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Cover-up deep in the heart
of Texas

Posted By Jerome R. Corsi On 10/05/2005 @ 1:00 am In Commentary | Comments Disabled

CBS missed the boat. Dan Rather should never have used the forged documents. Instead, “60 Minutes” should have focused on GTECH, Ben Barnes and Harriet Miers.

The real story in Texas goes back to the Texas Lottery scandals of the 1990s. This can of worms, now re-opened by the Miers nomination, appears to be a story of political influence peddling, cover-ups over exactly how and why George Bush got into the National Guard, and GTECH – the Rhode Island company that has held the Texas contract since 1992, despite not always being the low bidder.

In the Texas Lottery scandal, there are abundant real documents on the public record, plus evidence of some that the Texas Lottery Commission has worked to make sure the public will never see. Who was at the center of what be one massive cover-up? Attorney Harriet Miers – President Bush’s new, surprise Supreme Court nominee.

George W. Bush and Harriet Miers do have a long history, going back at least to 1995 when George W. Bush appointed her to be a Texas Lottery commissioner, just after he first took office as governor of Texas. In 2000, when Gov. Bush left Texas to move to Washington, one of his first appointments as president was to make sure Harriet Miers was on his White House staff. President Bush says he nominated Harriet Miers to the Supreme Court in large part because she is a close and trusted associate. The question now is: How close and how trusted?

Let’s start with GTECH’s 1997 10-K report. GTECH is a public company, listed on the New York Stock Exchange (symbol: GTK). The 10-K is a detailed report public companies are required to file with the Securities and Exchange Commission. When filing a 10-K, a public company must make full disclosure of any adverse conditions that could negatively impact earnings.

What GTECH revealed in its 1997 10-K was that the company was under investigation in Texas because of allegations against one of its paid consultants, one Ben Barnes, who previously had been lieutenant governor of Texas. GTECH hired Barnes in 1991, before the company had the Texas Lottery contract, because Barnes claimed to have influence with then-governor of Texas, Ann Richards. For getting GTECH the Texas contract in 1992, Barnes received somewhere between 3.5 to 4 percent of GTECH’s gross Texas Lottery revenue, a percentage that yielded Barnes somewhere in the range of $3 million a year.

The 1997 GTECH 10-K noted that the company was under investigation in Texas and its contract had been open to competitive bid. GTECH disclosed that Texas Lottery contract was then the company’s largest contract, accounting for 16 percent of GTECH’s total revenue in fiscal 1997. Losing this contract would materially hurt GTECH’s operating income and depress its stock price as a consequence. GTECH ran for cover by terminating Ben Barnes contract and paying him $23 million to stay quiet.

Why did Barnes hold out until 1997? He was a Democrat with influence over Democrat Gov. Ann Richards, but what hold did he have on Republican Gov. George W. Bush?

When Bush was elected governor in 1995, after beating Ann Richards, Barnes told GTECH not to worry. Barnes claimed to know the Bush family very well. He boasted that Bush family friend Sidney Adger was the person who came to him in 1968 to ask him to use his influence to make sure George W. Bush was admitted into the Texas Air National Guard.

You remember Ben Barnes from the Dan Rather “60 Minutes” show, where Barnes told the National Guard story and came near tears when he claimed that he held young Bush’s life in his hands and he chose life, rather than have Bush face the danger of possible death in Vietnam. At any rate, on May 4, 1995, Gov. Bush appointed Harriet Miers to be one of the three Texas Lottery commissioners.

On June 9, 1997, the Texas Lottery Commission hired Larry Littwin of New York City to be the new executive director of the Texas Lottery, for an annual salary of $100,000. Mr. Littwin was hired from a field of approximately 700 applicants, because of his prior experience with lottery operations.

Mr. Littwin was hired to replace the first executive director of the Texas Lottery, Nora Linares, whom the Lottery Commission fired in January 1997, because of allegations of questionable business practices, including a charge that GTECH had hired Ms. Linares’ boyfriend (whom she later married) and because Ms. Linares had not objected to GTECH hiring “former state officials” as lobbyists with excessive control, such as Ben Barnes (all documented in a bill submitted to the Texas Legislature as House Concurrent Resolution No. 153, seeking redress in Larry Littwin’s wrongful termination grievance.

When he took over his new job, Mr. Littman was presented by the state auditor with a report highly critical of the Texas Lottery Commission, GTECH, and the relationship between the two. According to the charges in HRC 135, Mr. Littwin realized that the Texas Lottery Commission had not conducted the audits of GTECH as required by Texas state law. Mr. Littwin began an investigation of GTECH, including allegations that GTECH had made unlawful campaign contributions. He decided to put the GTECH contract up for competitive bid. Mr. Littwin was ordered by the Texas Lottery Commission, including Harriet Miers, to stop his investigation. On Oct. 29, 1997, only five months after he had been hired, Mr. Littwin was fired by the Texas Lottery Commission, whose only state reason was that they had “lost confidence” in him.

Mr. Littwin’s wrongful termination suit was the occasion for taking Ben Barnes’ deposition, where he gave the testimony under oath where he disclosed his alleged involvement with the Bush National Guard controversy and his political influence peddling for GTECH through the first two years of Bush’s term as governor of Texas.

What was the final disposition of the lawsuits which resulted? Larry Littwin entered into an out-of-court settlement with GTECH for which he was paid $300,000. As a condition of the settlement, Mr. Littwin agreed to destroy all documents produced by the litigation, including any copies he may have had of the Barnes deposition. GTECH moved to settle with Mr. Littwin only after its ability to defend itself was damaged when a federal judge ruled that Texas Lottery Commissioner Harriet Miers did not have to give a deposition in his case. GTECH also paid Ms. Linares a reported $435,000 to end her lawsuit against the company, plus a reported $290,000 to Ms. Linares’ attorneys.

GTECH further dodged a bullet when the Texas Lottery Commission, including Harriet Miers, decided to end the competitive bidding and re-award the contract to GTECH, deciding not to pursue the lower-price competitive bids that were then on the table. In the period 1995-1997, the George Bush controversy over the National Guard had not yet surfaced to be vetted. Was there a cover-up going on? That’s a reasonable question given what we’ve uncovered so far.


Related commentary:

Is Harriet Miers ‘Unfit for Judging’?


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