From Texas comes another story raising yet more ethical questions about George W. Bush. At the heart of the scandal is the Houston-based Service Corporation International (SCI), which describes itself as “world’s largest death care provider”. As Gore’s folk at the Democratic National Committee dish out this story to the press what they don’t highlight and what the mainstream press has yet to disclose is that Al Gore’s campaign chairman, Tony Coelho, sits on the board of SCI and serves as one of the company’s strategic advisers.
The funeral industry has long been one of the least regulated and most corrupt enterprises in the United States. In Texas, mortuary operations are overseen by the Funeral Commission, an indulgent board appointed by the governor and largely composed of funeral home executives and their lawyers. In 1996 the Commission’s director, Eliza May, began receiving complaints that SCI funeral homes were employing unlicensed embalmers, many of them low-paid Mexican immigrants. May launched an investigation of SCI, which disclosed numerous violations in embalming practices. May and her investigators recommended that SCI be fined $450,000.
One of the SCI-owned funeral homes May looked into was the Sparkman-Crane mortuary in Dallas. The commission had received complaints from the family of Frank Hood, a Wichita Falls television newscaster who died of cancer in 1998. According to Hood’s family, the funeral home so overpumped Hood’s body with embalming fluids that when he was presented in his casket for open viewing fluid was oozing from his eyes, ears and mouth. The sight caused his younger brother to run screaming in horror from the viewing room.
After the funeral, the casket was placed in the Hood family crypt. But when Hood’s mother visited the site several weeks after the funeral she reported that there was a putrid odor in the crypt. The director of the SCI-owned cemetery said the smell must have come from “a dead mouse”. A few days later, when members of Hood’s family returned to place flowers at the tomb, they noticed that a brown fluid had seeped through the casket into a pool on the floor. The Hood family recently filed suit against SCI, claiming that the embalming of Hood’s body was botched by inexperienced and unlicensed workers and that the casket was cheap and shoddily constructed.
Not long after May’s investigators showed up for unannounced inspections of SCI funeral parlors, company executives were on the phone to their allies in Austin at the funeral commission, the governor’s office and the state legislature. They accusing May of using “storm trooper tactics”. May was put on the carpet. One of the funeral commission’s members who lambasted her was Leo Metcalf, an SCI executive. Soon May was summoned to a meeting with Bush’s chief of staff, Joe Allbaugh (now a top mananger in Bush’s presidential campaign) and SCI’s founder, Robert L. Waltrip. Waltrip is a family friend of the Bushes and has contributed $45,000 to George W.’s various campaigns.
During the meeting, George W. Bush popped into the office and asked Waltrip why he was there. Waltrip told the governor he was having problems with the funeral commission. Bush said, “Are those folks still messin’ with you?” The governor turned to SCI’s top lobbyist, a Republican lawyer named Johnnie B. Rogers, and said, “Hey, Johnnie B., are you taking care of him?” Rogers replied: “I’m doing my best, governor.”
May was told to back off. But she refused to drop her probe. Nine months later May was fired and has now filed a whistleblower lawsuit against the Commission. As part of the suit, she subpoened Bush. In an effort to quash the subpoena, Bush filed a sworn affadavit on July 20, 1999 saying, “I have had no conversations with SCI officials, agents or representatives” or “with anyone on the funeral commission” concerning May’s inquiry into SCI. But, quite aside from the encounter noted above, Bush had also taken up the issue at a political fundraiser, where he queried the head of the funeral commission about the SCI probe. So the governor appears to have lied under oath.
But this story has not yet gone very far and it’s not likely to. Tony Coelho, who has served as a director of SCI since 1991, isn’t about make SCI’s shoddy practices and George W.’s efforts on the company’s behalf much of a political issue. SCI has been exceptionally generous to Coelho. Last year, the former California congressman and House whip was paid $21,000 a year in director’s fees and another $18,000 for serving on the executive committee. SCI also contributes $42,000 a year to Coelho’s retirement fund and gave him 3,000 shares of stock valued at $135,000. Total annual compensation for attending 12 meetings: $176,000. Moreover, according to documents filed with the SEC, the company gave Coelho a loan for $418,922. According to Coelho’s financial disclosure forms, he owns million shares of SCI stock worth $1.2 million.
In a 1993 survey, the Teamsters Union ranked Coelho as the nation’s most over-rated corporate board member. The Teamsters based the rating on the number of boards Coelho sits on: AutoLend Group, Cyberonics, ICF Kaiser (the international construction firm), Intl. Thoroughbred Groups, ITT Educational Services and Pinacle Global Group. The union assumed that Coelho couldn’t possibly devote enough time to each slot. But that calculation vastly underestimates Coelho’s expertise as a political fixer, an invaluable commodity to companies like SCI which find themselves butting heads with regulators, trade agreements, class action suits and foreign governments.
Despite its size, SCI’s operations in the US during the last few years haven’t been as profitable as in the past. The company’s annual 10-K filing with the SEC notes that SCI’s financial problems in the States are a result of “a weaker death rate” and “an increase in the number of cremations which typically carries lower sales price averages”. But SCI forecasts better times ahead: “The increasing proportion of people over 65 in the Company’s primary North American markets could increase demand for funeral services in the decades to come.”
To compensate for the temporary downturn, SCI expanded its operations overseas, becoming the first global funeral company. Tony Coelho, according to company documents, has played a major role in charting the company’s international strategy. SCI now has operations in more than 20 countries. While SCI controls about 11 percent of the US “funeral market”, it has done much better overseas. The company’s most recent annual report notes that SCI performs 14 percent of the funerals in the United Kingdom, 25 percent in Australia and 28 percent in France. In 1998, Coelho, of Portugese descent, helped the guide the company’s entrance into Portugal, Spain and Argentina.
Coelho and his cohorts at SCI have worked their magic in France, where SCI does more than $524 million a year in business. Until last year French law gave local municipalities the authority to provide local moturaries with a monopoly on funeral services. SCI fought to have the law overturned as an unfair trade barrier. The company prevailed in 1998. France, SCI boasts, now has “an open market in funeral services”. Still, there’s more work for Coelho and company to do. In its latest quarterly filing with the SEC, SCI notes mournfully that “cemeteries in France, however, are and will continue to be controlled by municipalities and religious organizations, with third parties, such as SCI, providing cemetery merchandise such as markers and monuments”.
SCI had sound reasons for targeting France. In the United Kingdom 70 percent of dispositions are through cremation. The French still opt for costly ceremonial funerals and extravagant interments. SCI filings crow gratefully that cremations account for only “17 percent of dispositions of human remains in France”. That doesn’t mean that SCI has given up on trying to coin money off of cremations. Company documents predict that “funeral operations which are predominantly cremation businesses typically have higher gross profit margin percentages than those exhibited at traditional funeral operations.” SCI plans to expand its cremation operations in the US, saying it “believes that memorialization of cremated remains represents a source of revenue and margin growth.”
A recent note from SCI to its shareholders attempted to calm concerns over thedecline in SCI stock prices this summer, forecasting an increase in business with the arrival of autumn. “The death rate tends to be somewhat higher in the winter months and the Company’s funeral service locations generally experience a higher volume of business during those months.” CP