Private sector compensation enters Mass. gov. race

By Glen Johnson
AP Political Writer / October 21, 2010

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NEWTON, Mass.—The Republican challengers in the Massachusetts gubernatorial race struck back at Democrat Deval Patrick on Thursday, saying his criticism of the hefty private sector salary paid to GOP candidate Charles Baker ignores the governor's own big earnings while he worked for Fortune 500 companies.

Baker and running mate Richard Tisei said it also glosses over Patrick's leadership at Ameriquest, a lender that turned out to be one of the biggest players in not only the subprime mortgage crisis, but the national recession it fueled.

The governor has spent much of the past four years leading a cash-strapped state through the fallout.

"Totally hypocritical," Tisei said during a news conference outside the Statehouse, noting the nearly $10 million Patrick was paid during his four years as general counsel at Coca-Cola Co., as well as the $360,000 annually he received during his two years as a board member of ACC Capital Holdings, the parent company of Ameriquest.

"If the governor is out there criticizing Charlie for his role at Harvard Pilgrim (Health Care), where he took a company that was in receivership, turned it into one of the best health care organizations in the country, ... I think it's fair game to take a look at what the governor did in the corporate world," said Tisei, a state senator from Wakefield.

Patrick dismissed the complaint.

"My criticism of Charlie is that he raised (premium) rates 150 percent while he was head of Harvard Pilgrim," the governor said. "When we stood up against the insurance companies this year, to try to bring some moderation to that, what did he do? He stood on the sidelines and did nothing while these rates continued up. And I think that's fair game."

Patrick and his running mate, Lt. Gov. Timothy Murray, have been running a television commercial making that point: that Baker's annual salary rose from $500,000 to $1.7 million during the decade he headed Harvard Pilgrim -- the state's second-largest private insurer -- while premiums increased 150 percent.

Murray, however, has been more tart in speeches for more than a year. He has blasted the salary, taunted Baker by noting his middle name and seaside hometown, and suggested Baker is out of touch with average Bay State residents.

Baker has responded by highlighting his turnaround at Harvard Pilgrim, as well as surveys naming the company as the top insurer in terms of customer satisfaction. One of his ads also notes that the Patrick administration approved several of the premium increases the governor now criticizes.

The debate sharpened this winter when Patrick's Division of Insurance unilaterally capped the premiums insurers could charges small businesses. The governor said holding down rates would promote job growth. Insurers, including Harvard Pilgrim, complained the governor was putting them at an economic disadvantage by not enforcing a similar cap on the people they must pay: health care providers such as hospitals and doctors.

Baker and Tisei accused the governor of enacting the cap to score political points and force Baker to defend his industry background during the campaign.

Patrick's tenure with Ameriquest was raised during his first campaign in 2006, when Democratic opponent Tom Reilly criticized the future governor for working at ACC Capital Holdings. Patrick said he was brought in to help the company reform its practices, in part by crafting a $325 million predatory lending settlement with Reilly and other state attorneys general.

Yet just weeks after Patrick was inaugurated as governor, he placed a phone call to former Treasury secretary Robert Rubin, then a top official at Citigroup, trying to arrange a cash infusion to stabilize Ameriquest.

At the time, a gubernatorial spokesman said Patrick vouched for the "current management and the character of the company." Citigroup, through an array of subsidiaries, had numerous financial interests in the state, from bond work to credit card legislation.

The governor later branded the conversation a "mistake," adding, "I appreciate that I should not have made the call."

Meanwhile, a lawsuit filed in Illinois in January 2009 alleges that Patrick and the board's other directors, in 2005, approved a $50 million severance package with Ameriquest's chief executive officer as a form of "hush money" over the company's fraudulent practices.

The Baker campaign said in a statement Thursday: "Why is his campaign covering up his management role there now, when, as one of just five board members, he claimed in 2006 that he played a major role in fixing the company?"

Patrick replied: "We have gone over that multiple times. We did a lot of good work there and there was an awful lot that happened in that industry which was not good, as you know, and that's all I got to say about that."

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