Small world — filled with tough moral choices — isn’t it?
The New York investment firm that controls Steward Health Care System — the largest community hospital network in Massachusetts — also owned Freedom Group Inc. — the country’s largest seller of firearms, including the semiautomatic rifle used in the Sandy Hook elementary school massacre.
Caught like a deer in a rifle scope, Cerberus Capital Management quickly decided to sell Freedom Group, a collection of gun companies that includes Bushmaster, the firm that made the rifle used to kill 20 children and six adults in Newtown, Conn.
For Cerberus, it was the right thing to do. The divestment announcement won praise for this secretive investment group and got the media off its back. It could cost the company “hundreds of millions of dollars,” former New York Governor Eliot Spitzer wrote for Slate in a piece that lauded Cerberus.
But is even that enough for a business that already made a fortune from guns and could make more from the sale of this asset? After Newtown, gun permit requests are up, and there’s a run on guns. A federal assault weapons ban could alter the market, but it would take more than rhetoric for that to happen. It would take action in the Republican-controlled House of Representatives.
Any proceeds from the sale of Freedom Group now amounts to blood money. Why not invest it in a fund dedicated to the memories of those dead children and educators? Put it into schools or mental health programs. Pour it into something that nurtures and heals to atone for the fact that it flows from something that destroyed life, family and community.
Ralph de la Torre, Steward’s CEO, should be the one to lead the cause. Past cash flow from Freedom Group undoubtedly funded Cerberus acquisitions, such as Steward’s hospital network. Steward’s CEO, de la Torre, has been drawing a paycheck from Cerberus, which owns the hospital network and the firearms company. Someday when he cashes in his options, they will be paid out of Cerberus.
There’s so much irony in underwriting a hospital chain dedicated to protecting health and welfare via a business dedicated to arming people with weapons of human destruction. It’s especially ironic that Steward began with the purchase of the Catholic hospital group known as Caritas Christi. But that’s the nature of bottom-line business thinking. You take money from where you can get it, no questions asked.
The Newtown massacre is forcing people to ask uncomfortable questions.
The investors behind Cerberus did, maybe partly because the father of Stephen Feinberg, the founder of the private equity firm, lives in Newtown. According to Bloomberg News, Martin Feinberg lives about 6 miles from the Sandy Hook Elementary School and described the deadly shootings as “devastating.”
The closer we are to tragedy, the more devastating it feels. When the human cost is only 6 miles away, it’s harder to analyze the lucrative sale of assault weapons from a purely financial perspective. The deadly aftermath of bullets slicing through first-graders makes it easier to set the moral compass on high.
But setting the moral compass on high can also drag down the bottom line.
According to the Globe, Springfield gunmaker Smith & Wesson has already lost 15 percent of its stock value since the Newtown shooting and could take a long-term financial hit if an assault weapons ban is revived. The type of weapon Adam Lanza used to mow down his victims is the company’s fastest-growing gun line.
There’s still a lot of power, money, and moral ambiguity behind the gun industry.
For Cerberus, it was the right thing to do.
On one hand, Governor Deval Patrick is pushing for stronger gun-control legislation. But during a recent radio appearance, Patrick declined to take a position on whether the state should divest its pension fund assets from gun manufacturing corporations. He also defended state tax breaks given to Smith & Wesson, which is receiving $6 million in tax breaks to bring 225 jobs to its company headquarters in western Masschusetts.
“It’s not like everything that a gun manufacturer makes is evil,” Patrick said.
No, it’s not. But trading jobs for guns like the one used in Newtown is another illustration of the small world we live in and the tough moral choices it presents.Joan Vennochi can be reached at firstname.lastname@example.org. Follow her on Twitter @Joan_Vennochi.