Merrill Probe Focused on Payment
A Merrill Lynch & Co. investigation earlier this year into the actions of a high-ranking executive centered on whether $75,000 that a Merrill consultant gave to a television journalist was actually a payment for an alleged effort to discredit New York Atty. Gen. Eliot Spitzer, sources close to the matter said Friday.
The probe centered on whether Thomas H. Patrick, who resigned Tuesday as Merrill’s executive vice chairman, funneled money through consultant Rick Kash to fund the production of a cable TV show that would disparage Spitzer. Months earlier, the attorney general had led a highly publicized crackdown on the giant brokerage firm’s stock analysts.
In separate interviews Friday, Kash and the journalist, Bill Kurtis, said they told lawyers for Merrill that the payment was a personal business deal between them and had nothing to do with Merrill Lynch or Spitzer.
The investigation was conducted by Fried, Frank, Harris, Shriver & Jacobson, a prominent New York law firm. It was ordered by Merrill’s board of directors, began March 12 and lasted two to three months, one source said.
The law firm looked into whether Patrick tried to organize an anti-Spitzer media campaign.
The probe revealed that Patrick engaged in activities that were “problematic” and “not appropriate” but nothing that was “illegal or unethical,” according to one source, who did not disclose specifics about the activities. A cable TV show attacking Spitzer apparently never was produced.
Merrill has said previously that the company did not try to discredit Spitzer. Bill Halldin, a Merrill spokesman, declined to comment Friday. Patrick did not return a call left at his Chicago home Friday.
Kash and Kurtis said Friday that the $75,000 payment, which Kash’s company made to Kurtis’ Chicago-based TV production company late last year, was to finance a video project that Kurtis pitched to the Chicago Symphony Orchestra for use in fundraising events.
Kash said he hoped to gain publicity for his firm among concert goers.
“This was Bill and me and the Chicago Symphony -- period, end of story,” Kash said.
Kash, who founded Cambridge Group, a Chicago-based management consulting firm, said his firm has done work for Merrill for the last five or six years. He has been friends with Patrick for 15 to 20 years, Kash said.
On an Internet site, Patrick is quoted praising a book that Kash wrote. He and Patrick also served together on the board of Comdisco Inc., Kash said.
Kurtis, an Emmy-award-winning journalist who hosts the weekly “American Justice” program on the A&E; cable network, has said he met with Merrill Lynch officials in New York last November to discuss a possible story on whether Spitzer was overstepping his bounds as a state official by pursuing stock analysts, typically the domain of federal regulators.
He pitched the idea to A&E;, which turned it down, he said. He stressed that there was no discussion of money with Merrill and that he did not receive any payment from Merrill.
“I would never do something like this or even entertain” the idea, Kurtis said Friday.
The project Kurtis pitched to the orchestra involved a 23-minute film of national parks that would be set to music and would use high-definition technology, Kurtis said. It would be intended for use at symphony fund-raising events to draw a younger audience that could be lured by a visual presentation, he said.
As a result of Merrill’s investigation, Patrick was reprimanded and stripped of some management duties, including oversight of the brokerage firm’s public and government affairs departments.
Patrick left the firm abruptly Tuesday after he angered E. Stanley O’Neal, Merrill’s chief executive, by lobbying to have Arshad Zakaria, Merrill’s investment banking chief, named company president, sources said. But Patrick’s role in the alleged effort to discredit Spitzer was an underlying factor, a source said.
Media stories about the Merrill investigation have prompted Spitzer’s office to ask Merrill for details of its probe.
