When Alex Sink became Florida's top financial watchdog almost three years ago, she put her assets in a blind trust, which she said would help her avoid conflicts of interest.
Yet Sink's effort to avoid potential conflicts and hold herself to a self-proclaimed higher standard has an unintended consequence: There is less public disclosure about her finances than other officials and greater uncertainty as to whether she is deciding matters in which she may have a financial interest.
Why? Because blind trusts are not regulated in Florida, and there are no rules guaranteeing that officeholders' financial dealings are being handled independent of their public duties.
In fact, the Florida Commission on Ethics once ruled that one of Sink's predecessors could not avoid conflicts of interest by creating a blind trust and parking his financial holdings in it.
Now a candidate for governor, Sink dismisses the reasoning, saying her blind trust is still the best way to go above and beyond the state's ethics laws. "It's blind because I don't know what's in there.
"I'm damned if I do and damned if I don't,'' she lamented. "I think I deserve a lot of credit for doing something that I wasn't even required to do, doing the right thing, and not wanting there to be any question for people to believe that I have integrity and that I'm making the best decisions I possibly can."
Sink spent 26 years in banking, retiring in 2000 as head of Bank of America's Florida operations. That year, she made $3.4 million from the bank in salary, pension, deferred compensation and stock grants.
Now 61, she is half of a Democratic power couple. Her husband, Bill McBride, is a corporate lawyer who lost to Jeb Bush in the 2002 governor's race.
She was McBride's key adviser, learned from his loss and won statewide office in November 2006.
As chief financial officer, Sink manages billions of dollars that annually flow into the state treasury. She sets policy as a member of Florida's Cabinet and serves as a trustee overseeing $120 billion in public investments. And she is the self-described "voice of the people'' on banking and insurance matters.
During the 2006 campaign, she listed her net worth as $10 million, and she knew her holdings presented potential conflicts.
She owned stock in Bank of America, which receives millions in banking, bond and investment fees from Florida every year. She had investments in other companies that could benefit from actions she might take. And she had served on the board of Raymond James Financial, a St. Petersburg-based brokerage firm that had a stake in her decisions.
So Sink put her assets into a blind trust. Driving her decision, she says, was the controversy that dogged then-CFO Tom Gallagher.
After press reports that he traded stock in companies that had contracts with the state or were regulated by his office, the ethics commission found probable cause that Gallagher's investments violated state law. The commission ultimately dropped the charges because he owned less than 1 percent of the companies' shares of stock.
With the "Gallagher situation'' weighing on her, "I just thought … 'I'm going to just take this off the table,' '' Sink said.
"I didn't want to get into office and every time I'm in the Cabinet meeting and somebody comes up with an issue, you just have to sit there and say, 'Uhhhh, do I have that stock,' or, 'Am I invested in this company?'
"I just wanted to just not worry about it. . . . I don't even have to think about it 'cause I don't know anything.''
When the St. Petersburg Times asked for a copy of her blind trust agreement last year, Sink did not produce it. Her office later said it was not a public document.
In June, after she announced for governor and the Times again requested it, Sink released a copy.
Blind trust banned
In 1991, one of Sink's predecessors, Gerald Lewis, inherited bank stock from his mother. Because the stock was in companies that had operations regulated by Lewis, he asked the Florida Commission on Ethics if he could avoid the potential conflict of interest by putting his personal assets in a blind trust.
Lewis proposed a laundry list of strict steps to make the proposed trust truly blind, including picking independent trustees and submitting the proposed trust to the commission for its approval.
The commission said no.
Though a blind trust was a "laudable'' idea, the ethics commission said, it does not have the "authority to, in effect, legislate an entirely new concept into the ethics laws of the state.''
What's more, the commission wrote, such a trust would circumvent state conflict of interest laws: "We find that (Lewis) may not avoid a prohibited conflict of interest . . . by establishing a 'blind trust.' "
Philip Claypool, the executive director and general counsel of the Florida Commission on Ethics, would not comment on the specifics of Sink's case. But he says the law has not changed since the Lewis opinion.
"Unlike federal laws and those of a number of states,'' he said, "Florida's ethics laws do not mention and do not contemplate the concept of a blind trust for a public official.''
And with no rules, he said, "the people of Florida would have no guarantee that the trust was completely blind.''
The Fasano bill
In late 2006, prompted by the Gallagher stock controversy, the state ethics commission recommended that the Legislature require that the five statewide elected officers put their stocks and bonds into publicly traded mutual funds or a "qualified'' blind trust.
Championing the legislation was Sen. Mike Fasano, a Republican from New Port Richey. Fasano supported Charlie Crist over Gallagher in the Republican gubernatorial primary.
Sink signed her blind trust agreement Dec. 28, 2006.
"We were anticipating that the Legislature was going to pass a requirement, and we wanted to be consistent with what their intent was,'' Sink said.
The lawyer who set up Sink's blind trust, Robert Waltuch, said he was unaware of the ethics commission opinion on Gerald Lewis, but he said it wouldn't have made any difference. Waltuch said he organized the trust based on the pending legislation. "We thought it was going to cover us.''
Sink's trust does not meet several key provisions of the bill, which was amended and ultimately died in the 2007 legislative session. For example:
• A listing of the assets originally placed in the trust would have been required.
She did include a list in her blind trust, but it detailed only some assets. It did not name the specific stocks and bonds in two accounts that contain the bulk of the trust assets.
Sink said that what went into her blind trust is substantially what she reported on a financial disclosure statement she filed six months before. Among other holdings, it listed two accounts that contained $4.9 million in assets, including stock in Bank of America and Raymond James.
What's more, simply moving large amounts of money into a blind trust does not magically erase the knowledge of what you own.
Kenneth Gross, a Washington lawyer who has advised many national politicians on blind trusts, explains a similar federal rule that governs executive branch officials.
"You're tagged with the knowledge of whatever you put in the blind trust,'' Gross said. "If the stock happens to be purchased after, then it's not a problem. But if it's a stock you own, you can't just blind it by putting it into the trust.''
Sink doesn't see it that way. "I don't know that it's in there,'' she said. "I don't know what's in there.''
• A trustee must be a "disinterested party.'' A relative or a spouse of a relative cannot be a trustee.
Sink's trust is not run by relatives. But her trustees are political allies with ties to her husband.
Overseeing the trust is Robert Bolt, her husband's law partner. Bolt and his wife donated a total of $5,000 to political campaigns of Sink and McBride.
Waltuch, who wrote the trust agreement and serves as a trustee, was a partner at Holland & Knight when McBride ran the law firm. Waltuch recently joined Shutts & Bowen, which has represented a range of financial clients and also has a lobbying operation in Tallahassee.
Trustee Jerry Williams, who founded an investment bank in Tampa, is a friend of McBride. Williams and McBride serve on the advisory board of an investment banking firm.
Alan Fisk, an original trustee, is Sink's longtime accountant and handles her taxes and financial disclosure forms. He donated $750 to her campaigns, and his wife, Joyce, a former vice president of Bank of America, donated $1,000. He said he was "not independent'' of Sink because he controlled assets in the trust that are included on the financial disclosure form that he also prepares.
Banker/investor Hjalma Johnson recently replaced Fisk as a trustee. Johnson serves on the same investment board with Williams and McBride.
He is past president of the American Bankers Association and the Florida Bankers Association. A major political donor, he says he has known every president from Richard Nixon through George W. Bush and lobbies for banks in Washington.
With her husband's associates running the trust, can it be independent?
"You just have to trust the integrity of the people involved, and the spirit in which it was created,'' Bolt said. "We're reputable people, we're honest people, we don't engage in shams.''
Said Sink: "I mean, these are lawyers and . . . they're abiding by the legal application of what the trustee is.''
Also, "I was just not going to put my money with people I didn't know.''
Her trustees work for free, but Sink said setting up the trust cost her about $100,000 in legal and accounting fees.
"It was a very expensive undertaking,'' she said. "But I think it was the right thing to do.''
Blind trusts sound good but can run afoul of state laws requiring public officials to disclose their personal finances.
Florida requires "a full and public disclosure of financial interests,'' every year, of any asset, liability or income source of more than $1,000.
In 2007, Sink's financial disclosure included an entry for $927,678 of income. The source of that income: her blind trust.
In other words, without the state ethics commission or any outsider certifying that her trust is truly blind, Sink reported a lump sum income of nearly $1 million without providing any specifics.
The ethics commission instructs office holders that they must list each individual company from which they received more than $1,000 in dividend or interest income "rather than aggregating income from all of these investments.''
The commission has never ruled on whether a lump-sum income statement from a blind trust, like the one Sink provided, meets the disclosure law.
Sink says she has met the requirements.
Florida allows another way to satisfy disclosure rules: The official can release her income tax returns. Sink has not made her tax returns public since she has been CFO.
Sink likens her situation to what Gov. Charlie Crist has done. She said they both put their financial interests in a blind trust.
But Crist released his income tax return. It lists a "revocable trust" — in which daily decisions about assets are turned over to someone else — that yielded $1,951 in tax-exempt interest last year.
Fasano, who pushed the failed legislation to create blind trusts, had felt so strongly about them that he had urged officials in March 2007 to create them with or without a law.
Now Fasano says that even if Sink had the best intentions, "by not having a law in place and allowing an individual to say 'I'm putting my assets in a blind trust,' it gives them the opportunity to hide their assets.
"Here I am complimenting the CFO for trying, but when you think about it, what she's doing is she's avoiding the public from knowing where her money is invested,'' said Fasano, who supports Sink's opponent, Attorney General Bill McCollum, for governor.
"You can hide your assets by creating a blind trust.''
If a state official cast a vote that would result in private gain, Florida law requires the official to disclose the conflict within 15 days. The law also forbids a public official from having a financial relationship with any business entity that would create a continuing conflict or impede his or her duties.
Without declaring a potential conflict, Sink has had a stake in matters benefiting her former employer and other companies that she owned stock in before she placed her assets in a blind trust. Because of the trust, it can't be learned how much of a financial interest, if any, she had in the firms at the time of her decisions.
That's the point, Sink says: She didn't know what interests she had, so she had no conflict to declare.
Sink voted with the governor and other Cabinet members to allow negotiated, or no-bid, bond deals for a financial underwriting team that includes her former employer, Bank of America. One transaction resulted in $770,000 in fees for a subsidiary of the bank and its newly acquired Merrill Lynch unit.
She is one of three trustees of the State Board of Administration, which administers Florida's hurricane fund. The fund has a financial consulting contract with a subsidiary of Raymond James.
Last November, the head of the SBA notified Sink's deputy that the contract terms could mean a "windfall'' for the company. Sink agreed that those terms had to change. But they stayed the same.
State officials around the country have run into trouble over blind trusts.
California requires that blind trusts be managed by a "disinterested party.'' Yet Gov. Arnold Schwarzenegger put his close friend and financial adviser in charge of his blind trust — then appointed him to a state board.
Mississippi Gov. Haley Barbour said he had cut his ties to the Washington lobbying company he once headed. Somebody leaked details of his blind trust, which hid the truth: He still had a stake in the company.
Wisconsin disallowed blind trusts last year. The move came after a judge ruled on cases involving companies in which she and her husband owned stock and then put family assets into a blind trust.
The problem with blind trusts is that "they're not blind because you know everything you've put in them,'' said Jonathan Becker, the ethics administrator in Wisconsin.
In Florida, then-Gov. Jeb Bush set up a "revocable trust.'' The Times reported that Bush picked two political confidants to run his trust. They invested in a mutual fund whose stock holdings included companies with interests in Florida policy — including Walt Disney Co., Waste Management Inc. and a company that wanted to drill for oil off Florida's coast.
Since the Gerald Lewis opinion 18 years ago, the state ethics commission hasn't issued an opinion about blind trusts, and state officials have done what they wanted.
Those who study ethics say that hands-off approach can allow conflicts of interest while signaling to the public the exact opposite.
Gross, the Washington blind-trust expert, said the problem isn't so much Sink as it is Florida's lack of blind trust rules for public officials.
"She is attempting to create a de facto blind trust that meets the spirit of avoiding conflicts of interest without having any black letter law to guide her,'' Gross said.
Sink said it makes no sense to fault her for going above and beyond.
"I operate in the public,'' she said. "I don't have any secrets. Everything I do is a matter of public record, and I think people have to have trust in their public officials.''
Computer assisted reporting specialist Connie Humburg and Times researchers Carolyn Edds and Shirl Kennedy contributed to this report.