| In our last installment, Ben Barnes and John Connally had gone belly up as their real estate empire foundered on the collapse of Texas land prices in the late 1980s. Connally died shortly thereafter, but Ben Barnes picked himself up. From Texas Monthly:
The highly publicized end of the Barnes-Connally real estate partnership appeared to foil his attempt to regain power and influence. "I didn't have anything but my father's red pickup truck," he told me. So he returned to politics-not as a candidate, but as a lobbyist. "Somebody who knew me needed a favor in state government," he said. "He called a friend of mine to see if I could help him in Austin. I had always tried to help friends whenever I could, but I never took money for it. My friend told him, 'Ben's broke. You have to pay him now.'" He landed the two biggest lobbying jobs that the Capitol has ever seen: the bullet train and the lottery. His first big client was a French group competing with a German rival for the right to build a high-speed rail line in Texas. As Barnes tells it, the bill authorizing a study for the train was languishing in the Legislature with three weeks left in the session when he was hired. Barnes went to see Bob Lanier, the chairman of the Highway Commission, who was the chief opponent of the bill but also a former political ally. Barnes didn't waste time on facts and figures. "Bob, I got to pass this bill," he told his old friend. Lanier withdrew his opposition. As Barnes remembers it, "He told people, 'Barnes is such a scoundrel, I just got to help him.'"
The French client won the right to build the train, but even Barnes couldn't squeeze financial assistance out of the Legislature. In the meantime, Gtech had hired him to help pass the lottery. The Basses of Fort Worth were early investors in GTech, and their lawyer, a longtime Barnes supporter named Dee Kelly, recommended him. In frantic maneuvering at the end of the 1991 legislative session, Barnes had three hours to get three votes in the Senate, which he did. "It was harder than anything I had to do as Speaker or lieutenant governor," he says. Years later, the details of his relationship with GTech came out during an investigation of the company by the Texas Lottery Commission. In addition to his lobbying contract of $25,000 a month, Barnes and a partner received 3.5 cents from every lottery ticket sold, or more than $3 million a year. Under pressure from the commission, the company severed its dealings with Barnes-for a buyout price of $23 million.
Some reporters, notably Jim Moore and Greg Palast, have written a great deal about the fact that Barnes refrained from coming forward about helping George W. Bush get into the National Guard until it came out in court in the late 1990s. They have alleged that there was some kind of quid pro quo between Harriet Miers, Bush's Lottery Commissioner, and Barnes in which he kept quiet and GTech kept the contract.
I spoke to Governor Barnes about these charges after he saw the first post in this series and he emphatically denied them. According to Barnes, the incoming Bush administration, particularly Karl Rove, were very eager to get rid of Barnes AND GTech. The contract went to Gtech's chief competitor who, according to Barnes, just wasn't up to the massive task of running a lottery in all 254 Texas counties and the contract went back to GTech.
The Texas Observer paints a slighty different picture:
(In early 1997) federal prosecutors implicated GTECH lobbyist Ben Barnes, a prominent Democrat, and former Texas House speaker and lieutenant governor, in kickback allegations against a GTECH executive. Barnes was later cleared of any wrongdoing in that case, but the news focused attention on Barnes' lobbying contract with GTECH. Barnes had helped bring the lottery and GTECH to Texas. The company paid him a percentage of its earnings from the Texas Lottery, as long as Barnes helped it keep the contract. Together, Barnes and lobby partner Ricky Knox were earning a reported $3 million a year, which was 4 percent of GTECH's annual revenues on their Texas contract, according to press accounts at the time. Neither man would comment for this story. Amid public pressure and criticism from (Bush Lottery Commissioner Harriet) Miers, GTECH cut Barnes loose, buying out his contract in February 1997 for a cool $23 million. But his role in the Harriet Miers and George W. Bush story was far from over.
In February 1997, Miers and the Lottery Commission began to discuss replacing GTECH as the lottery operator. It was an issue fraught with power politics given the billions at play in the lottery: the Texas Lottery contract accounted for about 15 percent of GTECH's total revenues at the time. Adding to the intrigue, Miers' Dallas law firm had, until 1996, represented EDS, a company openly interested in taking GTECH's place. "Certainly I will tell you that we had issues with GTECH," says Anthony Sadberry, a Houston attorney who served on the Lottery Commission at the time with Miers. "But I don't believe it was anyone saying, `because of these things we're hearing, we should rebid the contract.' My sense is that all three commissioners wanted to know if we had the best deal we could get and was there something better out there."
The commission hired Lawrence Littwin, a New Yorker and veteran lottery operator, as executive director in June 1997. It would be his responsibility to seek proposals to replace GTECH. Miers and the Lottery Commission had gone through two interim directors since Linares' firing five months earlier. Littwin's presence caused more controversy, though, not less. He had once worked as an executive for GTECH's main rival, AWI, a company that craved the Texas contract. Littwin also launched an investigation of GTECH campaign contributions to state legislators. When it became public that Littwin had sent lottery investigators to sift through state campaign records, several prominent state officials, including Miers, attacked Littwin in the media. Commissioners voted to fire their relatively new hire-the fourth director in less than a year-in October 1997.
In the meantime, the State Auditor's Office had released a scathing report on the Texas Lottery in August 1997-more than two years after Miers' arrival. The auditor's report brimmed with accusations of conflicts of interest and poor management. It cited the lottery for maintaining too little oversight of GTECH and accused the company of a "less than arms length relationship" with elected state officials and the Lottery Commission.
And yet, despite all the criticism of GTECH and the lottery, Miers and the commission decided to keep the company as their contractor. In February 1998, after a year of taking proposals from other potential contractors at a cost of more than $300,000 to the state, the three commissioners voted to close down the bidding process. Then-Executive Director Linda Cloud had decided to end the bidding, saying that GTECH's deal was the best the state could get. Miers and the commission ratified the decision.
I don't know the answers here. I do know that GTech has an ugly record involving multiple criminal convictions.
I also found this story from the October 30, 1999 issue of the Austin American-Statesman (no link, I had to use Lexis Nexus):
A lawsuit that led to the disclosure of details about how young George W. Bush got into the National Guard was settled Friday by a former Texas Lottery director and the firm he blamed for his 1997 firing.
Gtech, operator of the Texas Lottery, agreed to pay $300,000 to Lawrence Littwin. The company denied any wrongdoing and called the settlement a "business decision that was in the best interest of our company and the Texas Lottery."
"The company is extremely disappointed and frustrated that it ultimately became necessary to reach a settlement of this matter," Gtech spokesman Marc Palazzo said. "The cost and time associated with litigating this case would have been extensive and far more than the settlement."
Littwin and his attorneys were unavailable for comment Friday. In the settlement, Littwin accepted a confidentiality agreement severely limiting what he can say about the case.
Court records show Littwin wanted $2.6 million from Gtech. His lawsuit claimed the company had undue influence over the Texas Lottery Commission -- influence that led the commission to fire him -- because former Lt. Gov. Ben Barnes, a former high-dollar lobbyist for Gtech, had potentially damaging information about how Bush got into the National Guard. Gtech had cut its ties with Barnes -- paying $23 million to Barnes and associate Ricky Knox to terminate their contract -- before Littwin's five-month tenure at the Lottery Commission.
Last month, in a deposition sought by Littwin's lawyers, Barnes was asked whether, while serving as speaker of the Texas House in 1968, he helped Bush get into the Texas Air National Guard.
After the deposition, Barnes issued a statement saying he had been asked by Houston businessman Sidney Adger, a longtime Bush family friend, to recommend George W. Bush for the Guard slot that he eventually got. The statement said nobody in the Bush family had asked for favorable treatment for George W. Bush.
The governor and his father have said they were unaware of any efforts by Adger to get the younger Bush into the Guard. Littwin's lawsuit said Barnes "is alleged to have helped the current Governor George Bush avoid active duty during the Vietnam War."
The lawsuit also noted that two top former Bush aides, Reggie Bashur and Cliff Johnson, became Gtech lobbyists after leaving the governor's staff.
Back to the Observer:
Littwin filed a lawsuit against GTECH in federal district court in Dallas in December 1998, claiming that the company had orchestrated his firing. Littwin's attorneys set about trying to take depositions from the lottery's major figures, including Miers, Cloud, and, most intriguingly, Barnes. Included in the Littwin case file is an anonymous letter addressed to U.S. Attorney Dan Mills. The letter alleges that the GTECH contract was extended in 1996 because Barnes held information that could have jeopardized George W. Bush's gubernatorial re-election campaign in 1998. While serving as speaker of the Texas House in 1968, Barnes had been instrumental in helping Bush win a coveted slot in the Air National Guard and thus avoid service in Vietnam. According to the unsigned letter, Reggie Bashur, who served as deputy chief of staff for Governor Bush, approached Barnes with a deal: keep quiet about the National Guard and the $3 million a year from GTECH continues to flow. Sometime after Barnes lost his lobby contract in February of 1997, Bashur took over as GTECH's lobbyist.
Littwin's attorneys convinced a judge to allow them to depose Barnes about the allegations. The September 27, 1999, deposition of Ben Barnes in Littwin v. GTECH Corporation et al. has taken on an almost legendary aura. "It's the unicorn of Texas politics," says Deece Eckstein, director of the Southwest region for the liberal advocacy group, People for the American Way. After the five-hour deposition, Barnes' lawyer Charles Burton read a short statement in which he said his client had acknowledged that he had recommended Bush for the Texas Air National Guard at the behest of a Bush family friend. He also said that he had "no knowledge" that either Bush or his father knew about it. As part of the settlement in the case that came almost exactly a month after the deposition, all documents produced in the litigation, including Barnes' testimony, were ordered to be destroyed or handed over to GTECH.
What else Ben Barnes said in that five-hour deposition is still unknown. Did anyone ever threaten to take away GTECH's contracts if he talked about the governor and his guard service? Was money exchanged between GTECH and elected officials, including those in the governor's office? Was Barnes' $23 million payout in 1997 contingent on GTECH keeping its contract?
If Democratic senators on the Senate Judiciary Committee want to know more about Miers and her tenure on the Lottery Commission, Barnes is the best person to ask. Perhaps no one is better positioned to answer the question of whether Harriet Miers really cleaned up the lottery. |
