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Rick Perry's Capital Of Cronyism

In Texas, It Pays To Know Rick Perry

In Rick Perry’s office, the revolving door spins both ways: Perry has recruited several senior staffers from the ranks of Austin’s lobbying community, and at least 17 of his former aides have left for lobbying careers. Being close to Perry has its benefits – Perry had appointed nearly a thousand of his donors to boards and commissions, has supported legislation on their behalf, and directed large business incentive grants to their companies. Even Perry himself has profited, thanks to questionable stock and real estate investments involving close allies.

Most Perry Chiefs Of Staff Have Been Lobbyists, At Least 17 Aides Have Gone On To Lobbying Careers. In August 2010, PolitiFact Texas verified a claim from Perry opponent Bill White that most of Rick Perry’s chiefs of staff have been lobbyists: “Far as we can tell, five have been registered as lobbyists, as White stated. Three of those — McKinney, Toomey and Sullivan — were lobbyists before Perry hired them as chief of staff.” In 2009, the Dallas Morning News reported that overall, “At least 17 former Perry aides are now registered lobbyists, a comparison of payroll and lobbying records shows.” [PolitiFact Texas, 8/30/10; Dallas Morning News, 1/7/09]

Perry Vetoed “Revolving Door” Bill The Same Day He Appointed A Former Lobbyist. According to the Houston Chronicle, Perry “defended his veto of a bill that would have required a waiting period before former Harris County employees could lobby the county, saying a ‘piecemeal’ approach to Texas ethics law isn’t good public policy… Rep. Garnet Coleman, who carried Senate Bill 2468 with [Sen. Mario] Gallegos, noted that the veto came the same day that Perry announced that Ray Sullivan, a lobbyist who previously worked for Perry, will return to the governor’s office as chief of staff.” [Houston Chronicle, 6/20/09]

Perry’s Political Appointees Have Given Him At Least $17 Million In Contributions. Texans for Public Justice issued a “Governor Perry’s Patronage” report in September 2010, detailing the large amount of contributions Perry had collected from his appointees. “As Texas’ longest serving governor, Rick Perry appointed 3,995 people to 592 boards, committees, councils, corporations, task forces, compacts, authorities, teams, groups and departments as of February 2010 (he appointed some of them to multiple posts)… Yet Texans should not forget the sacrifices of Perry’s appointees. This includes the 921 appointees who contributed to Perry’s campaign or had a spouse that did so. These donor-appointees supplied $17.1 million of the $83.2 million total that Governor Perry’s campaign raised since 2001 (donations occurred before and after the appointments).” [Texans for Public Justice, September 2010]

Enron Donated $25,000 To Perry After Company Executive Was Appointed To Utility Commission. “Gov. Rick Perry has received more than $227,000 in campaign donations from Enron Corp. officials since 1993, second among state politicians behind George W. Bush when he ran for governor,” the Associated Press reported in January 2002. Enron chief executive Kenneth Lay alone had contributed $138,000 to Perry’s campaigns, “including a $25,000 donation the day after Perry named former Enron executive Max Yzaguirre to be chairman of the Public Utility Commission last June.” Yzaguirre resigned in the wake of Enron’s collapse. [AP, 1/20/02]

20 Companies Receiving $174.2 Million In Enterprise Fund Economic Incentives Have Given $2.2 Million To Perry’s Political Interests. A March 2010 investigation by the Texas Observer found that “20 of the 55 Enterprise Fund companies have either given money directly to Perry’s campaign (through their political action committees or executives) or donated to the Republican Governors Association, a Washington, D.C.-based group that Perry presided over in 2008. The 20 companies have received a combined $174.2 million from the Enterprise Fund. During the same time period, those 20 corporations have donated $2.2 million to Perry and the governors association. Several companies made donations around the time they received grants from the Enterprise Fund. It’s even possible that taxpayer money from the fund came full circle into Perry’s own campaign.” [Texas Observer, 3/11/10]

Hewlett-Packard: Failed Deal Brought No Jobs, But Hundreds Of Thousands In Perry Contributions. “Perhaps no company better illustrates the flow of money than Hewlett-Packard Co. In October 2006, the California-based technology giant received $3 million from the Enterprise Fund to open four data centers in Texas that were supposed to create 420 jobs. The project didn’t exactly go well—the centers never opened, and Hewlett-Packard later had to repay its grant. Nary a Texan got a new job. But before the deal fell apart, Perry and his political allies took in their share of money. Hewlett-Packard’s political action committee contributed $20,000 to the governor’s campaign. It was one of 18 Enterprise Fund companies whose PACs or chief executives donated to Perry’s campaign, according to an analysis by the watchdog group Texans for Public Justice. The PACs and chief executives forked over a combined $355,000 to Perry’s campaign. (One of the largest donors was Joe Sanderson, the head of Sanderson Farms Inc., a Mississippi-based chicken producer that received $500,000 from the Enterprise Fund in April 2006. Three months later, Joe Sanderson gave $25,000 to Perry’s campaign. He has since given $75,000 more.)” [Texas Observer, 3/11/10]

Governor’s Office Has Directed Over $16 Million In Emerging Technology Funds To Perry Donors’ Companies. An October 2010 investigation by the Dallas Morning News “found that more than $16 million from the Emerging Technology Fund has been awarded to companies with investors or officers who are large campaign donors to Perry… The governor’s office administers the tech fund, and the governor must approve each award – a system that most other states with tech funds avoid to guard against political influence. The News found that tech fund money has been awarded to companies with which at least eight significant Perry donors are affiliated.” [Dallas Morning News, 10/3/10]

Perry Denied Knowledge Of His Donors’ Involvements, But Grant Applicants Must Disclose Investors. “In an interview with The News, Perry said he usually does not know if his campaign supporters have financial interests in the companies that get tech fund money. ‘From time to time, I may know someone who has an interest in a project. That is a pretty rare occurrence,’ he said. However, Perry spokeswoman Katherine Cesinger said in an e-mail that applicants for technology funding must provide full financial disclosure to the governor’s staff, including the names of investors. The governor said he does not look at these disclosures when deciding whether to approve an award.” [Dallas Morning News, 10/3/10]

ThromboVisision: Donor Gave Perry $424,000, Company Received $1.5 Million. The News’ investigation included a timeline focusing on Houston financier Charles W. Tate’s relationship with the now-bankrupt ThromboVision, Inc. Tate had donated over $424,000 to Perry over the years, including travel on his personal airplane. In November 2006, as a member of a regional state life science board, Tate voted to recommend that ThromboVision receive grant money from the Emerging Technology Fund. Months later, he personally invested in the company – after the state’s advisory committee had approved ThromboVision’s application, but before Perry had made the announcement public. Attorney James P. Joseph , who heads the tax-exempt practice at Arnold & Porter LLP in Washington, D.C. and advised the IRS on tax-exempt matters, described the arrangement as “a classic conflict of interest.” [Dallas Morning News, 10/3/10]

Perry Donor’s Company Received $4.5 Million State Grant, Despite Minimal Investment. In June 2011, the Austin American-Statesman reported that “The founders of Convergen LifeSciences Inc. had invested only $1,000 of their own money when they asked the State of Texas in 2009 to give them $4.5 million to help develop a new lung cancer-fighting drug using nanotechnology, according to documents the Austin American-Statesman obtained Wednesday under the Texas Public Information Act. But the documents raised as many questions as they answered about Convergen, which was founded two years ago by David Nance, an Austin biotech executive and political contributor to Gov. Rick Perry, and Dr. Jack Roth, a researcher at the MD Anderson Cancer Center in Houston.” [Austin American-Statesman, 6/15/11]

Former Perry Aide On Convergen Board Of Directors Claimed Little Involvement. “The company’s application listed three members of its board of directors, including Nance. The other two said Wednesday they had never served on the board… Sha’Chelle Devlin Manning, a former Perry consultant on nanotechnology strategy, said she initially agreed to serve on the board because of her high regard for Roth’s work and because a close friend had been diagnosed with late-stage cancer. But Manning said she had to resign without attending a meeting because of pressing business and family obligations. She said she had no role in Convergen’s application. It’s unclear whether Convergen has operated for two years without a board of directors or whether Nance recruited new members.” [Austin American-Statesman, 6/15/11]

Nance’s Daughter Hired To Promote State Technology Fund. In late October 2010, the Dallas Morning News reported that Verve Public Relations Inc. of California was paid nearly $70,000 to promote the governor’s Emerging Technology Fund. “Verve is operated by Christiane ‘CJ’ Nance, the 33-year-old daughter of David G. Nance, an entrepreneur and Perry donor whose company received a $4.5 million tech fund award in August. David Nance is a former member of the Perry-appointed advisory committee that recommends awards from the tech fund. Verve’s work included producing videos that promoted tech fund recipients. It was covered by a $100,000 donation from a company run by David Nance, the governor’s office said.” [Dallas Morning News, 10/30/10]

CREW: Perry One Of America’s “Worst Governors.” In April 2010, Citizens for Responsibility and Ethics in Washington included Perry in a report detailing the “unethical and incompetent actions of 11 governors who pride their self-interests over their states’.” Perry was cited for allegedly disregarding campaign finance laws, questionable uses of campaign funds, blocking transparency, accepting travel and contributions from donors with business before his office, and “perpetuating the revolving door between government and special interests.” [Citizens for Responsibility and Ethics in Washington, 4/21/10]

Perry’s Pay-to-Play

Perry Pushed For An Ethanol Production Waiver After Ethanol Opponent Gave $100,000 to the RGA, Which Perry Chaired. “Gov. Rick Perry’s request for a waiver of federal corn-based ethanol production mandates was prompted by a March meeting he had with East Texas poultry producer Lonnie ‘Bo’ Pilgrim, who six days later gave $100,000 to the Republican Governors Association chaired by Perry,” the Houston Chronicle reported in July 2008. “In the three weeks following that donation, Perry’s staff began preparing to submit the renewable fuel standards waiver request to the federal Environmental Protection Agency, according to 596 pages of records obtained from the governor’s office by the Houston Chronicle under the Texas Public Information Act.” [Houston Chronicle, 7/1/08]

Pilgrim Financed Perry Flight To Washington. “In June [2008], Pilgrim provided Perry with $9,179 worth of air travel to Washington, where the governor held a news conference at the National Press Club to publicize his effort to get a waiver from the federal mandates,” the Texas Observer reported in February 2009. [Texas Observer, 2/6/09]

Perry’s Largest Donor Helped Create Industry-Friendly Homebuilders Commission, Company Attorney Later Appointed To Board. “[Bob] Perry’s critics most often point to his involvement with the Texas Residential Construction Commission, a state agency created in 2003 to regulate the home building industry,” the Texas Tribune reported in 2010. “His corporate counsel helped craft the legislation that endowed the commission with its powers, and the governor later appointed the attorney to help manage the agency, which was shuttered last fall after lawmakers failed to finance it. Consumer groups had attacked the commission — which had been presented as a venue for protecting home owners — as lacking the power to address complaints of shoddy construction.” [Texas Tribune, 10/29/10]

Bob Perry Is Rick Perry’s Largest Individual Donor, Has Given Over $2.5 Million. Houston homebuilding magnate Bob Perry (no relation) and his wife Doylene have directed at least $2,581,799 to Perry’s campaign efforts since 2000, not including millions more they have given to the Republican Governors Association (which has been the biggest overall contributor to Perry’s campaigns). [Texas Tribune, 7/22/11]

Bob Perry Was Biggest “Swift Boat Veterans For Truth” Donor. “Bob Perry donated almost $4.5 million to the ‘Swift Boat Veterans for Truth’ campaign that challenged 2004 Democratic presidential nominee John Kerry’s account of his Vietnam War record. Michael Beckel, spokesman for the nonprofit monitor of federal campaign spending, Center for Responsive Politics, said Perry ‘is one of the most high-profile conservative donors out there.’” [Associated Press, 7/31/11]

Perry Signed Bill Allowing Donor’s Nuclear Waste Facility, Appointees Approved Subsequent Licenses. In 2003, Perry signed legislation “allowing the disposal of federal and other low-level radioactive waste at a site yet to be determined in Texas,” the Dallas Morning News reported. “A West Texas facility now operated by Dallas-billionaire Harold Simmons, who has lobbied extensively for the bill for years, is the most likely disposal site.” In May 2008, the Texas Commission on Environmental Quality (TCEQ) voted to approve Simmon’ proposal. “All three environmental commissioners were appointed by Perry,” the Austin American-Statesman reported. In January 2011, another commission filled with Perry appointees approved the company’s efforts to import radioactive waste from 36 additional states. [Dallas Morning News, 6/21/03; Austin American-Statesman, 5/22/08; Austin American-Statesman, 1/4/11]

Harold Simmons Has Given Perry At Least $1.12 Million. Dallas billionaire Harold Simmons owns Waste Control Specialists, a nuclear waste facility that has spent millions on contributions and lobbying for permits to radioactive material from other states. He is Perry’s second largest individual donor, having given at least $1,120,000 to Perry’s campaigns since 2000. [Texas Tribune, 7/22/11]

Simmons’ Company Was Only License Applicant. “How Simmons was able to obtain licenses from the state of Texas to dispose of nearly the full gamut of radioactive waste is more a story of politics and money than one of sound science,” D Magazine wrote in a story headlined “Dallas’ Most Evil Genius.” “Critics have pointed out that the nation’s largest aquifer underlies the site and is in an earthquake hazard zone. As Simmons told the Dallas Business Journal in a rare interview in 2006: ‘It took us six years to get legislation on this passed in Austin, but now we’ve got it all passed. We first had to change the law to where a private company can own a license [to handle radioactive waste], and we did that. Then we got another law passed that said they can only issue one license. Of course, we were the only ones that applied.’” [D Magazine, 1/20/10]

Simmons’ License Approved Despite TCEQ Staffer Opposition, Three Resigned In Protest. “In 2007, a team of geologists and engineers at TCEQ unanimously recommended that a license for the vast dump, near Andrews, be denied,” the Texas Observer reported in May 2010. “Water contamination was a prime concern. Then-Executive Director Glenn Shankle ordered the TCEQ team to issue the license anyway… Records show that Shankle met regularly with a team of lobbyists, lawyers and company principals at the same time his own experts warned him of the dump’s dangers. Seeing that the fix was in, three TCEQ employees quit in protest. Commissioners hardly batted an eye.” [Texas Observer, 5/26/10]

Perry’s Profitable Revolving Door

Former Perry Staffer Lobbied For Merck When Perry Mandated HPV Vaccine. Perry’s former chief of staff Mike Toomey is a close friend dating back to their time in the Texas House of Representatives. “One aspect of their relationship will be scrutinized if Mr. Perry runs for president: Mr. Toomey was a lobbyist for Merck when Mr. Perry issued a 2007 executive order requiring sixth-grade girls in Texas to be vaccinated against the sexually transmitted human papillomavirus, the leading cause of cervical cancer,” the Texas Tribune reported in July 2011. “At the time, the only approved vaccine was Gardasil, made by Merck. The Legislature overrode the executive order, and some attributed the flap to the close ties between Mr. Toomey and the governor.” [Texas Tribune, 7/30/11]

Toomey Lobbied Before And After Term As Perry’s Chief Of Staff. “Mr. Toomey left [the Texas House] to work for then-Gov. Bill Clements, and then became a lobbyist. He returned to government to be Mr. Perry’s chief of staff during a budget-cutting session in 2003, then returned to the lobby.” [Texas Tribune, 7/30/11]

Merck’s PAC Contributed To Perry’s Campaign, Lobbying Effort Employed Relative Of Perry Staffer. “Merck is bankrolling efforts to pass state laws across the country mandating Gardasil for girls as young as 11 or 12.” the Associated Press reported in February 2007. “It doubled its lobbying budget in Texas and has funneled money through Women in Government, an advocacy group made up of female state legislators around the country. Perry has several ties to Merck and Women in Government. One of the drug company’s three lobbyists in Texas is Mike Toomey, Perry’s former chief of staff. His current chief of staff’s mother-in-law, Texas Republican state Rep. Dianne White Delisi, is a state director for Women in Government. Perry also received $6,000 from Merck’s political action committee during his re-election campaign.” [Associated Press, 2/2/07]

Perry Staffer Worked For Accenture On State Privatization Consultations, Separately Submitted A Bid For His Own Firm. “A former deputy chief of staff and political adviser to Gov. Rick Perry is among scores of private contractors hoping to cash in on a mammoth overhaul of state social services,” the Houston Chronicle reported in November 2003. “Perry made consolidating and privatizing parts of health and human services one of his top legislative priorities this year. Now, Ray Sullivan, a communications specialist and partner in Bashur, Carney & Sullivan Political Consulting, stands to benefit twice over. Sullivan said he’s working for Accenture LLP, awarded a tentative contract for ‘consolidation communications strategy,’ one of four leading consultants as the Texas Health and Human Services Commission oversees the consolidation of 12 social service agencies into five new departments… Separately, Sullivan Public Affairs bid as an ‘implementation consultant’ that has landed in a pool of approved vendors that could be tapped as needed.” [Houston Chronicle, 11/10/03]

Sullivan Lobbied Between Jobs For Perry, Now Serves As Chief Of Staff. Another of “Perry’s Legion,” the Texas Tribune reported that Ray Sullivan got his start in Texas politics working for Karl Rove as a backup spokesman for then-Gov. George W. Bush. “In 1998, Mr. Sullivan worked on Mr. Perry’s campaign for lieutenant governor. He worked for Mr. Perry in the new office for a time, left to work on Mr. Bush’s presidential campaign and then became a consultant and lobbyist in Austin. He returned to government a few years later, after Mr. Perry became governor.” [Texas Tribune, 7/30/11]

Texas Observer: Accenture Remembered As “Giant Public Policy Fiasco.” “Texas’ contract with Accenture Inc. to run health care call centers will be remembered as a giant public policy fiasco,” The Texas Observer editorialized in 2007. “The $899 million deal was the largest private contract ever signed by the state. In mid-March, health officials finally tore up the contract, fed up with Bermuda-based Accenture’s many failures… The outsourcing was supposed to save the state nearly $400 million. HHSC officials now concede those savings never materialized. Meanwhile, Accenture mistakenly dropped hundreds, perhaps thousands, of eligible families from state programs.” [Texas Observer, 3/23/07]

Perry Has Pushed Initiatives For Sullivan’s Clients, Ranging From Toll-Road Projects To Lottery Privatization. “Rick Perry says as governor, his job is to make life better for Texas families,” Dallas Morning News columnist Wayne Slater wrote in August 2010. “One family that’s done well is the Sullivans of Austin, Ray and Leslie… Ray has shuttled between top jobs on Perry’s staff and as a lobbyist representing interests with business before the state. His wife has directed the governor’s political fundraising. They haven’t broken the law or the rules governing the practice of politics and policy, and they’ve made between $4 million and $5.7 million since Perry’s been governor, according to campaign reports, lobby filings and state payroll records… Sullivan’s lobby clients have included energy, beer, financial and highway interests, some of which have found an active ally in the governor. For example, the toll-road engineering company HNTP Corp. has benefited from the governor’s advocacy of the Trans-Texas Corridor. Another Sullivan client, the Swiss financial-services giant UBS, pushed the state to privatize the lottery. Perry advocated the idea in 2007, but the Legislature turned thumbs down.” [Dallas Morning News, 8/19/10]

Between Lobbying Jobs For Toll Road Contractor, Perry Staffer Helped Write Transportation Law. “Five months ago, Dan Shelley was a top lobbyist helping corporations such as Cintra win the multibillion-dollar contract to build the Trans Texas Corridor, a superhighway championed by Mr. Perry,” the Dallas Morning News reported in February 2005. “Now he is the governor’s point man in the Capitol, helping write transportation law… State records showed Mr. Shelley met at least five times with state transportation officials on behalf of Cintra before the company won a multibillion-dollar road deal.” By August 2006, the Associated Press reported that Shelley had returned to Cintra for a lucrative payout: “Shelley resigned his state job in September and struck a lobbying deal with Cintra worth between $50,000 and $100,000 to work from March through the end of this year. His daughter and lobbying partner, Jennifer Shelley-Rodriguez, will earn between $25,000 and $50,000 from the company over the same period, state records show.” [Dallas Morning News, 2/17/05; Associated Press, 8/18/06]

Perry’s Portfolio

Perry Bought Land From Close Friend At $150,000 Below Market Value. In July 2010, the Dallas Morning News reported extensively on Perry’s lucrative real estate dealings: “Three years after Gov. Rick Perry’s biggest real estate score, questions persist about whether the governor benefited from favoritism, backroom dealing and influence-buying… At the center of the dispute is a gently sloping, half-acre grassy lot on the shore of Lake Lyndon B. Johnson in the Texas Hill Country resort of Horseshoe Bay. The resort is owned by Doug Jaffe, whose family has long, deep and sometimes controversial ties to Texas politics. Jaffe’s company had sold the parcel to state Sen. Troy Fraser, R-Horseshoe Bay, a friend and political ally of Perry’s. Fraser sold the lot to Perry for just above $300,000. An appraiser hired by The News determined that the land actually was worth $450,000 when Perry bought it. [Dallas Morning News, 7/25/10]

Perry Sold Horseshoe Bay Property For $1.15 Million, Potentially $350,000 Above Market Value. “Perry sold the property in 2007 to Alan Moffatt, a British national who is a business partner and close associate of Jaffe’s. Moffatt, as the owner of an aviation firm, was questioned, but never prosecuted, for his company’s international arms shipments to Africa in the 1990s. He paid Perry $1.15 million for the parcel. The News’ appraiser, who has decades of experience in Horseshoe Bay real estate, found that price to be $350,000 above market value. Moffatt denied that anything improper occurred in the transaction. ‘It just happened that the governor of Texas owned that lot,’ he said. ‘It was a good deal for me.’” [Dallas Morning News, 7/25/10]

Perry Claimed Homestead Tax Break On Second Home. “Gov. Rick Perry lives, works and votes in Austin,” the Associated Press reported in August 2009. “But he also claims to be a resident of College Station, Texas, where he owns a house and gets a tax break designed for local homeowners, records obtained by The Associated Press show… Perry’s daughter, Texas A&M student Sydney Perry, lives in the home and has roommates that pay rent to the family, officials said.” Within a day of the story’s publication, Perry withdrew his homestead exemption and announced plans to refund the $183.16 school tax break he had received. [AP, 8/11/09, 8/12/09]

Perry Fined By Ethics Panel For Failing To Report Rental Income. “Gov. Rick Perry was fined $1,500 by the Texas Ethics Commission on Wednesday for failing to report rental property in College Station and for filing incomplete information regarding debts on the property,” the Houston Chronicle reported in March 2011. “According to the commission, the total income Perry failed to disclose on personal financial statements in 2009 and 2010 was between $7,000 and $29,995. Perry also failed to disclose all of the debts and the names of the banks holding notes and leases on the College Station house.” [Houston Chronicle, 3/23/11]

Perry Earned $38,000 Profit After Selling Shares In Donor’s Company. According to the Associated Press, “Buying land low and selling it high isn’t the only way Perry has pushed his income above his salary. He turned a $38,000 profit in 1996 after selling shares of Kinetic Concepts, Inc., the hospital equipment company founded by wealthy Republican donor James Leininger.” [AP, 9/26/09]

Perry’s Shares Purchased The Same Day A California Investment Group Bought 2.2 Million Shares. According to the Dallas Morning News, “Mr. Perry said it was a coincidence that 2,800 shares of stock in a hospital equipment company, Kinetic Concepts Inc., were purchased on his behalf on the same day a California investment group began buying 2.2 million shares in the company, boosting the stock’s value.” [Dallas Morning News, 5/15/98]

Perry Had Spoken With Kinetic Concepts CEO James Leiniger The Same Day As His Stock Purchase. According to the Dallas Morning News, “On Jan. 24, 1996, Mr. Perry was in San Antonio to speak at a luncheon sponsored by the Texas Public Policy Foundation, a group founded by Mr. Leininger. The same day, 2,800 shares of Kinetic Concepts stock at about $10.40 a share were purchased, according to Mr. Perry’s personal financial statement. Mr. Perry and Mr. Leininger both said they did not discuss the company or its stock at the luncheon… Mr. Leininger, whose family was selling 6 million shares of stock in a public offering, said he did not know that San Francisco investors Richard Blum and Jerald Weintraub were preparing to buy 2.2 million shares. He said that if he had known, it would have been illegal to pass on inside information.” [Dallas Morning News, 5/15/98]

Perry: “I May Have” Said To Buy More Kinetic Stock. “Perry said he has never talked to Leininger about his company’s stock. Perry said his stockbroker said the Jan. 24 stock was bought due to customer order, but Perry said he does not remember placing that order. ‘I may have called and said sell something that’s not performing and buy some more KCI stock. It was a stock that was going up at that particular time,’ Perry said.” [Houston Chronicle, 5/22/98]