Virginia State Corporation Commission Junie L. Bradshaw signed a charter for a new state bank last month on the day before he appeared before two legislators who also are stockholders in the bank for a hearing on his re-election by the General Assembly to the SCC.
Bradshaw said in an inverview yesterday that the timing of the charter signing was a coincidence. He said that he and SCC Commissioner Preston C. Shannon had decided to approve the new bank several days before he was notified of this hearing appearance. "We told the staff to prepare the papers and I signed them when they came to me in the normal course," he said.
Bradshaw went before the House of Delegates Committee on Banking, Insurance and Corporations on Jan. 19 for a closed hearing on his re-election for a six year term. The chairman of the committee is Del. A. L. Philpott (D-Henry), who is listed in records on file with the SCC as a $2,500 investor in the new bank. Del. William T. Wilson (D-Covington), an organizer and attorney for the new bank, also is a member of the committee.
The House hearing was considered to be a pro form a screening of Bradshaw, whose re-election never was in doubt.
The chartering of the new bank, the State Bank of the Alleghenies in the western Virginia city of Covington, was vigorously opposed by dominant banks in the Covington-Clifton Forgo area. One of these, Covington National Bank, has appealed the SCC action to the Virginia Supreme Court.
Jack Heil, a former Covington newspaper editor, said in an inverview yesterday that directors of Covington National also have paid him to research records of the case for evidence of possible conflict of interest in the granting of the charter.
Virginia law permits General Assembly members, who are part-time public officials, to own interests in businesses regulated by the state. Lawyer legislators, who dominate the Assembly, are allowed to practice before state agencies, including in the SCC.
In addition to Philpott and Wilson, one other legislator, Del. Norman Sisisky (D-Petersburg), is listed as a Bank of the Alleghenies stock subscriber. Also on the stock subscriber list are Kevin T. McGlothlin and J. W. McGlothlin of Grundy, the son and cousin of Del. Donald McGlothlin (D-Grundy).
Joseph W. West, executive vice president of Covington National, said in an interview yesterday that he believes a 1976 change in state banking laws, also approved by the committee on which Philpott and Wilson serve, was helpful to the new bank of obtaining a charter.
The change permitted the SCC to apply a broader "public interest" standard when deciding whether to grant a charter. Previously, the SCC had to make a finding that a new bank would serve "a need and public convenience."
Bradshaw said that the new standard "was not a factor" in granting the bank charter.
The revision had been recommended by Golembe Associates, a Washington consultant that proposed broad changes in Virginia banking laws. Harry Gunther of Golembe Associates said in an interview that the change "was a miner one," recommended because it appeared that the SCC had been adhering "to standards that were too restrictive" in charter cases.
Del. Wilson and others began organizing the new bank in the fall of 1976, several months after the new chartering standard became effective. About 700 persons, three-fourths of them residents of the Covington area, have subscribed about $800,000 to capitalize the new bank.
The SCC in recent years has followed a policy of encouraging bank competition through a liberal branching policy, but has a several cases denied branches to large bank holding companies when it found that a branch would damage a small, independent bank.
The liberal branching recommendations, backed by Branshaw, so far have not been approved by the Assembly. Wilson has benn outspoken in his opposition to the SCC position.
Creation of the new bank in Covington would establish a small competitor for two established banks. Bradshaw said the application was approved "because of the strong evidence of support from resident of the area." He added, "They put on a dog-goned good case for it."
Bradshaw denied an favoritism in the case. He pointed out that two opponents of the charter are among his personal friends - George N. Kostel, chairman of the First National Bank of Clifton Forge and Howard Dobbins, a Richmond lawyer, who represents Covington National.
Kostel served with Bradshaw on the House Corporations Committee for 10 years, Bradshaw said, and Dobbins is a neighbor, a fellow deacon at the Second Baptist Church in Richmond.
Wilson also denied any conflict. He said the question was raised in his last election campaign, "but was rejected by the people of Covington."