
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, July 21, 1993                   TAG: 9307210180
SECTION: VIRGINIA                    PAGE: C-3   EDITION: METRO 
SOURCE: Associated Press
DATELINE: NEWPORT NEWS                                LENGTH: Medium

ACTIVISTS SEE CONFLICT IN ENTERPRISE

The man who brought five powerful state lawmakers - including House Majority Leader Richard Cranwell, D-Vinton - into a new mortgage insurance venture has been a lobbyist in recent years for Virginia's biggest health insurance company.

Consumer activists said the business connection that former Blue Cross-Blue Shield lobbyist George E. Murphy Jr. has formed with the five legislators raises questions about conflict of interest.

"Blue Cross can't take a breath without the General Assembly's approval," said Julie Lapham, executive director of Common Cause of Virginia.

But the legislators said they see no conflict by investing in Murphy's International Guaranty Insurance Corp., which is seeking a state license to operate as a mortgage insurance company.

Murphy, who has past mortgage insurance experience, incorporated International Guaranty in 1990 and by early this year had recruited the legislators as investors.

One of the lawmakers involved in International Guaranty - House Corporations, Insurance and Banking Committee Chairman Lewis Parker, D-South Hill - said he did not feel Murphy's lobbying posed an ethics problem.

"I've voted against him," said Parker. "He has the same right as any citizen in the commonwealth of Virginia to express their opinion to me."

Senate Majority Leader Hunter Andrews, D-Hampton, another investor and director in International Guaranty, said he always has been careful to avoid conflicts of interest and would abstain from voting on matters involving mortgage insurance.

Another director, Del. Alan Diamonstein, D-Newport News, said last week that Murphy never had lobbied him.

But Blue Cross-Blue Shield has one of the biggest lobbying operations in the state to influence insurance and health-care issues. In the 1993 legislative session, Blue Cross was the sixth-biggest spender in lobbying the General Assembly, spending $58,225, according to the secretary of the commonwealth's office.

Rod Mathews, Blue Cross senior vice president for legal and governmental affairs, said Murphy has been intimately involved in every aspect of Blue Cross's lobbying effort since 1989.

Murphy said involvement of the five legislators in his insurance venture had nothing to do with politics. He said they are all longtime friends and that he invited them to be board members of International Guaranty because he respects their business acumen.

Diamonstein said Murphy had stopped lobbying for Blue Cross by the time he joined the business. "I'm not in business with a lobbyist," he said.

But Diamonstein, Parker, Andrews, Cranwell and Del. Alson Smith, D-Winchester, are listed as International Guaranty directors in a financial report dated Feb. 18, nearly two weeks before the 1993 legislative session ended.

At the time, Murphy still was doing lobbying work. Mathews said Murphy worked as a lobbyist throughout the session and gradually phased out of the job in the spring.

Consumer advocates said they are afraid Murphy's company will benefit from its connections with the legislators.

Andrews is chairman of the Senate committee that writes tax laws and determines appropriations; Cranwell heads the House tax-writing committee.

Parker and Smith are on the House committee that writes insurance law, while Diamonstein and Smith sit on the House Appropriations Committee.

Keywords:
POLITICS

by CNB