Perry's Piggybank: Texas Enterprise Fund Recipients Gave $7 Million To Rick Perry and His Republican Governors Association Texans for Public Justice October 2011 Enterprise
Perry's Piggybank:
Texas Enterprise Fund Recipients Gave $7 Million To Rick Perry and His Republican Governors Association
Governor Rick Perry sold the Texas Legislature in 2003 on the creation of the Texas Enterprise Fund (TEF). Perry has made the program, which awards taxpayer money to companies to create jobs in Texas, a centerpiece of his gubernatorial and presidential campaigns. TEF awards are jointly approved by the governor, lieutenant governor and House speaker. Perry's office claimed in August 2011 that TEF had awarded $439,833,196 to create 59,157 jobs (TPJ's Phantom Jobs report analyzes how Perry inflates these jobs claims).
http://info.tpj.org/watchyourassets/enterprise3/index.html
http://info.tpj.org/watchyourassets/enterprise3/TEFreport.pr.2010.pdf
TEF also helps pay Perry's campaigns bills, as the Texas Observer reported in 2010.1 This report finds that 43 companies that landed a total of $333 million in TEF awards contributed almost $7 million to Perry's campaign and the Perry-affiliated Republican Governors Association (RGA). TEF companies sometimes made corporate contributions directly to the RGA, while company PACs, owners or executives gave to both the RGA and to Perry's campaign (which cannot accept corporate funds).2 These contributions included $1,652,159 to Perry's gubernatorial campaigns and $5,331,701 to the RGA. The 43 TEF recipients that contributed to Perry and/or the RGA represent about half of the 90 companies that received TEF awards but received 76 percent of all TEF-awarded funds.3
Critics allege that Perry uses TEF as a political slush fund. If true, political contributions could offer a useful way to identify some of the most politicized TEF projects. This study finds much wreckage among the TEF projects that have generated the most political contributions. Many TEF projects that heavily supported Perry or the RGA have defaulted on job promises, amended their contracts to lower their job promises, use accounting scams to inflate their job claims or have terminated their TEF contracts altogether.
Perry's No. 1 contributor, the RGA has given Perry's gubernatorial campaigns $4 million since 2006. According to Perry's chief political consultant, Dave Carney, Perry became involved in RGA fundraising that same year.4 Perry has since served as the overall chair and the finance chair of the RGA (see TPJ's report Crony Capitalism: The Republican Governors Association in the Perry Years). This study tracks TEF-associated contributions to the RGA since January 2006 and TEF associated contributions to Perry's gubernatorial campaign since January 2001. The timing of these TEF-related contributions runs the gamut. TEF recipients made their political contributions before signing their TEF contract, after signing their contract—or both. The Washington-based Center for Responsive Politics provided RGA contributions data used in this report.
For the 13 TEF grant recipients that contributed more than $200,000 apiece to Rick Perry and the RGA, this report summarizes what is known about their political contributions and the degree to which they have complied with their TEF contracts.
Enterprise Fund-Tied Contributions to Perry & the Republican Governors Assn.
Total To
Perry & RGA
TEF Recipient Perry Total
1/01 To 7/11 RGA Total
1/06 To 7/11 TEF
Award
Year
$720,251 Hewlett-Packard Co. $25,650 $694,601 $5,000,000 2006
$640,700 General Electric Co. $18,000 $622,700 $4,200,000 2011
$628,350 Golden Living (GGNSC) $0 *$628,350 $2,100,000 2011
$607,495 Frito-Lay (PepsiCo) $0 $607,495 $1,125,000 2009
$591,500 TX Instit. for Genomic Med. $506,500 *$85,000 $50,000,000 2005
$454,233 G-Con, LLC $354,233 $100,000 $3,000,000 2010
$362,430 McLane Co., Inc. $261,126 $101,304 $1,000,000 2009
$300,000 VCE (Cisco & EMC Corp.) $10,000 $290,000 $2,450,000 2011
$292,145 Sanderson Farms, Inc. $165,000 *$127,145 $500,000 2006
$248,450 Motiva (Shell Oil Co.) $13,000 *$235,450 $2,000,000 2006
$232,800 Lockheed Martin Corp. $26,000 $206,800 $5,480,000 2006
$208,775 Fidelity Global Brokerage $4,000 $204,775 $8,500,000 2007
$200,900 Office Depot, Inc. $0 *$200,900 $300,000 2011
$197,056 Home Depot USA $11,000 $186,056 $8,500,000 2004
$168,825 Raytheon Co. $17,500 $151,325 $1,000,000 2005
$145,725 3M Co. $3,500 $142,225 $194,000 2011
$130,500 Nationwide Mut. Insurance $30,500 $100,000 $2,500,000 2010
$124,000 Caterpillar, Inc. $14,000 *$110,000 $9,675,000 '09/'10
$110,900 Medtronic, Inc. $0 $110,900 $6,000,000 2009
$87,500 ebay, Inc. $5,000 $82,500 $2,800,000 2011
$77,925 T-Mobile USA, Inc. $0 $77,925 $2,150,000 2005
$59,950 Texas Instruments $59,950 $0 $50,000,000 2003
$58,500 Washington Mutual, Inc. $8,500 $50,000 $15,000,000 2005
$57,000 Countrywide Home Loans $7,000 *$50,000 $20,000,000 2004
$50,000 Samsung Group $0 *$50,000 $10,800,000 2006
$35,000 Comerica, Inc. $10,000 *$25,000 $3,500,000 2007
$35,000 Rackspace Hosting $35,000 $0 $22,000,000 2007
$35,000 Tyson Foods, Inc. $0 $35,000 $7,000,000 2005
$25,000 IDX Corp. $0 $25,000 $360,000 2011
$22,500 MD Anderson Cancer Ctr. $22,500 $0 $25,000,000 2004
$20,000 Kohl's Corp. $0 $20,000 $750,000 2010
$15,000 Allstate Insurance Co. $10,000 $5,000 $1,100,000 2010
$8,450 Scott & White Hospital $8,450 $0 $7,500,000 2007
$8,000 Vought Aircraft $8,000 $0 $35,000,000 2004
$6,250 Auto. Data Processing (ADP) $0 *$6,250 $3,000,000 2006
$5,000 Sino Swearingen $5,000 $0 $2,500,000 2006
$4,250 Trace Engines, LP $4,250 $0 $
As this report was being compiled, Governor Perry closed a 15-year-old blind trust and publicly disclosed the contents of that investment portfolio. Governor Perry reported that his blind trust held stock in 37 companies during 2010. Texans for Public Justice was surprised to discover that three of these companies had received TEF awards totaling $12.2 million. What are the chances that eight percent of the stocks picked by Perry's blind trustee happen to have received grants from Perry's jobs fund?
Perry's trust held stock in Hewlett-Packard and General Electric, which are TEF's top two political contributors to Perry and the RGA. Perry reported that his trust sold its holdings of both of these companies (which received total TEF awards of $9.2 million) at a loss during 2010's roller-coaster market. TEF awarded $5 million to Hewlett-Packard ($720,251 to Perry/RGA) in 2006 to create 420 jobs. The parties terminated this contract in 2008 before Hewlett-Packard filed a single job-compliance report. The Governor's Office reported that it recovered the money dispersed to this company.
Perry Stock In TEF-Subsidized Companies TEF Award Company Perry Shares RP's Loss/Gain (If Sold) Total Donations To Perry & RGA
$5,000,000 Hewlett-Packard 100-499 -<$5,000 $720,251
$4,200,000 General Electric 500-999 -$5,000-$9,999 $640,700
$3,000,000 ADP 100-499 NA $6,250
$12,200,000 TOTALS $1,367,201
TEF awarded $4.2 million in 2011 to General Electric ($640,700 to Perry/RGA ) for a Fort Worth train factory that promised to create 775 jobs. GE's new TEF project has yet to face job-creation targets. GE also is a junior partner involved with the $25 million that TEF awarded in 2005 to the University of Texas System's MD Anderson Cancer Center to create the Center for Advanced Biomedical Imaging. This project pledged to create 2,252 jobs. To pump up job-creation numbers, however, this TEF project does not just count new jobs at the TEF-funded imaging center. Instead it counts virtually any new job at the UT Health Center or MD Anderson. MD Anderson's payroll has been growing like a cancer for years—long before TEF's birth. To suggest that TEF is responsible for every new MD Anderson job after 2005 is a farce.
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Perry reported that he continued to hold 100 to 499 shares in Automated Data Processing (ADP) in 2010. ADP has reported that it is complying with the terms of the $3 million that TEF awarded to ADP in 2006 to create 1,028 jobs in El Paso. ADP CEO Gary Butler, who is not a regular RGA contributor, gave RGA $6,250 on September 8, 2010. The payroll company's Texas payroll fell 96 jobs short of the 1,028 new jobs that it had promised to create in 2010. ADP was not technically in default, since it had stockpiled surplus TEF job credits in better years.
A nursing home chain calling itself Golden Living or GGNSC ranks No. 3 among TEF donors to Perry/RGA. TEF recently awarded Golden Living $2.1 million, a large amount to create just 100 jobs. TPJ found that GGNSC began moving $628,350 to Perry's RGA in 2008. But researchers could not find out much more about Golden Living or GGNSC until they discovered that Drumm Investors, LLC owns GGNSC. The Government Accountability Office (GAO) mentions Drumm in a recent study on how private investment firms are buying out nursing homes, making it hard to trace nursing-home ownership.5 That report suggests that Drumm and San Francisco-based Fillmore Capital Partners bought out the notorious nursing home company Beverly Enterprises in 2006 (Beverly contributed $513,155 to RGA between late 2002 and early 2006).6 After Beverly overextended itself in a debt-fueled buyout of nursing homes, the company cut costs by slashing its nursing staff. This triggered regulatory negligence charges across multiple states and earned Beverly dishonorable mention in the 1992 book America: What Went Wrong?7 The GAO report suggests that GGNSC stands for Golden Gate National Senior Care.
TEF awarded $1,125,000 to Frito-Lay in 2009 to create 125 jobs. Parent company Pepsico gave $607,495 to the RGA. According to the Governor's Office, Frito-Lay exceeded its job pledge by creating 140 new jobs in 2010.
The Texas Institute for Genomic Medicine ranks No. 5 among TEF donors to Perry/RGA. Perry's alma mater, Texas A&M University, and Houston-based Lexicon Pharmaceuticals established the Institute to clone mouse stem cells with a 2005 TEF award of $50 million. The Houston Chronicle revealed that three families that have been big backers of Perry's campaign controlled 17 percent of Lexicon's stock.8 Led by Houston Texans owner Robert McNair, these investors have contributed $591,500 to Perry/RGA. After Lexicon defaulted on some of its initial job targets, Governor Perry's office amended its contract in 2008. The amendment says Lexicon need not produce a single new job until 2012. If you visit the Institute for Genomic Medicine, you won't find the 5,000 new jobs that it promised to create. In its creative accounting for these jobs, TEF assumes that the Institute is responsible for every new Texas job that falls into any of 24 biotech industry classifications.
The Institute for Genomic Medicine is but one example of the keen interest that Perry's development slush funds have shown in the governor's alma mater. Perry's office triggered 2009 legislative inquiries when it moved $50 million from TEF into the Emerging Technology Fund and bypassed an advisory panel to award that money to Texas A&M University. A&M received money to create a fast-track drug lab called the National Center for Therapeutics Manufacturing.9 Around that time Perry's slush funds also granted state money to two intertwined biotech firms that work with A&M. The Emerging Technology Fund awarded $1.75 million in 2009 to Gradalis, Inc. and TEF awarded $3 million in 2010 to G-Con, LLC. Gradalis owns 10 percent of G-Con and two big Perry contributors own stakes in Gradalis, according to the Dallas Morning News and New York Times.10 Gradalis investor John McHale of Austin ordinarily backs Democrats. Yet when Perry's slush funds awarded a total of $4.75 million to Gradalis and G-Con in 2009 and 2010, McHale contributed a total of $100,000 to Perry's campaign. Longtime Perry patron James Leininger ($339,233 to Perry/RGA) also owned Gradalis stakes. Finally, David Shanahan, a principal at both Gradalis and G-Con, contributed $15,000 more to Perry's campaign.
Four-Year Money Timeline For G-Con and Gradalis
Date
Event
3/19/07 Gradalis investor Jim Leininger gives RGA $50,000.
6/12/07 Gradalis investor Jim Leininger gives RGA $50,000.
9/19/07 Gradalis investor Jim Leininger gives Perry a $19,232 jet flight.*
12/6/07 G-Con/Gradalis principal David Shanahan gives Perry $5,000.
12/11/08 Gradalis investor Jim Leininger gives Perry $25,000.
2/19/09 ETF awards Gradalis $1.75 million.
6/26/09 Gradalis investor Jim Leininger gives Perry $25,000.
11/10/09 G-Con/Gradalis principal David Shanahan gives Perry $10,000.
12/4/09 Gradalis investor John McHale gives Perry $50,000.
5/1/10 TEF awards G-Con $3 million.
9/3/10 Gradalis investor John McHale gives Perry $50,000.
TEF awarded $1 million in 2009 to a unit of the McLane Group, a grocery wholesale company run by longtime Perry supporter and Houston Astros owner Drayton McLane, Jr. ($362,430 to Perry/RGA). That TEF contract says McLane Advanced Technologies, LLC will create 225 jobs by the end of 2011. Perry's office periodically updates a list of TEF projects posted on the Internet. Copies of that list printed around the time of TEF's 2009 grant to McLane dutifully list this project as producing 225 jobs. In late 2010, however, the Governor's Office began posting versions of that list that left the "Jobs" field blank for the McLane project. In another anomaly, under the Public Information Act Texans for Public Justice obtained from the Perry's office a chart summarizing 2010 TEF job numbers (presumably taken from the TEF compliance reports that the Governor's Office has yet to release). That chart oddly makes no mention of McLane, which promised to create 100 jobs by the end of 2010 and 225 jobs by the end of 2011.
Computer companies Cisco and EMC Corp. started Virtual Computing Environment Co. (VCE). Intel also invested in this computer venture, which landed a $2.45 million TEF contract in 2011 to create 434 jobs. Cisco and Cisco CEO John Chambers gave $240,000 to RGA. Chambers also gave $10,000 to Perry's campaign. Intel gave the RGA $50,000. VCE complied with its initial pledge to create 55 jobs by the end of 2010, according to the Governor's Office.
TEF awarded Sanderson Farms $500,000 in 2006 for a chicken hatchery and processing plant that pledged to create 1,312 low-paying jobs lasting through 2009. Sanderson fell 200 jobs short in 2009, reportedly paying $81,891 in penalties. Starting in 2007, Sanderson Farms and CEO Joe Sanderson, Jr., began moving a total of $127,145 to the RGA. Joe Sanderson also gave $165,000 to Perry's campaign.
TEF awarded $2 million in 2006 to Motiva Enterprises (a joint venture of Shell Oil and Saudi Aramco) to create 300 refinery jobs by the end of 2010. In 2008 Motiva laid off workers and rolled back the completion date for its refinery expansion from 2010 to 2012. The parties amended the contract in 2009, giving Motiva two more years to deliver the 300 jobs. Motiva reported 258 jobs in 2010, 42 jobs short of its original contract but 108 jobs over its amended contract. Starting in late 2006, Motiva partner Shell began moving $235,450 to the RGA. Shell also contributed $13,000 to Perry's campaign.
TEF awarded $5.48 million to Lockheed Martin Corp. in 2007 to create 800 new jobs at a Houston rocket plant. Falling 97 jobs short in 2008, Lockheed amended the contract to just require the company to create 550 jobs. In 2009 Lockheed reported 677 jobs, which surpassed the amended target but fell 123 jobs short of its original pledge. By 2010 Lockheed reported 503 new jobs, which didn't even fulfill its amended contract. Lockheed, which gave $232,800 to Perry/RGA, announced that it would lay off 1,200 workers nationwide in 2011.11
Office Depot scored a $300,000 TEF award in 2011 to create 203 jobs. Office Depot, which began backing the RGA the year before it landed this grant, has given the RGA $200,900. The Governor's Office has not released any details on this grant.
Fidelity Global Brokerage landed an $8.5 million TEF grant in 2007 to create 1,535 jobs. Fidelity gave $208,775 to Perry/RGA. After defaulting on its job promises, Fidelity got Perry's office to amend its contract. The amendment slashed Fidelity's job targets from 1,535 to 850 jobs, gave it five more years to produce fewer jobs and required the company to repay $4 million of its grant. Fidelity reported 177 jobs in 2010. That falls 1,358 jobs short of its original promise and 13 jobs short of its amended pledge.
Texans for Public Justice
snip...
http://info.tpj.org/reports/pdf/PerryPiggybankTEF.pdf
Report: Nearly half of state grantees donated to Perry
By PEGGY FIKAC, AUSTIN BUREAU
Updated 09:47 p.m., Thursday, October 13, 2011
AUSTIN - Nearly half the companies that received Texas Enterprise Fund grants also made donations to Gov. Rick Perry's state campaigns or the Republican Governors Association, according to a report released Thursday by a watchdog group.
The governors association, which Perry twice chaired, has been his top state campaign contributor.
The report - "Perry's Piggybank" - by Texans for Public Justice says 43 companies gave nearly $7 million in political contributions to Perry or the RGA.
To date, 90 companies have been awarded $439 million in state economic development grants from the Perry-championed Texas Enterprise Fund.
The companies that gave political contributions to Perry or the RGA got $333 million, or about three-quarters, of the grant money. That includes companies that donated before or after signing their contracts for the grants.
The report says many of the projects whose companies donated heavily to Perry or the RGA have defaulted on job promises, amended contracts to lower job goals, inflated job claims or terminated their contracts.
"Where there is a cozy connection between a powerful and-or monied interest, I think people naturally are suspicious of the money being more influential than the merits," said Sheila Krumholz of the Center for Responsive Politics, whose RGA contribution data was tapped for the report. "I think it resonates with voters ... all the way across the spectrum, including the tea party and the occupiers, beyond mainstream Democrats, Republicans and independents."
Perry's campaign attacked the report, defended the grant process as above board and beneficial to state job creation, and said many of the companies cited gave nearly an equal amount to the Democratic Governors Association during the same period.
Should he become the GOP nominee, questions about state perks for Perry donors could squelch a key Republican attack against the Obama administration over a $535 million loan to the now-bankrupt Solyndra. Perry already has had to fight off accusations of "crony capitalism" from some GOP opponents.
"It's common to have these types of incestuous relationships ... in part because that's the way the system works. There also are probably a lot of people out there who donated who didn't receive funds," said Mark Jones, professor of political science at Rice University. "What it really does is it means you can't go after Solyndra if you are Rick Perry."
'Based on merits'
The governor's office has noted that companies found to have failed to meet their obligations must repay some grant funds. Campaign spokeswoman Katherine Cesinger emphasized Thursday that project funding must get approval from the lieutenant governor and House speaker, as well as the governor.
"Funds are awarded based on the merits of the projects, including job creation, and the TEF is key to Texas' ability to successfully compete with other states economically," Cesinger said.
The report toted up nearly $1.7 million that went directly to Perry's campaigns from January 2001 through last June. It cited $5.3 million in donations to the RGA from January 2006, when Perry became involved in association fundraising, through June.
The donations, including direct corporate contributions to the association, plus money to Perry or the RGA from company political action committees, executives or owners.
Also gave to Dems
Andrew Wheat, of Texans for Public Justice, said Perry's camp is correct that many companies that gave to his campaign and the RGA also gave to Democrats.
"The No. 2 political contributor in our report was General Electric, whose CEO runs Obama's Council on Jobs and Competitiveness. When Obama gives tax dollars to corporate supporters, as in the Solyndra case, it's no prettier than when Perry does it," Wheat said.
http://www.chron.com/news/houston-texas/article/Report-Nearly-half-of-state-grantees-donated-to-2217889.php#loopbegin
Perry's Piggybank:
Texas Enterprise Fund Recipients Gave $7 Million To Rick Perry and His Republican Governors Association
Governor Rick Perry sold the Texas Legislature in 2003 on the creation of the Texas Enterprise Fund (TEF). Perry has made the program, which awards taxpayer money to companies to create jobs in Texas, a centerpiece of his gubernatorial and presidential campaigns. TEF awards are jointly approved by the governor, lieutenant governor and House speaker. Perry's office claimed in August 2011 that TEF had awarded $439,833,196 to create 59,157 jobs (TPJ's Phantom Jobs report analyzes how Perry inflates these jobs claims).
http://info.tpj.org/watchyourassets/enterprise3/index.html
http://info.tpj.org/watchyourassets/enterprise3/TEFreport.pr.2010.pdf
TEF also helps pay Perry's campaigns bills, as the Texas Observer reported in 2010.1 This report finds that 43 companies that landed a total of $333 million in TEF awards contributed almost $7 million to Perry's campaign and the Perry-affiliated Republican Governors Association (RGA). TEF companies sometimes made corporate contributions directly to the RGA, while company PACs, owners or executives gave to both the RGA and to Perry's campaign (which cannot accept corporate funds).2 These contributions included $1,652,159 to Perry's gubernatorial campaigns and $5,331,701 to the RGA. The 43 TEF recipients that contributed to Perry and/or the RGA represent about half of the 90 companies that received TEF awards but received 76 percent of all TEF-awarded funds.3
Critics allege that Perry uses TEF as a political slush fund. If true, political contributions could offer a useful way to identify some of the most politicized TEF projects. This study finds much wreckage among the TEF projects that have generated the most political contributions. Many TEF projects that heavily supported Perry or the RGA have defaulted on job promises, amended their contracts to lower their job promises, use accounting scams to inflate their job claims or have terminated their TEF contracts altogether.
Perry's No. 1 contributor, the RGA has given Perry's gubernatorial campaigns $4 million since 2006. According to Perry's chief political consultant, Dave Carney, Perry became involved in RGA fundraising that same year.4 Perry has since served as the overall chair and the finance chair of the RGA (see TPJ's report Crony Capitalism: The Republican Governors Association in the Perry Years). This study tracks TEF-associated contributions to the RGA since January 2006 and TEF associated contributions to Perry's gubernatorial campaign since January 2001. The timing of these TEF-related contributions runs the gamut. TEF recipients made their political contributions before signing their TEF contract, after signing their contract—or both. The Washington-based Center for Responsive Politics provided RGA contributions data used in this report.
For the 13 TEF grant recipients that contributed more than $200,000 apiece to Rick Perry and the RGA, this report summarizes what is known about their political contributions and the degree to which they have complied with their TEF contracts.
Enterprise Fund-Tied Contributions to Perry & the Republican Governors Assn.
Total To
Perry & RGA
TEF Recipient Perry Total
1/01 To 7/11 RGA Total
1/06 To 7/11 TEF
Award
Year
$720,251 Hewlett-Packard Co. $25,650 $694,601 $5,000,000 2006
$640,700 General Electric Co. $18,000 $622,700 $4,200,000 2011
$628,350 Golden Living (GGNSC) $0 *$628,350 $2,100,000 2011
$607,495 Frito-Lay (PepsiCo) $0 $607,495 $1,125,000 2009
$591,500 TX Instit. for Genomic Med. $506,500 *$85,000 $50,000,000 2005
$454,233 G-Con, LLC $354,233 $100,000 $3,000,000 2010
$362,430 McLane Co., Inc. $261,126 $101,304 $1,000,000 2009
$300,000 VCE (Cisco & EMC Corp.) $10,000 $290,000 $2,450,000 2011
$292,145 Sanderson Farms, Inc. $165,000 *$127,145 $500,000 2006
$248,450 Motiva (Shell Oil Co.) $13,000 *$235,450 $2,000,000 2006
$232,800 Lockheed Martin Corp. $26,000 $206,800 $5,480,000 2006
$208,775 Fidelity Global Brokerage $4,000 $204,775 $8,500,000 2007
$200,900 Office Depot, Inc. $0 *$200,900 $300,000 2011
$197,056 Home Depot USA $11,000 $186,056 $8,500,000 2004
$168,825 Raytheon Co. $17,500 $151,325 $1,000,000 2005
$145,725 3M Co. $3,500 $142,225 $194,000 2011
$130,500 Nationwide Mut. Insurance $30,500 $100,000 $2,500,000 2010
$124,000 Caterpillar, Inc. $14,000 *$110,000 $9,675,000 '09/'10
$110,900 Medtronic, Inc. $0 $110,900 $6,000,000 2009
$87,500 ebay, Inc. $5,000 $82,500 $2,800,000 2011
$77,925 T-Mobile USA, Inc. $0 $77,925 $2,150,000 2005
$59,950 Texas Instruments $59,950 $0 $50,000,000 2003
$58,500 Washington Mutual, Inc. $8,500 $50,000 $15,000,000 2005
$57,000 Countrywide Home Loans $7,000 *$50,000 $20,000,000 2004
$50,000 Samsung Group $0 *$50,000 $10,800,000 2006
$35,000 Comerica, Inc. $10,000 *$25,000 $3,500,000 2007
$35,000 Rackspace Hosting $35,000 $0 $22,000,000 2007
$35,000 Tyson Foods, Inc. $0 $35,000 $7,000,000 2005
$25,000 IDX Corp. $0 $25,000 $360,000 2011
$22,500 MD Anderson Cancer Ctr. $22,500 $0 $25,000,000 2004
$20,000 Kohl's Corp. $0 $20,000 $750,000 2010
$15,000 Allstate Insurance Co. $10,000 $5,000 $1,100,000 2010
$8,450 Scott & White Hospital $8,450 $0 $7,500,000 2007
$8,000 Vought Aircraft $8,000 $0 $35,000,000 2004
$6,250 Auto. Data Processing (ADP) $0 *$6,250 $3,000,000 2006
$5,000 Sino Swearingen $5,000 $0 $2,500,000 2006
$4,250 Trace Engines, LP $4,250 $0 $
As this report was being compiled, Governor Perry closed a 15-year-old blind trust and publicly disclosed the contents of that investment portfolio. Governor Perry reported that his blind trust held stock in 37 companies during 2010. Texans for Public Justice was surprised to discover that three of these companies had received TEF awards totaling $12.2 million. What are the chances that eight percent of the stocks picked by Perry's blind trustee happen to have received grants from Perry's jobs fund?
Perry's trust held stock in Hewlett-Packard and General Electric, which are TEF's top two political contributors to Perry and the RGA. Perry reported that his trust sold its holdings of both of these companies (which received total TEF awards of $9.2 million) at a loss during 2010's roller-coaster market. TEF awarded $5 million to Hewlett-Packard ($720,251 to Perry/RGA) in 2006 to create 420 jobs. The parties terminated this contract in 2008 before Hewlett-Packard filed a single job-compliance report. The Governor's Office reported that it recovered the money dispersed to this company.
Perry Stock In TEF-Subsidized Companies TEF Award Company Perry Shares RP's Loss/Gain (If Sold) Total Donations To Perry & RGA
$5,000,000 Hewlett-Packard 100-499 -<$5,000 $720,251
$4,200,000 General Electric 500-999 -$5,000-$9,999 $640,700
$3,000,000 ADP 100-499 NA $6,250
$12,200,000 TOTALS $1,367,201
TEF awarded $4.2 million in 2011 to General Electric ($640,700 to Perry/RGA ) for a Fort Worth train factory that promised to create 775 jobs. GE's new TEF project has yet to face job-creation targets. GE also is a junior partner involved with the $25 million that TEF awarded in 2005 to the University of Texas System's MD Anderson Cancer Center to create the Center for Advanced Biomedical Imaging. This project pledged to create 2,252 jobs. To pump up job-creation numbers, however, this TEF project does not just count new jobs at the TEF-funded imaging center. Instead it counts virtually any new job at the UT Health Center or MD Anderson. MD Anderson's payroll has been growing like a cancer for years—long before TEF's birth. To suggest that TEF is responsible for every new MD Anderson job after 2005 is a farce.
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Perry reported that he continued to hold 100 to 499 shares in Automated Data Processing (ADP) in 2010. ADP has reported that it is complying with the terms of the $3 million that TEF awarded to ADP in 2006 to create 1,028 jobs in El Paso. ADP CEO Gary Butler, who is not a regular RGA contributor, gave RGA $6,250 on September 8, 2010. The payroll company's Texas payroll fell 96 jobs short of the 1,028 new jobs that it had promised to create in 2010. ADP was not technically in default, since it had stockpiled surplus TEF job credits in better years.
A nursing home chain calling itself Golden Living or GGNSC ranks No. 3 among TEF donors to Perry/RGA. TEF recently awarded Golden Living $2.1 million, a large amount to create just 100 jobs. TPJ found that GGNSC began moving $628,350 to Perry's RGA in 2008. But researchers could not find out much more about Golden Living or GGNSC until they discovered that Drumm Investors, LLC owns GGNSC. The Government Accountability Office (GAO) mentions Drumm in a recent study on how private investment firms are buying out nursing homes, making it hard to trace nursing-home ownership.5 That report suggests that Drumm and San Francisco-based Fillmore Capital Partners bought out the notorious nursing home company Beverly Enterprises in 2006 (Beverly contributed $513,155 to RGA between late 2002 and early 2006).6 After Beverly overextended itself in a debt-fueled buyout of nursing homes, the company cut costs by slashing its nursing staff. This triggered regulatory negligence charges across multiple states and earned Beverly dishonorable mention in the 1992 book America: What Went Wrong?7 The GAO report suggests that GGNSC stands for Golden Gate National Senior Care.
TEF awarded $1,125,000 to Frito-Lay in 2009 to create 125 jobs. Parent company Pepsico gave $607,495 to the RGA. According to the Governor's Office, Frito-Lay exceeded its job pledge by creating 140 new jobs in 2010.
The Texas Institute for Genomic Medicine ranks No. 5 among TEF donors to Perry/RGA. Perry's alma mater, Texas A&M University, and Houston-based Lexicon Pharmaceuticals established the Institute to clone mouse stem cells with a 2005 TEF award of $50 million. The Houston Chronicle revealed that three families that have been big backers of Perry's campaign controlled 17 percent of Lexicon's stock.8 Led by Houston Texans owner Robert McNair, these investors have contributed $591,500 to Perry/RGA. After Lexicon defaulted on some of its initial job targets, Governor Perry's office amended its contract in 2008. The amendment says Lexicon need not produce a single new job until 2012. If you visit the Institute for Genomic Medicine, you won't find the 5,000 new jobs that it promised to create. In its creative accounting for these jobs, TEF assumes that the Institute is responsible for every new Texas job that falls into any of 24 biotech industry classifications.
The Institute for Genomic Medicine is but one example of the keen interest that Perry's development slush funds have shown in the governor's alma mater. Perry's office triggered 2009 legislative inquiries when it moved $50 million from TEF into the Emerging Technology Fund and bypassed an advisory panel to award that money to Texas A&M University. A&M received money to create a fast-track drug lab called the National Center for Therapeutics Manufacturing.9 Around that time Perry's slush funds also granted state money to two intertwined biotech firms that work with A&M. The Emerging Technology Fund awarded $1.75 million in 2009 to Gradalis, Inc. and TEF awarded $3 million in 2010 to G-Con, LLC. Gradalis owns 10 percent of G-Con and two big Perry contributors own stakes in Gradalis, according to the Dallas Morning News and New York Times.10 Gradalis investor John McHale of Austin ordinarily backs Democrats. Yet when Perry's slush funds awarded a total of $4.75 million to Gradalis and G-Con in 2009 and 2010, McHale contributed a total of $100,000 to Perry's campaign. Longtime Perry patron James Leininger ($339,233 to Perry/RGA) also owned Gradalis stakes. Finally, David Shanahan, a principal at both Gradalis and G-Con, contributed $15,000 more to Perry's campaign.
Four-Year Money Timeline For G-Con and Gradalis
Date
Event
3/19/07 Gradalis investor Jim Leininger gives RGA $50,000.
6/12/07 Gradalis investor Jim Leininger gives RGA $50,000.
9/19/07 Gradalis investor Jim Leininger gives Perry a $19,232 jet flight.*
12/6/07 G-Con/Gradalis principal David Shanahan gives Perry $5,000.
12/11/08 Gradalis investor Jim Leininger gives Perry $25,000.
2/19/09 ETF awards Gradalis $1.75 million.
6/26/09 Gradalis investor Jim Leininger gives Perry $25,000.
11/10/09 G-Con/Gradalis principal David Shanahan gives Perry $10,000.
12/4/09 Gradalis investor John McHale gives Perry $50,000.
5/1/10 TEF awards G-Con $3 million.
9/3/10 Gradalis investor John McHale gives Perry $50,000.
TEF awarded $1 million in 2009 to a unit of the McLane Group, a grocery wholesale company run by longtime Perry supporter and Houston Astros owner Drayton McLane, Jr. ($362,430 to Perry/RGA). That TEF contract says McLane Advanced Technologies, LLC will create 225 jobs by the end of 2011. Perry's office periodically updates a list of TEF projects posted on the Internet. Copies of that list printed around the time of TEF's 2009 grant to McLane dutifully list this project as producing 225 jobs. In late 2010, however, the Governor's Office began posting versions of that list that left the "Jobs" field blank for the McLane project. In another anomaly, under the Public Information Act Texans for Public Justice obtained from the Perry's office a chart summarizing 2010 TEF job numbers (presumably taken from the TEF compliance reports that the Governor's Office has yet to release). That chart oddly makes no mention of McLane, which promised to create 100 jobs by the end of 2010 and 225 jobs by the end of 2011.
Computer companies Cisco and EMC Corp. started Virtual Computing Environment Co. (VCE). Intel also invested in this computer venture, which landed a $2.45 million TEF contract in 2011 to create 434 jobs. Cisco and Cisco CEO John Chambers gave $240,000 to RGA. Chambers also gave $10,000 to Perry's campaign. Intel gave the RGA $50,000. VCE complied with its initial pledge to create 55 jobs by the end of 2010, according to the Governor's Office.
TEF awarded Sanderson Farms $500,000 in 2006 for a chicken hatchery and processing plant that pledged to create 1,312 low-paying jobs lasting through 2009. Sanderson fell 200 jobs short in 2009, reportedly paying $81,891 in penalties. Starting in 2007, Sanderson Farms and CEO Joe Sanderson, Jr., began moving a total of $127,145 to the RGA. Joe Sanderson also gave $165,000 to Perry's campaign.
TEF awarded $2 million in 2006 to Motiva Enterprises (a joint venture of Shell Oil and Saudi Aramco) to create 300 refinery jobs by the end of 2010. In 2008 Motiva laid off workers and rolled back the completion date for its refinery expansion from 2010 to 2012. The parties amended the contract in 2009, giving Motiva two more years to deliver the 300 jobs. Motiva reported 258 jobs in 2010, 42 jobs short of its original contract but 108 jobs over its amended contract. Starting in late 2006, Motiva partner Shell began moving $235,450 to the RGA. Shell also contributed $13,000 to Perry's campaign.
TEF awarded $5.48 million to Lockheed Martin Corp. in 2007 to create 800 new jobs at a Houston rocket plant. Falling 97 jobs short in 2008, Lockheed amended the contract to just require the company to create 550 jobs. In 2009 Lockheed reported 677 jobs, which surpassed the amended target but fell 123 jobs short of its original pledge. By 2010 Lockheed reported 503 new jobs, which didn't even fulfill its amended contract. Lockheed, which gave $232,800 to Perry/RGA, announced that it would lay off 1,200 workers nationwide in 2011.11
Office Depot scored a $300,000 TEF award in 2011 to create 203 jobs. Office Depot, which began backing the RGA the year before it landed this grant, has given the RGA $200,900. The Governor's Office has not released any details on this grant.
Fidelity Global Brokerage landed an $8.5 million TEF grant in 2007 to create 1,535 jobs. Fidelity gave $208,775 to Perry/RGA. After defaulting on its job promises, Fidelity got Perry's office to amend its contract. The amendment slashed Fidelity's job targets from 1,535 to 850 jobs, gave it five more years to produce fewer jobs and required the company to repay $4 million of its grant. Fidelity reported 177 jobs in 2010. That falls 1,358 jobs short of its original promise and 13 jobs short of its amended pledge.
Texans for Public Justice
snip...
http://info.tpj.org/reports/pdf/PerryPiggybankTEF.pdf
Report: Nearly half of state grantees donated to Perry
By PEGGY FIKAC, AUSTIN BUREAU
Updated 09:47 p.m., Thursday, October 13, 2011
AUSTIN - Nearly half the companies that received Texas Enterprise Fund grants also made donations to Gov. Rick Perry's state campaigns or the Republican Governors Association, according to a report released Thursday by a watchdog group.
The governors association, which Perry twice chaired, has been his top state campaign contributor.
The report - "Perry's Piggybank" - by Texans for Public Justice says 43 companies gave nearly $7 million in political contributions to Perry or the RGA.
To date, 90 companies have been awarded $439 million in state economic development grants from the Perry-championed Texas Enterprise Fund.
The companies that gave political contributions to Perry or the RGA got $333 million, or about three-quarters, of the grant money. That includes companies that donated before or after signing their contracts for the grants.
The report says many of the projects whose companies donated heavily to Perry or the RGA have defaulted on job promises, amended contracts to lower job goals, inflated job claims or terminated their contracts.
"Where there is a cozy connection between a powerful and-or monied interest, I think people naturally are suspicious of the money being more influential than the merits," said Sheila Krumholz of the Center for Responsive Politics, whose RGA contribution data was tapped for the report. "I think it resonates with voters ... all the way across the spectrum, including the tea party and the occupiers, beyond mainstream Democrats, Republicans and independents."
Perry's campaign attacked the report, defended the grant process as above board and beneficial to state job creation, and said many of the companies cited gave nearly an equal amount to the Democratic Governors Association during the same period.
Should he become the GOP nominee, questions about state perks for Perry donors could squelch a key Republican attack against the Obama administration over a $535 million loan to the now-bankrupt Solyndra. Perry already has had to fight off accusations of "crony capitalism" from some GOP opponents.
"It's common to have these types of incestuous relationships ... in part because that's the way the system works. There also are probably a lot of people out there who donated who didn't receive funds," said Mark Jones, professor of political science at Rice University. "What it really does is it means you can't go after Solyndra if you are Rick Perry."
'Based on merits'
The governor's office has noted that companies found to have failed to meet their obligations must repay some grant funds. Campaign spokeswoman Katherine Cesinger emphasized Thursday that project funding must get approval from the lieutenant governor and House speaker, as well as the governor.
"Funds are awarded based on the merits of the projects, including job creation, and the TEF is key to Texas' ability to successfully compete with other states economically," Cesinger said.
The report toted up nearly $1.7 million that went directly to Perry's campaigns from January 2001 through last June. It cited $5.3 million in donations to the RGA from January 2006, when Perry became involved in association fundraising, through June.
The donations, including direct corporate contributions to the association, plus money to Perry or the RGA from company political action committees, executives or owners.
Also gave to Dems
Andrew Wheat, of Texans for Public Justice, said Perry's camp is correct that many companies that gave to his campaign and the RGA also gave to Democrats.
"The No. 2 political contributor in our report was General Electric, whose CEO runs Obama's Council on Jobs and Competitiveness. When Obama gives tax dollars to corporate supporters, as in the Solyndra case, it's no prettier than when Perry does it," Wheat said.
http://www.chron.com/news/houston-texas/article/Report-Nearly-half-of-state-grantees-donated-to-2217889.php#loopbegin
