In 1997, while she was chairwoman of the Texas Lottery Commission, Harriet Miers was mired in a conflict-of-interest controversy with charges that she had arranged a lucrative Texas Lottery Commission contract for a prominent Austin advertising firm that was also a client of the law firm Miers was co-managing at the time, Locke Purnell (later to be merged into Locke Liddell).
According to the charges, the arrangement violated Texas law that prohibited lottery commissioners from being compensated by lottery contractors.
In January 1997, Texas newspapers published reports alleging that Miers’ law firm had charged the Austin advertising firm GSD&M $38,000 in legal fees over the previous two years, while GSD&M was the main advertising contractor for the Texas Lottery Commission. In the period in question, GSD&M collected more than $191 million in fees from the Texas Lottery, including $36 million in the fiscal year that ended August 31, 1997. The lottery’s 1998 budget scheduled an additional $40.2 million for GSD&M.
At this time, the Texas Lottery Commission was locked in a legal battle with recently fired Executive Director Nora Linares. On Jan. 15, 1997, the Associated Press reported that Buck Wood, attorney for Linares, said the arrangement between GSD&M and Miers’ firm violated the state law establishing the lottery. Wood claimed that the Texas law says no lottery commissioner may work for or be paid any money by a major lottery contractor.
In response to Wood’s accusations, Miers told local papers, including the Dallas Morning News and the Austin American-Statesman, that the $38,500 billed to GSD&M was a fraction of Locke Purnell’s $112 million in billings during that period. Wood responded that any payment to GSD&M should disqualify Miers from being eligible to serve as a commissioner.
As seems typical of the lottery scandals while Harriet Miers was a commissioner, the response of the Texas Lottery Commission was to keep the status quo. Despite a policy articulated by the Texas Lottery Commission to seek competitive bids in all contract situations, Executive Director Linda Cloud recommended in January 1998 that the Texas Lottery should just extend for one year the GSD&M advertising contract.
The Austin American-Statesman reported Jan. 8, 1998, that Cloud felt burdened by sorting through competitive bids to replace GTECH, the lottery’s main operating contract. Cloud also said it was a bad time to switch ad firms because GSD&M was working on ads to support new games scheduled for the spring, games that were designed to bring the lottery out of a serious slump in sales.
GSD&M Vice President Steve Dalbey gave the Austin American-Statesman the same line of reasoning: “We are moving into the game of our life, and it is not the time you bench a proven performer and bring in some inexperienced sub.”
Miers removed herself from the vote of the commission approving Cloud’s decision. The other two commissioners voted to leave the GSD&M contract in place. Commissioner John Hill explained to the Austin American-Statesman at the time, “I think we should back up our executive director unless there is some real compelling reason not to.”
Evidently, the policy of seeking competitive bids was not a compelling reason to re-examine the GSD&M contract. Nor was the apparent conflict in Texas law where Miers could be seen to be receiving compensation from the Texas Lottery via the fees Locke Purnell was charging GSD&M for legal representation.
In September 1998, GTECH settled out-of-court with Nora Linares, agreeing to pay Linares and her attorneys $725,000. Of this payment, Linares received $435,000. The rest, $290,000, was split by her lawyers, including attorney Buck Wood. Linares had charged that GTECH made a “systematic effort” to get her fired to cover-up its own pattern of making political payoffs to keep its lottery contract.
In June 1997, Attorney General Dan Morales had ordered GTECH to disclose that it had paid $23 million to end a contract with former Lt. Gov. Ben Barnes, who since 1992 had been receiving 4 percent of GTECH’s gross revenue in Texas, as payment for Barnes’ exerting influence first over then-Gov. Ann Richard’s administration and then over the administration of Gov. George W. Bush – to make sure GTECH did not lose its Texas contract. In a deposition given in a wrongful dismissal suit field by lottery Executive Director Larry Littwin, Barnes had testified under oath that he exerted political influence to get Bush into the National Guard during the Vietnam War.
Texas filing records reveal that Bush’s gubernatorial campaign had paid attorney Harriet Miers $19,000, allegedly to look into Barnes’ allegations about the National Guard favors. In 1995, Bush appointed Miers to be the chairwoman of the three-member Texas Lottery Commission.