11.18.11

Rick Perry Offered State Jobs to Personal Business Contacts

Rick Perry proposed this week locking up lawmakers who use their position for personal gain. But as Texas governor he mixed state and personal business on occasion, Daniel Stone reports.

GOP presidential hopeful Rick Perry, who is running an ad this week in Iowa promising he would stop Washington politicians from cashing in on their jobs, has mixed personal and official business on occasion as Texas governor.

Shortly after he entered the governor’s office in 2001, for instance, Perry reportedly bought land from a state senator at a below-market price and then turned an $850,000 profit just six years later. Along the way, at least two people—a lawyer and real estate broker—involved in the deal landed state appointments from Perry. Likewise, the Texas governor named two partners in a natural gas venture he co-owned to plum state jobs, The Daily Beast has confirmed.

Such transactions during his tenure lead some ethics observers to question whether Perry’s current attack on Washington ethics smacks a bit of hypocrisy.

“Perry’s not known for his consistency,” says Melanie Sloan, the director of the nonpartisan ethics watchdog group Citizens for Responsibility and Ethics in Washington. “The fact that he’s being hypocritical on this issue is not surprising. It’s convenient.”

Perry’s campaign takes umbrage at any suggestion that the Texas governor did anything wrong, noting his Texas appointments required independent state Senate confirmation, and that the governor placed all his financial investments in a blind trust in 1998, leaving control of investment decisions to a broker outside his control. The governor keeps his personal matters and official business distinctly separate, campaign spokesman Ray Sullivan told The Daily Beast on Wednesday.

Whatever the case, Perry’s struggling campaign has pivoted this week to the question of Washington ethics, taking advantage of stories earlier this week in Newsweek and on CBS’s 60 Minutes highlighting members of Congress whose personal stock transactions created the appearance they were cashing in on their jobs. Perry’s ad promises he would support a law as president that would lock up any lawmaker who tried to profit from insider trading.

In his state, though, Perry might have difficulty facing his own questions about insiders connected to his businesses.

A 2010 investigation by the Dallas Morning News detailed how Perry in 2001 bought a half-acre plot next to Lyndon B. Johnson Lake in a resort known as Horseshoe Bay in Texas Hill Country. Through a series of transactions, Perry bought the land from a state senator, Troy Fraser, for $300,000, about $150,000 less than an independent analysis had said it was worth. Six years later, Perry sold the land for $1.15 million, netting more than $800,000 in just six years, as the resort was built up around the property and the entire region grew in value, according to details published by the newspaper and verified by The Daily Beast.

At least two players involved along the way in the land transaction ended up with state appointments. Colleen McHugh was an attorney Perry hired to fight his property tax bill related to the deal. He didn’t pay her money, according to the investigation, but while she litigated the deal that ended up saving Perry about $14,000, she also was serving as chairwoman of the Texas Public Safety Commission, a position Perry had appointed her to. A year later, she was nominated for a seat on the University of Texas Board of Regents, also by Perry.

Ron Mitchell, the man who reportedly brokered Perry’s 2007 sale, was appointed by Perry two years later to a seat on the Texas State University System’s Board of Regents.

McHugh declined to speak about the matter. Mitchell did not respond to requests seeking comment.

Earlier this fall, The Daily Beast’s Steve McVicker reported on another Perry deal whose partners landed state jobs. Perry’s investments in MKS Energy, a Texas firm that controls nearly $3.4 million in gas rights in a prominent Texas shale field, earned him $25,000 last year.

The company was founded by one of Perry’s friends, Ric Williamson, who is now deceased, and was a former colleague and mentor of Perry’s in the Texas state legislature. In 2001, after taking over as governor, Perry appointed Williamson to a seat on the Texas Transportation Commission. Williamson advocated for Perry’s ultimately doomed plan to build a 4,000-mile toll-road system called the Trans-Texas Corridor that would have run through property owned by MKS.

Williamson died in 2007. One year later, Perry appointed Williamson’s widow, Mary Ann Williamson, to the Texas Lottery Commission. Two years later, he elevated her to become the commission’s chairperson. Williamson didn’t respond to The Daily Beast’s calls last month.

“The fact that he’s being hypocritical on this issue is not surprising. It’s convenient.”

Sullivan, the campaign spokesman, said there was no connection between the governor’s business dealings and his appointments, and pointed out that many of the positions were without salaries. “Perry appointees are all subject to Senate review and confirmation,” Sullivan said.

A liberal-leaning watchdog group, Texans for Public Justice, has questioned Perry’s blind trust. The governor knew his partners in the company, the group has said, and appointed them to state offices while his stake in the company was generating him personal income.

Perry’s blind trust “does not appear to be totally blind—except to the extent that love is blind,” the group said last month.