Roots of the Sting

In the spring of 1994, Hall was accused of forcing a credit card collection company seeking city business to subcontract some of the job to a minority firm he favored. A city investigation cleared Hall; a Harris County grand jury took no action. A few months later, two Anglo construction contractors appeared before Council to accuse African-American councilmen Al Calloway and Michael Yarbrough of using similar tactics to gain black companies a greater share of city business.

Just before Christmas of that year, while everyone was awaiting word on the new minority-hiring ordinance, Hall's name surfaced again in connection with questionable behind-the-scenes manuevering. The Press reported that the city attorney had played an extraordinary role in trying to get Robert Muhammad, the local minister for Louis Farrakhan's Nation of Islam, a portion of the West Capital collections deal. West Capital managed to fend off the effort, which would have effectively given Muhammad the lion's share of the fees from the contract. Not long after Hall left the city for private practice, West Capital lost its contract.

Meanwhile, Controller George Greanias had begun auditing the collection contract held by Municipal Collections Inc., whose principals include Peary Perry, the Lanier campaign worker whom Turner has alleged to be the source of Channel 13's election-eve report. Greanias fanned the outrage of black leaders by halting payment to the minority subcontractor, Bayou City Enterprises. According to the controller's audit, the company had been paid nearly $500,000 in fees for little or no work.

Lanier stood fast in support of Bayou City before bowing, somewhat reluctantly, to public sentiment and canceling the subcontract. Lanier was almost as disinclined to fire Municipal Collections in August, after Greanias announced the company may have been paid $1 million too much. Greanias also urged the Lanier administration to investigate how Municipal Collections was awarded the city business, as well as the origin of an unusual clause in the contract language that gave Bayou City Enterprises 19 percent of the collection fees.

Lanier declined, unencumbered by much Council interest in the issue, and has since allowed the dispute to proceed to the courtroom. The city has been sued separately by Municipal Collections and West Capital, both of whom have indicated displeasure with what Harry Terry calls "the price of doing business in Houston, Texas."

From a contractor's standpoint, the price can be quite high. Terry says he followed the city's usual procedure for hiring a minority contractor by choosing a handful of possibilities from the city's list of certified vendors. But then he ran into what he playfully calls "tier-platting, bureacratic viscosity."

"We received indications from the legal department that what we had done toward choosing minority subcontractors didn't matter," Terry recalls. "The city tells you unilaterally how it will be done."

Terry says the city nixed his choices, and to gain Council approval, West Capital had to agree to pay 8 percent of its contract proceeds to Burney & Foreman, the law firm Sheila Jackson Lee had recommended. West Capital was also obligated to pay another 8 percent to attorneys Arturo Eureste and Enrique Dovalino.

Before West Capital's contract was cancelled early last year, payouts to the two subcontracting ventures totaled about $400,000. Not bad, considering that, according to Terry, West Capital had little use for anything more than a part-time attorney, much less two separate entities carrying out identical duties.

"There wasn't any work they could do," Terry says. "We had technology that did all the work. So we had to fabricate a rationale in order to justify giving them a percentage. It was just a reality that was part of getting the contract."

West Capital's experience closely mirrors that of Municipal Collections, which has made no secret of its disgust over the share of its contract that went to Bayou City Enterprises. After the collection deal was awarded in April 1993, a rift developed between the two companies, and their principals tried to use their perceived political clout to gain advantage.

Municipal Collections' Perry took his grievances directly to Lanier. According to sources, Lanier sought to appease Perry by sending him to Ben Hall, who drew up an agreement whereby Municipal Collections would withhold $11,500 from Bayou City's monthly fee and, in exchange, handle some of the subcontractor's responsibilities.

That seemed to keep everyone happy until September 1994, when Shackelford called Hall, who set up a Saturday meeting at City Hall with Lanier. Shackelford, who would later fail miserably to convince Greanias that Bayou City had done any work on the contract, complained that his firm wasn't being paid enough. A source close to Municipal Collections' operation blames that meeting for triggering the investigatory heat from Greanias, and, beginning early last fall, from the FBI.

"Shackelford said they were doing all this work, but weren't being paid," the source says. "The next thing we know, we've got George Greanias and a zillion auditors descending on us."

That was 18 months ago. Those subsequently questioned by the FBI in the collections investigation say the feds haven't visited them lately, and the last time they did, it was obvious their interest had yet to peak.

"By the time I talked to them for the third time, they were asking me about stuff I had no idea about," says a West Capital executive visited by the FBI.

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