Outside the blind trusts he created to avoid a conflict of interest, Senate Majority Leader Bill Frist earned tens of thousands of dollars from stock in a family-founded hospital chain largely controlled by his brother, documents show.
The Tennessee Republican, whose sale this summer of Hospital Corporation of America Inc. stock is under federal investigation, has long said he could own HCA shares and vote on health care legislation without a conflict because he had placed the stock in blind trusts approved by the Senate.
However, ethics experts say a partnership arrangement shown in documents obtained by the Associated Press raises serious doubts about whether the senator truly avoided a conflict.
HCA stock in the documents was accumulated by a family investment partnership started by the senator's late parents and later overseen by his brother, Thomas Frist Jr. The brother served as president of the partnership's management company and as a top officer of HCA. The senator holds no position with the company.
The senator's share of the partnership was placed in a Tennessee blind trust between 1998 and 2002, separate from those governed by Senate ethics rules. Frist reported that Bowling Avenue Partners, made up mostly of non-public HCA stock, earned him $265,495 in dividends and other income over the four years.
Edmond M. Ianni, a former Wilmington, Del., bank executive who established blind trusts for corporate executives, questioned why the senator's brother was able to manage assets "when the whole purpose of a blind trust is to ensure lack of not only conflict of interest but appearance of conflict of interest."
Kathleen Clark, a government ethics expert at the Washington University in St. Louis School of Law, said she does not believe the Senate trusts or the Tennessee trust insulated Frist from a conflict because the senator or his brother was advised of transactions and could influence decisions.
Frist's interest in Bowling Avenue Partners and the Tennessee blind trust was listed on annual disclosure reports he filed with the Senate. Thomas Frist's ability to influence HCA stock decisions in the partnership was detailed in separate trust and partnership documents obtained by the AP.
The Frists' father and Thomas Frist founded HCA, the nation's largest for-profit hospital chain.
Frist lawyers confirmed that the senator's brother could influence investment decisions in the Bowling Avenue partnership and said the partnership was placed in a Tennessee trust because Senate ethics rules did not allow the non-public HCA shares to be included in Senate-approved trusts.
"His interests in the family partnership were not held by his Senate blind trusts because Senate rules did not permit it. Senator Frist did not control the assets in this partnership and he annually disclosed his interests to the public as required," Frist spokesman Bob Stevenson said.