director of the Center for Insurance Research.
According to the demand letter, "the evidence supports a claim that the Board knew or should have known about the illegal conduct of its chief lobbyist, F. William Sawyer, and executives. The board breached its duty [to Hancock policyholders] in failing to exercise reasonable and prudent supervision over the management, policies, practices and controls over the affairs of Hancock in the critical area of influence peddling."
The 12 page demand letter further states: "the Board of Directors appropriately admitted guilt for Hancock's engagement in a 'scheme to defraud the public of its right to the honest services of one or more members of the Massachusetts legislature.' Although settlement of the claims with the United States Attorney's Office and the State Ethics Commission was appropriate, Hancock has not held accountable all responsible directors, officers and employees for its losses, nor addressed the problem that Hancock is run by a totally insulated, unaccountable, and self-perpetuating board of directors."
The policyholder letter presents 13 demands for action by Hancock's Board to ensure the accountability of the Company to policyholders; to restore and maintain the good name of John Hancock; and to reimburse Hancock for any and all costs resulting from the illegal lobbying activities.
John Hancock is one of the top six insurance companies in the country with over $50 billion in assets, policyholders in all 50 states, foreign business, 10,000 employees, and ownership in 120 subsidiaries. Hancock is the largest insurer in Massachusetts. Because the company is chartered and headquartered in Massachusetts, the Commonwealth serves as Hancock's primary regulator. The Massachusetts laws and legislature are more important to Hancock than the laws and legislature of any other state. Hundreds of bills pass through the Massachusetts legislature many of which could have significant impact on John Hancock.
"Given the importance of the Commonwealth to its corporate operations, Hancock's chief lobbyist chose not to rely simply on the merits of the company's arguments before the legislature," said Adkins. "Rather, he relied on the routine corporate practice of providing illegal gifts to key legislators in the form of meals, theater and sports tickets, golf, and hotel rooms around the country. Such gifts even included an all-expense paid trip to the Super Bowl for the insurance committee chairman," Adkins said.
"Not only did the Board and officers denigrate one of the greatest names in American history, but the tallest building in Boston is now also the most visible symbol of political corruption in the Commonwealth." The good name and value of the policyholder-owned mutual company must be returned to policyholders and management must be prevented from undermining democratic processes both within and outside the company," he said. "Compliance with the policyholder demands served on the Board today will restore the John Hancock Mutual Life Insurance Company to good standing."