Petrelis Files

AIDS ACTION COMMITTE PROFITED FROM MERCK STOCK

From: MPetrelis@aol.com

Date: Sat, 15 Feb 2003 18:06:51 EST
To: arapp@baywindows.com, lkiritsy@baywindows.com, sgiordano@baywindows.com, Mabronski@aol.com, MPetrelis@aol.com
Subject: AIDS Action owns and profits from Merck, War Machine stocks

Feb. 15, 2003


Dear friends:

There's an excellent eye-opening news article in the Feb. 6 issue of Boston's Bay Windows newspaper, that you should take the time to read. Written by Laura Kiritsy, AIDS Action staff airs grievances with [Mike] Duffy, the executive director of the agency, the article details complaints lodged against Duffy during his eight months on the job. I suspect other AIDS groups may go through similar turmoil between executives and staff, but it never seems to make into the news. Now, it has.

My curiosity about the AIDS Action Committee of Massachusetts, Inc, was piqued by Kiritsy, so I paid a visit to www.guidestar.com, the premier web site for the IRS 990 tax reports of all 501(c)3 nonprofits. Just to check on the latest IRS 990 for the group. Really wanted to know the salaries of the top people. And in the process, I learned new information about their finances, including their investments.

The FY2000 tax report showed AIDS Action had sold off $557,370 of stock and security assets. [See Part 1, line 8a.]

A breakdown of which stocks and securities the agency sold lists the following information.

On May 21, 2000, AIDS Action sold one hundred of its Merck and Co, Inc, shares. The selling price was $6,657, the cost basis was $7,464, with a loss of $807.

Later, on March 7, 2001, the group sold four hundred Merck shares. This time, the selling price was $31,911, and the cost basis was $10,974, for a gain of $20,937. Nice pocket change. By the way, at the time of these transactions, Larry Kessler was the executive director of AIDS Action, not Mike Duffy.

Keep in mind that AIDS Action present information only on the stock it sold. No further information is provided about their other stocks, which may or may not include holdings in other Big Pharma companies that produce anti-AIDS drugs.

However, the group also sold off one hundred shares of the Enron Corp, during this FY, thereby making a $3,406 profit on the sale. On the other hand, the agency's dump of eight hundred shares in WorldCom, Inc, resulted in a loss of $26,288.

AIDS Action additionally sold some of its stocks, in FY 2000 and FY 1999, for the following companies, that many progressive activists view as part of the military industrial war machine;
BP Amoco, Honeywell International, and the General Electric Co.

Viewing this information got me thinking about the moral and ethical issues involved when an AIDS service organization, that is community-based, owns stock, first, in Big Pharma, and second, also in companies that profit from wars.

Should AIDS Action refuse to own Merck stock because of objections treatment activists have with the company's high profit margins, based somewhat on sales of AIDS medicines? In an ideal world, my answer would be yes. But the world, especially now, is not ideal, so a large of me says, sure, it's OK for the agency to realize a return on its Merck stock. The $20,937 return the Merck sale helps keep the agency alive and serving persons with HIV and AIDS.

Opposition to AIDS Action having stock in corporations that make war possible, is likely based, for me and perhaps others, on the principle that social service agencies should not profit from war corporations. Kind of like one has to cause suffering elsewhere in the world in order to somehow benefit people suffering with HIV or AIDS in Boston.

On the flip side, why shouldn't an AIDS service organization take profits from its investments in both Big Pharma and the War Machine and put that money to damn good use keeping people with AIDS alive and preventing new HIV infections?

I don't there are easy answers here, but I hope to engender a debate about these issues in the AIDS community. And not just about whether they should own stocks in questionable and controversial corporations, but also whether AIDS and gay service agencies should reveal their stock portfolios. As far as I know, nonprofits are not required by IRS laws to list their stock investments. I would argue, that yes, the groups should practice a high level of transparency about their finances and investments, especially to build and keep trust with the people who donate to the groups.

My hope is that Bay Windows examines the tax returns for AIDS Action at www.guidestar.com, then poses my questions and others to the Boston community, for a follow up news article. Toward that end, this email is being sent to editors and reports at the paper, and I will call them next week.

In the meantime, I would like to know what you think about the issue of our community-based organizations owning stock, in Big Pharma especially. Please share your thoughts with me. Thanks.

Regards,
Michael Petrelis
San Francisco, CA
MPetrelis@aol.com



REPLY from Bay Windows editor

Subj: Re: AIDS Action owns and profits from Merck, War Machine stocks
Date: 2/18/2003 12:37:15 PM Pacific Standard Time
From: arapp@baywindows.com (Andrew Rapp)
To: MPetrelis@aol.com, lkiritsy@baywindows.com, sgiordano@baywindows.com, Mabronski@aol.com

Hi Michael,

Thanks for your message. I received your voicemail as well. The issues you raise are interesting, but I do not feel they warrant news coverage.

We have a tremendous challenge in keeping our readers abreast of AIDS funding issues in the state. Currently we are focusing our energy on tracking the cuts in state dollars to ASA's and prevention efforts. This coverage requires attention to both the state political maneuverings, as well as tracking the responses of the various agencies affected. Complicating both sides are the multiple channels that transport dollars to those living with HIV and AIDS. There are housing grants, medical research subsidies, drug programs, transportation services, and the list goes on.

In this context AIDS Action's gains from the Merck sales are insignificant. Their gain on the sale (approx $20K) is less than 0.001% of the total that our current and previous governors have cut from state AIDS funding in the past six months. From this perspective, ill-gotten or not, the gains have no measurable impact on those living with HIV/AIDS, which is my ultimate concern. Given this, I can't justify devoting the resources of our staff to exploring this issue.

Thanks again for your message. I'm glad you enjoyed Laura's story. We are continuing to follow these developments and do expect and follow-up stories to occur.

thanks,
Andrew