Company Hired to Handle Katrina's Dead Has Tainted History

On Wednesday the official death toll from Katrina jumped to 474. More than 400 of those bodies are now being held for autopsy at two locations in the Baton Rouge area. All those bodies are now producing a brand new public relations nightmare for state officials. This time, it involves the hiring of the world's largest funeral corporation to handle the job of recovering the dead. But it's a company we've learned has a tainted history of legal troubles.

According to the Department of Health and Hospitals, Kenyon International has been in charge of recovering and handling Hurricane Katrina's dead without a contract since last Wednesday. That contract was finally inked these past few days by Governor Kathleen Blanco, who obviously felt FEMA was dragging its feet.

Even before Katrina hit, the accusations and criticisms for both federal and local leaders were endless. First, national attacks on the slow search and rescue efforts, and now more trouble concerning the recovery of Katrina's dead. Governor Blanco has just inked the deal with Kenyon International to lead body recovering efforts. The only problem -- Kenyon's parent company is Service Corporation International, a scandal-ridden, Texas-based company accused in a number of lawsuits for illegally discarding and desecrating corpses.

The state Department of Health and Hospitals says it was unaware of the company's legal troubles and was only doing what the governor had asked.

"We're going to do what the governor's office ask us to do," said DHH representative Bob Johannessen. "They wanted this firm to work here and we facilitated to have that contract signed."

When asked if the governor requested a background check on the company, Johannessen replied he didn't know.

The deal signed between Kenyon International and DHH is a two-month contract that runs from September 12th to November 15th. Kenyon will be paid a ten percent discounted daily rate of $119,000. Kenyon also says estimated expenses for the first 31 days should total roughly $639,000.

Kenyon, however, has already been involved in recovering dead bodies in New Orleans and other areas since last Wednesday.

According to DHH, the understanding was that FEMA was originally going to contract with Kenyon International, but after those talks failed, Governor Blanco stepped in to finalized the deal.

Kenyon International is part of Service Corporation International, which is the largest funeral provider in the world, owning many of the most prestigious funeral homes in the world. But 9 News has learned it's a troubled company.

Service Corporation International is headquartered in Houston, Texas. Its CEO and founder is said to be personal friends with the Bush family, prompting some controversial headlines regarding presidential influence. In recent years, the giant firm has been sued in several states for its mishandling of bodies, just the thing Governor Blanco alluded to on Tuesday when she took the handling of Katrina victims out of the hands of FEMA.

"The recovery of bodies is a FEMA responsibility, but I cannot stand by while vital operations are not handled properly," said Blanco. "In death, as in life, our people deserve more respect than they've received."

In 2003, SCI settled, for $100 million, a class action suit in Florida involving two of the companies' funeral homes. The suit made these allegations:

- The funeral homes broke open burial vaults and dumped remains in a wooded area to be consumed by wild animals

We know of no similar allegations against Kenyon International itself, but the parent company is certainly tainted by allegations of price gouging and gruesome disrespect of the dead. We have tried by phone and email to get a response from Governor Blanco's office or from her. We do not know if she is aware of the troubles or legal problems accumulated by the company she has hired to handle the bodies of Hurricane Katrina victims. We've had no response.

November 26, 1999

Houston-based Service Corporation International (SCI), which describes itself as "world's largest death care provider".

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.

Tony Coelho, who has served as a director of SCI since 1991.

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.

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 to 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".

Anthony L Coelho

Director at
Service Corporation International
Houston, Texas
SERVICES / PERSONAL SERVICES
Director since 1991

62 years old

Mr. Coelho was a member of the U.S. House of Representatives from 1978 to 1989. After leaving Congress, he joined Wertheim Schroder & Company, an investment banking firm in New York and became President and CEO of Wertheim Schroder Financial Services. From October 1995 to September 1997, he served as Chairman and CEO of ETC w/tci, an education and training technology company that he established and subsequently sold. He served as general chairman of the presidential campaign of former Vice President Al Gore from April 1999 until June 2000. Since 1997, Mr. Coelho has worked independently as a business and political consultant. Mr. Coelho also served as Chairman of the President's Committee on Employment of People with Disabilities from 1994 to 2001.

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