Managers of tobacco suit money aided GOP
HOUSTON â€“ Within weeks of getting Comptroller Carole Keeton Rylander's OK to manage the state's $1.4 billion tobacco lawsuit settlement money, principals in four money management companies donated $38,000 to a Republican political fund, the Houston Chro
A fifth company donated money directly to Ms. Rylander, the newspaper said, citing reports filed with the Texas Ethics Commission.
The five money management companies stand to make $1.2 million a year in fees for investing the state's money.
The newspaper said New York money manager Thomas Valenzuela gave $12,000 to the Associated Republicans of Texas in the month his contract with Ms. Rylander's office became effective. Then, on the day the political committee received the money, it donated $10,000 to Ms. Rylander's political account.
The donations were a coincidence, Rylander spokesman Mark Sanders told the Chronicle, noting that the Associated Republicans of Texas have given her $75,000 in contributions since 1993.
The principals in the investment firms could not be reached for comment Monday, the Chronicle said.
Nothing illegal has been suggested about the campaign contributions from the state's outside money managers, but critics called it unseemly.
Suzy Woodford, executive director of Common Cause of Texas, called it "an outrage" that Ms. Rylander has sole control over the investing of $1.4 billion in taxpayers' money without oversight.
"It stinks to high heaven when you've got an elected official who has the power to give out more than $1 billion to companies that then contribute to a political fund that then makes contributions to her," Ms. Woodford said.
Eight days after the comptroller's office reported committing an $8 million investment with Techxas Ventures II L.P. of Austin, general partners Bruce Ezell and Michael La Vigna donated $10,000 each to the Associated Republicans, the newspaper reported.
Neither Mr. Valenzuela nor Techxas Ventures made any other contribution to a Texas political fund in 1999, the Chronicle said.
Other firms whose principals contributed to the Associated Republicans after receiving contracts from Ms. Rylander were Chicago Equity Partners of Illinois and Vaughn, Nelson, Scarborough & McCullough of Houston.
A Maryland subcontractor for the firm of Davis Hamilton Jackson & Associates of Houston donated $9,500 directly to Ms. Rylander, the Chronicle reported.
The money involved in Ms. Rylander's investment decision resulted from her management of a portion of the state's $17.3 billion lawsuit settlement with the tobacco industry.
One of Ms. Rylander's 1998 campaign promises was to push state lawmakers to use a portion of the lawsuit money to fund a state teacher pay raise.
"This money must be a windfall for our classroom teachers, not a windfall for lawyers, lobbyists and Austin insiders," Ms. Rylander said during her election campaign.
The House is scheduled Tuesday to debate legislation to crack down on potential conflicts of interest at the Permanent School Fund.
That bill would give the comptroller the power to cancel school fund money-manager contracts when conflicts of interest occur. It also would establish a financial committee appointed by the governor, lieutenant governor and House speaker to advise the State Board of Education on investment decisions.
While the bill would give comptroller oversight authority over the Permanent School Fund, it does not address potential conflicts of interest with her office.