State v. Society

In Manhattan last week, New York State Superintendent of Insurance Alfred J. Bohlinger released an unusual announcement: Thomas Ignatius Parkinson, 71, boss for the last 26 years of the Equitable Life Assurance Society, third largest insurance company in the U.S. (after Metropolitan Life and Prudential), would shortly resign. Bohlinger implied that he had forced the resignation.

State investigators, he said, had spent more than two years probing Parkinson's handling of Equitable's affairs, and had prepared a 289-page report of their findings. The society, he carefully pointed out, was in "sound financial condition," but the report accused Parkinson of "nepotism" in giving $950,921 of the society's advertising business to a newly formed agency controlled by his young son, Courtney V. Parkinson, who had no experience handling such large accounts. It also charged that "favoritism" had been shown in handing out the company's legal work and in placing construction contracts. Among the findings: P: Equitable had paid a $60,000 legal fee to one of its directors, and $128,027 in fees to law firms in which Equitable directors were partners. P:An Equitable officer had received a $30,000 salary and two others $10,000 each from McCarthy Oil & Gas Corp. after it had defaulted on a loan made by Equitable. The three had had the job of reorganizing the McCarthy company. P: Contracts for some of Equitable's biggest building projects had been awarded to favored builders and architects on orders from Parkinson, who believed that no builder had the financial resources to make a competitive bid on such huge jobs. P:Parkinson had invested too much of Equitable's money in single projects, such as Pittsburgh's $50 million Gateway Center Development.

Many of the charges had been aired before, although not in a formal report, and Equitable had taken steps to correct any practices criticized. And as Equitable's President Ray D. Murphy quickly pointed out, Parkinson had been preparing to retire when his term as chairman of the board runs out next February. What shocked insurance men. for whom Parkinson has often been the country's leading spokesman, was the implication that Parkinson was being forced out of his $100,000-a-year job under fire. Parkinson lost no time correcting that impression. Said he: "I am proud of all my record with the Equitable, and of [its] growth under my direction ... I have not resigned, and will not resign."

"You Won't Do." That Parkinson meant to fight it out was no surprise; he has never ducked a challenge. He likes to tell how, as a young graduate of University of Pennsylvania Law School, he applied for a job with an insurance company and was turned down with the answer: "You won't do, young man. you're not the type that makes good in life insurance." Parkinson did so well outside insurance that eventually the insurance men came to him. After practicing law for five years, he helped revise New York City's administrative code (the rules and regulations of city departments), became legislative counsel for the U.S. Senate, wound up as dean of Columbia University's faculty of law. In 1920, Equitable hired him as second vice president and sent him off to Europe to salvage what he could of the multimillion trust funds it had been required to set up in banks to guarantee its policies. Though the assets of many of the banks had been confiscated by warring armies, Parkinson retrieved the funds, a feat that brought him the society's vice-presidency in 1925, its presidency 2 1/2 years later. He has since nearly tripled its sales, boosted its assets from less than $1 billion to more than $6 billion.

On the Offensive. In meeting the charges last week, Parkinson took the offensive himself. He implied that he was being kicked out to leave his $100,000-a-year job vacant for a high state official. Bohlinger, who said that he did not want the job, found that he had some more explaining to do. Newspapers raised the question whether Bohlinger was not violating the state law, since his wife is chairman of the board of and controls a New York insurance brokerage concern, left her by her first husband, a former Equitable agent. Though the state law states that the insurance superintendent shall have no interest "directly or indirectly" in any insurance business. Bohlinger denied there was any irregularity since his wife is not a licensed broker, is not active in management of her company.

Embarrassed by all the uproar, Equitable's directors seemed anxious to smooth over the trouble if they could. But neither Parkinson nor Bohlinger was in any mood to let them do so. Using his broad legal powers as superintendent, Bohlinger requested a special meeting of Equitable's directors to consider the entire affair. Parkinson canceled plans to enter the hospital for an eye operation, was expected to be at the meeting.

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