In some sense, Mike McGavick took his first political bribe before he even swung into full campaign mode earlier this year. McGavick resigned last year as the CEO of Safeco Insurance Company in order to challenge Maria Cantwell for her Senate seat. In the process, he walked off with $28 million in bonuses and stock options.
Think about it. McGavick—a former lobbyist for the insurance industry—is paid by the insurance company he heads some $28 million to quit his job and become a Senator. “Win-win,” right?
To you and me that kind of a deal has the stench of corruption, both because of the potential for back-room agreements and because of the way it cleverly bypasses campaign finance laws:
Technically, Safeco is constrained by the same campaign finance limits as you or I, but insurance industry lobbyist cum CEO cum senate candidate McGavick is free to spend as much on his own campaign as his new-found personal fortune affords him. How convenient.
But not everyone sees this as a political scandal. Take, for example, 27 year old Emma Schwartzman. Today she filed a lawsuit against McGavick over his “excessive” severance package.
To Ms. Schwartzman this is not about politics. Instead, it is about theft. And it’s about family honor. Specifically, it’s about McGavick stealing from Safeco—a company founded by her great, great grandfather—and its shareholders.
In her own words:
Our lawsuit alleges that Mike McGavick didn’t earn the $28 million, he knew he wasn’t entitled to it, but he took it anyway.
I have brought this lawsuit to protect the assets and integrity of Safeco Corporation—a company that is important to me, my family, and my community.
My great, great grandfather was a founder of General Insurance Company, which later became Safeco. My great grandmother sat on the board and was an adviser to the company in its early years—at a time when most women had little role in corporate affairs. I own original shares passed down to me from my great great grandfather.
I have always been proud of my family’s role in building Safeco into a major employer in our state and a trusted member of the business community.
But under Mike McGavick’s leadership, Safeco lost its ethical compass. His greed has diminished the value of my investment and, more importantly, the ethical values of this great company.
As expected, the McGavick campaign responded with charges of “Political Smear!”
This is a politically motivated character attack. The allies of the incumbent senator have found yet another avenue to continue their daily personal attacks on me. […] These allegations regarding my compensation are without merit and obviously politically inspired.
Are the charges politically inspired, or contractually inspired? Here is the rationale for the lawsuit given by Ms. Schwartzman’s lawyers:
When McGavick became Safeco’s CEO in 2001, he drove a hard bargain. In addition to an annual compensation package worth as much as eight million dollars, McGavick also bargained for a “golden parachute” provision. This meant that if McGavick were fired, he would receive a multi-million dollar termination payment.
But Mike McGavick did not get fired from Safeco; he voluntarily resigned. And his employment contract clearly stated that if he resigned he would forfeit his right to a big payout. He would forfeit all compensation, including bonuses and stock options, and would get only his last paycheck. These employment contracts are quoted in the complaint, included in your packets, and posted on our website.
Instead of resigning from Safeco with his final paycheck, as his contract clearly provided, McGavick walked away with $28 million.
This lawsuit will prove that this $28 million payment was improper and fraudulent on numerous counts, and McGavick acted dishonestly and unethically in bargaining for and receiving this payment.
Just how did the
bribe severance agreement circumvent McGavick’s contract?