Posted on 02/11/2005 7:35:46 PM PST by BobL
Former Perry aide among those hired to lobby Texas agencies.
By Martin Z. Braun, Eddie Baeb
Friday, February 11, 2005
The top underwriter of U.S. municipal bonds last year, UBS AG, also led in another category: paying former government officials to help it win contracts to underwrite the debt public agencies use to build schools, hospitals and roads.
The Zurich, Switzerland-based bank paid $2.4 million last year to 28 consultants, including Ray Sullivan, a spokesman for President Bush when he was governor and a former aide to Gov. Rick Perry. Sullivan's wife, Leslie, is finance director of Perry's campaign.
According to Texas Ethics Commission filings, Sullivan is paid between $50,000 and $99,999 a year as a registered lobbyist for UBS, which was recently hired to back the state's transportation bonds and is the main underwriter for the bonds that will pay for the U.S. 183-A toll road.
The company also donated $30,000 to the Republican Party of Texas's administrative account in the third quarter of 2004.
Sullivan referred questions Thursday to UBS officials. They did not immediately return phone calls but have previously defended the process of paying consultants.
A Perry spokeswoman and a state transportation official dismissed suggestions of improper influence.
"I can honestly tell you we had no influence from any elected official," said James Bass, chief financial officer for the Texas Department of Transportation.
The use of consultants by bond underwriters has come under scrutiny by the Municipal Securities Rulemaking Board, which regulates U.S. dealers in municipal bonds. More than 80 percent of the nation's municipal bonds are privately arranged, without competitive bidding.
"The fundamental question that's being avoided or evaded is whether or not undue influence is being brought to bear," said William Kittredge, 55, founder of the Center for the Study of Capital Markets and Democracy in Arlington, Va. "Is the public suffering as a result by paying more?"
The 10 largest underwriters paid $11.2 million to bond consultants last year, according to filings with the rulemaking board.
In September, UBS was named as a senior manager on the first-ever sale of highway bonds for the Texas Mobility Fund in April, a $1 billion deal. A year before, UBS donated $20,000 to a successful referendum campaign to authorize the sale of $3 billion in highway bonds.
Bass, of the Transportation Department, said UBS was selected through a competitive process. Firms were scored based on their knowledge of state legislation, expertise in transportation finance and ideas "to maximize leverage," he said.
UBS is also the primary underwriter for a $248 million bond sale the Central Texas Regional Mobility Authority will offer Tuesday. The money will be used to build and operate U.S. 183-A, an 11.6-mile toll road east of Cedar Park and Leander. Sullivan, the former Bush and Perry aide, has made sporadic appearances over the past year at the monthly meetings of the mobility authority board.
Perry press secretary Kathy Walt said the governor prohibits former employees from lobbying his office for one year or one legislative session after they leave. Sullivan last worked for the governor's office in 2001 and on his campaign in 2002.
"The governor doesn't have anything to do with who TxDOT selects or with their bidding process," she said.
UBS's highest-paid consultant in 2004 was National Strategies Inc., a Washington-based firm paid $767,542 to solicit bond work, according to bank filings. Headed by Al Gordon, a former aide to former New York Gov. Mario Cuomo, the firm helped UBS win $7.9 billion in underwriting work in California.
UBS spokeswoman Susan Austin said in a statement: "The firm's use of consultants is fully transparent and complies with applicable MSRB rules." Gordon didn't return calls seeking comment.
Last year, the Municipal Securities Rulemaking Board sought to ban underwriters from hiring consultants. In a notice filed April 5 on the proposal, the board wrote: "Some consultant practices challenge the integrity of the municipal securities market."
The fact that the largest banks paid the most to consultants shows the benefits of hiring politically connected people to win bond work,Kittredge said.
Additional material by staff writers Mike Ward and Ben Wear.
By the way, I'm on record as saying that I will SHUT UP the moment that Perry drops this TTC scheme and all of the toll roads that he's shoving down our throats - and goes back to using the gas tax (hopefully then increased) to pay for our FREEWAYS.
I couldn't care if Kay runs, other than to do all I can to support her, if it stops this INSANE toll road plan. (and yes, once the plan is dropped, then I have no use for Kay - because Perry is MUCH better than her on just about every other issue)
But others seem to attack Kay pretty hard, which leaves me wondering whether they really support the TTC plan, or support Perry despite the plan.
I predict she'll do both.
Well I'm no "East Coast Liberal" but rather a Ft Bend Conservative. KBH will give Perry a real run for his money and I believe she can beat him. I'm wondering where your statement about the Senator and news coverage comes from ... a dream perhaps? She has looked at the Governors office for years and wants to return to Texas.
"she would if she had an opponent"
I don't know her history that well. But the Primary was open 6 years ago, and no one chose to run against her - and it be tough for anyone to challenge her Senate seat, she simply doesn't usually anger conservatives (like the way Specter does).
But I do tend to agree that it will be quiet a show to watch if she runs for governor - and all outcomes are possible.
The fact that it gives the appearance of a CONFLICT OF INTEREST, and that is far too common a theme for the Perry Administration. Between high dollar contracts going to ex-employee cronies, railroad comissioner nods going to the unqualified state rep spouse of a rich donor, and judicial benches all over the state going to the big city mega-law firms that dispense the campaign cash, there is more than enough reason to raise ethics questions about the Perry administration's decision making process. The man is immersed in decisions that have conflict of interest written all over them. About the only thing he's missing at this point is his own Craig Livingstone and a crooked real estate deal.
Well state. I tend to do better discussing toll roads.
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