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The pattern of criminal influence buying that put a Texas lottery contractor’s national sales director into federal prison may have reached into Gov. George W. Bush’s office. Sources close to the state lottery scandals while Bush was governor told WND Harriet Miers was put on the Texas Lottery Commission to “keep the lid on the scandals” and to make sure investigations were stopped before embarrassing inquiries reached the governor himself.
The key to understanding these controversies is Larry Littwin, the lottery expert who was suddenly hired as executive director in June 1997 to clean up the mess involving contractor GTECH, and was then abruptly fired in October 1997 when his investigation was becoming uncomfortable for Bush.
Early in the summer of 1997, the then-retired Control Data executive, Larry Littwin, was in California vacationing with his wife when they saw a quarter-page advertisement in USA Today the Texas Lottery Commission was running, looking for a new executive director. Littwin’s wife encouraged him to apply, knowing that he had the required experience, having worked for Automated Wagering, the Control Data subsidiary that then was the major competitor of GTECH, the Rhode Island company then running the Texas lottery.
Littwin applied and was flown to Texas by the Lottery Commission. The three commissioners, including Harriet Miers, interviewed Littwin on June 9, 1997, and the same day he was hired. The sudden decision was a surprise, even to the Austin American-Statesman. The newspaper reported that the Texas Lottery Commission had passed over the 689 other applicants, voting 3-0 to hire Littwin “shortly after meeting him for the first time.” Littwin was given a $100,000 annual salary and was asked to begin immediately. At the time he was hired, AWI had already submitted a competitive bid to take the Texas lottery contract away from GTECH.
Littwin was more than qualified. Having competed against GTECH, he knew all too well that the company’s modus operandi involved taking the low road in securing and holding state lottery contracts through a pattern of political influence buying that was raising eyebrows all across America. In 1996, GTECH’s national sales director, J. David Smith, was convicted in New Jersey on federal felony charges involving political influence peddling and money laundering. On Jan. 7, 1997, the Texas Lottery Commission fired Executive Director Nora Linares amid a controversy that GTECH had hired Linares’ New Mexico boyfriend, Mike Moeller, on a $6,000 a month “consulting” contract.
On Jan. 15, 1997, the GTECH controversy reached a new level of intensity when federal prosecutors alleged that former Lt. Gov. Ben Barnes, the Texas consultant who was being paid $3 million a year by GTECH, was involved in a kickback scheme where $500,000 in checks had been written out of his checking account to a Kentucky company owned by J. David Smith’s wife. Barnes, a Texas Democrat with a scandal-plagued past, got his a lucrative contract from GTECH in 1991 under which he was paid 4 percent of GTECH’s gross Texas revenue because he allegedly could persuade Texas Gov. Ann Richards to hire GTECH to run the newly established Texas lottery. In 1995, Barnes kept his GTECH contract, arguing that he could help keep the contract under Gov. Bush, because the Bush family owed him a favor for pulling strings to get their son into the National Guard during the Vietnam War.
On Feb. 12, 1997, once the federal prosecutor’s allegations against Barnes were made known, GTECH canceled Barnes contract in what was reported as a “negotiated buyout.” Harriet Miers and the other two Texas Lottery Commissioners suppressed releasing details of the Barnes settlement with GTECH. The terms of the buyout were kept secret for several months until June 18, 1997, when Attorney General Dan Morales ruled in favor of the Austin American-Statesman and against the Texas Lottery Commission, instructing the panel to release the details of the secret buy-out deal. The Texas public was shocked to learn that Barnes was made a multi-millionaire when GTECH canceled his contract, receiving $23 million from GTECH as a final payout of the contract.
Littwin, when he took his job as executive director of the lottery in June 1997, took aggressive steps to clean up the mess. He actively invited competitive bids, even though GTECH’s contract with the state ran until 2002. Littwin realized that the Texas Lottery Commissioners, including Harriet Miers, had never conducted an independent audit of the lottery, even though such an audit was mandated by Texas state law. Even more threateningly, Littwin began an active investigation into the web of political influence GTECH was buying by “hiring consultants” and making contributions to Texas politicians. Littwin started reviewing campaign contributions made to lawmakers and elected politicians by GTECH, including some who were in office two years before voters approved the lottery.
When Littwin’s investigation turned upon Bush’s involvement with GTECH and Ben Barnes, Miers’ enthusiasm for Littwin waned. On Sept. 21, 1997, the Dallas Morning News quoted an increasingly nervous governor.
“I don’t think any of us understand what [Littwin] was doing,” Bush told the paper. “If in fact he was gathering data to try to embarrass a member of the House or Senate or the executive branch, it’s inappropriate behavior. I just don’t understand what was going on there, and I don’t think anybody does yet. I think that will be clarified by the commission.”
On Oct. 29, 1997, the commission clarified the situation by firing Littwin, the lottery expert they had hired so enthusiastically some five months earlier. Littwin believed he had been fired for political reasons. On Oct. 30, 1997, Littwin told the Austin American-Statesman that his problems started when he began investigating whether or not GTECH was engaged in political influence buying: “I think I stirred up concerns that perhaps something might be going on.”
Perhaps Bush had reason to be concerned. In 1995, after Bush became governor, GTECH had hired as lobbyists two top Bush insiders – Reggie Bashur, Bush’s former deputy chief of staff, and Cliff Johnson, one of Bush’s 1994 legislative liaisons. Reggie Bashur’s name had also come up in connection with the National Guard controversy. An anonymous letter written to U.S. Attorney Dan Mills in Austin, Texas, claimed that during the 1994 Texas gubernatorial campaign Bush had made a deal with Barnes through Bashur, assuring Barnes that the GTECH contract would not be put out to competitive bid as long as Barnes kept quiet about having used influence to get George Bush preferentially admitted to the National Guard. The decision to fire Littwin was made after Littwin began looking into these allegations.
WND can find no steps taken by Harriet Miers or any of the other Texas lottery commissioners to investigate improprieties. On Jan. 15, 1997, after federal prosecutors made public their kickback allegations against Barnes, Miers told the Austin American-Statesman that the matter would be looked into.
“We will obviously be in the process of determining what significance it has for the Texas Lottery,” she told the paper. Still, nothing happened.
Then, on Feb. 19, 1998, Texas Lottery Executive Director Linda Cloud announced her decision to end the competitive bidding. Cloud told the Dallas Morning News that simply “it is in the best interest of the state to terminate the procurement.” Reliable sources close to the internal workings of the Texas Lottery Commission told WND that Cloud had been called by the highest levels of Bush’s office and told that the governor wanted the bidding stopped.
Available records show no vote by lottery commissioners that preceded or followed what was reported as a decision Cloud made to end the competitive bidding. On April 9, 1998, Miers told the Houston Chronicle that she could see no reason to reopen negotiations with GTECH to press for further concessions. Commissioner John Hill agreed there was no reason for the commission to vote. He told the paper that the bidding process and negotiations simply didn’t work out. “We tried, and we tried hard,” he told the paper. Neither Miers nor Hill offered any explanation why the competitive bidding was ended such that lower bids were turned away.
At the time the bidding was stopped, Automated Wagering International, the GTECH competitor for whom Larry Littman had worked before becoming the Texas Lottery’s executive director, had on the table a competitive bid that reportedly would have saved Texas $92 million over five years plus provide a new computer system at no cost to the state. Charles Brooke, senior vice president for Automated Wagering International was shocked. “We were totally dismayed,” he told the San Antonio Express-News. “They owe us a hell of a lot better explanation. They didn’t even try to negotiate with us.”
Senate GOP leaders have reason to fear Larry Littwin’s testimony should he be subpoenaed to explain his insider’s view of the Texas Lottery scandals. Littwin sued GTECH in federal court. He settled for $300,000, but only after agreeing to destroy all copies of the deposition he was able to get from Ben Barnes. In that deposition, Barnes under oath told details of the National Guard cover-up. To date, no copies of the Barnes’ deposition have ever come to light.