Perry and Cronies

By Terri Hall l September 21, 2011

With the pay-to-play Solyndra solar panel bankruptcy scandal rocking the White House, Texas governor and presidential hopeful Rick Perry is embroiled in a mountain of controversy all his own. During the September 12 GOP presidential debate, Michelle Bachmann exposed the crony capitalism money trail behind Perry’s Executive Order mandating all 6th grade girls in Texas receive the Gardasil HPV vaccine made by the drug company, Merck, the employer of Perry’s former Chief of Staff, Mike Toomey. Merck funneled money to Perry, initially $5,000, but eventually adding up to the tidy sum of closer to $400,000 sparking outrage across Texas and now the nation.

Toomey’s just the tip of the iceberg.

A recent bill pushed through the Texas Legislature benefited the company Waste Control Specialists, owned by the number two donor to Gov. Rick Perry, Harold Simmons. Just days after the bill was signed into law, Mr. Simmons wrote a $100,000 check to Americans for Rick Perry, the Super PAC supporting Gov. Perry’s candidacy for president, notes Debra Medina of We Texans.

Janet Ahmad, president of Homeowners for Better Building, pointed to similar problems in the construction industry. Top Rick Perry donor, Bob Perry, paid nearly $8 million in campaign contributions and sought and received his own regulatory agency called the Texas Residential Construction Commission in 2003. Gov. Perry appointed industry-connected people to that agency, including Perry Homes VP, corporate counsel John Krugh. “The resulting agency was so anti-consumer and so counter-productive that the Texas Legislature later decided to abolish it,” Ahmad concludes.

Texas for Sale

Then there’s Perry’s penchant for selling off Texas infrastructure to the highest bidder, particularly to the employer of his former staffer Dan Shelley, a Spanish company, Cintra. Shelley worked as a ‘consultant’ for Cintra (in 2004), became Perry’s liaison to the legislature during the time that Cintra was awarded the development rights to the $7 billion dollar Trans- Texas Corridor (TTC) in 2005, then went back to work as a lobbyist for Cintra in 2006. He and his daughter reportedly earned between $50,000 and $100,000 on lobbying for Cintra that year.

Two key bills, which have just passed the Texas Legislature and signed into law by Governor Perry, further illustrate the high level of crony capitalism and pattern of governance in the Perry administration, both of which will benefit Cintra, in particular.

SB 1420 makes 15 Texas roads eligible to become public private partnerships (P3s). P3s sell-off Texas sovereign land and public roads to private entities creating 50-year private monopolies. P3s involve public money for private profits (including gas tax revenues and other public subsidies), contain non-compete road and highway clauses that penalize or prohibit the expansion of surrounding free routes, and put the power to tax in the hands of private multinational corporations that result in toll rates as high as 75 cents per mile ($13/day or the equivalent of adding $15 to every gallon of gasoline purchased at the pump). It’s selling off Texas to the highest bidder, which is the MOST expensive, anti-taxpayer method of funding infrastructure.

Four road projects under SB 1420 have already been awarded to Cintra.

In fact, every single P3 for roads in Texas has gone to Cintra: SH 130 (segments 5 & 6) and I-635 and the North Tarrant Express (comprised of multiple projects, primarily on I-820) in Dallas/Ft.Worth. All have been heavily subsidized by Texas taxpayers with gas tax revenues and other public money;(SB 1420, pp. 50-53) yet, Cintra walks away with a sweetheart deal and guaranteed profits. Despite Cintra’s shaky financial situation (its debt rating just got lowered due to fears of the Cintra-controlled Indiana Toll Road going into default), Governor Rick Perry’s highway department continues to press ahead with these extremely controversial and unpopular privatization projects.

Perry’s connection to Cintra explains why he endorsed former New York City Mayor Rudy Giuliani in the 2008presidential contest. At the time, Giuliani’s law firm, Bracewell & Giuliani, was the firm representing Cintra in its bid to take over Dallas area SH 121, which eventually unraveled. Giuliani’s investment firm was purchased by an Australian firm, Macquarie, another global infrastructure player in P3s at the same time his law firm was advising Cintra on the SH 121 deal. While many social conservatives were baffled by Perry’s backing of Giuliani, it was no surprise to those following the Trans-Texas Corridor and Perry’s push to privatize Texas freeways.

Balfour Beatty enters the scene

Perry likes to brag ‘Texas is Open for Business’ and here’s what that means for property rights and taxpayers. The second key public private partnership bill, SB 1048, Perry signed into law will mean Katie-Bar-the-Door on selling off virtually everything not nailed down. The bill was written by Texas lobbyist Brett Findley on behalf of the global London-based infrastructure firm, Balfour Beatty plc, and it will allow all public buildings, nursing homes, hospitals, schools, ports, mass transit projects, ports, telecommunications, etc. to be sold-off to corporations using the P3 financing scheme. Unlike the 50-year cap on road P3s, SB 1048 gives no limit on the length of time a P3 can last or whether such broad authority expires.

Two particularly anti-taxpayer provisions in SB 1048 are the fact taxpayers secure the private entity’s debt (Section 2267.061 (f)) and that it authorizes public subsidies for private profits by raiding taxpayers’ money through loans from the State Infrastructure Bank.

Michelle Malkin called P3s corporate welfare. Fannie Mae and Freddie Mac are P3s and required massive taxpayer bailouts. P3s socialize the losses and privatize the profits. These contracts also eliminate competitive bidding and grant government-sanctioned monopolies (with guaranteed profits) to the politically well-connected.

Public interest not protected, kept secret

These P3 contracts can be negotiated in SECRET, without financial disclosures (like financing, the structure of the ‘user fees’ or lease payments, viability studies, public subsidies, or whether or not it contains non-compete clauses or other “gotcha” provisions). There is no transparency to the P3 process nor meaningful public access before these agreements are signed, and the few guidelines that have been created simply exist to advise governmental entities outside the public purview.

Eminent domain for private gain

P3s represent eminent domain for private gain — the source of much of the backlash to the Trans- Texas Corridor, where P3s were the financing mechanism that granted these private entities the control of not just the facility, but the right-of-way, or surrounding property, where private companies make a killing on concessions. A plurality of Texans don’t like the idea of foreign ownership of our public infrastructure and they dislike eminent domain for private gain even more.

Of course, it all started with the the NAFTA trade agreement. The Trans-Texas Corridor that Governor Perry conceived of is known at the federal level as the Congressional high priority corridor and corridors of the future. Texans have come to know and understand the TTC as the feeder route for seven trade corridors from the Pacific coast of Mexico through Texas fanning out across America. Just in Texas, the TTC was to be a 4,000 mile multi-modal network of toll roads, rail lines, power transmission lines, pipelines, telecommunications lines and more. It was going to be financed, operated, and controlled by a foreign company, Cintra, granted massive swaths of land 1,200 feet (4 football fields) wide taken forcibly through the coercive government power of eminent domain.

Called the biggest land grab in Texas history, it was going to gobble up 580,000 acres of private Texas land (the first corridor alone was to displace 1 million Texans) and hand it over to politically well-connected global players using P3s, who, in turn, would gain exclusive rights to determine the route and concessions — hotels, restaurants, and gas stations — to be constructed along the corridor in this government-sanctioned monopoly for a half century. It was the worst case of eminent domain abuse for private gain ever conceived in America.

Property rights shredded

The Trans-Texas Corridor, and P3s in general, represent an imminent threat to private property rights. While lawmakers repealed the Trans-Texas Corridor from state statutes only months ago due to the public backlash, the corridor lives on through the P3 deals and contracts pushed by Texas Governor Rick Perry.

So, Perry basically granted state government a blank check to trample on individual property rights and the power to pick the economic winners and losers — who will lose their land to benefit another, rather than restricting the power of eminent domain to matters of public necessity. If the government can steal your land, it’s tantamount to stealing your wealth and destroying your future.

Who said Republicans can’t be socialists?

P3s are just the sort of wealth redistribution they like — giveaways to their cronies and special interest friends. They’re also a BIG step in enacting the U.N.’s Agenda 21 policies where the stated goals are to abolish private property and restrict mobility.

Rick Perry’s crony capitalism wasn’t just a fleeting lapse of judgment pertaining to the HPV scandal, it’s a consistent pattern of revolving door, pay-to-play crony capitalism that Americans detest and can ill afford.

Terri Hall is the founder of Texans Uniting for Reform and Freedom (TURF), which defends against eminent domain abuse and promotes non-toll transportation solutions. She’s a home school mother of eight turned citizen activist. Ms. Hall is also a contributor to

SFPPR News & Analysis.