The Deal Busters

GOP chair's super slush fund helps sink arena deal

In the strip-center wilds of Westheimer beyond the Beltway, the election-night crowd munched on Pappa La Rosa's cheese sticks and spicy ravioli, savoring early reports of success in their insurgent effort to detonate the downtown arena deal.

The heroes of the moment, wizened Harris County GOP Chair Gary Polland and moon-faced Tax Assessor-Collector Paul Bettencourt, flitted from table to table accepting early congratulations from the mostly Republican celebrants. Everyone liked the results, but no one knew to compliment the local GOP's version of Batman and Robin for a truly inspired bit of campaign improvisation that helped boost the opposition down the home stretch to victory.

It isn't often that politicos find new ways to get around state laws requiring disclosure of political contributors, but the Republican brain trust fighting the arena pact hammered out by Rockets owner Les Alexander and Mayor Lee Brown did just that. The maneuver Polland came up with was so original it left experts at the Texas Ethics Commission and veteran state legislators at a loss to cite any comparable examples from Texas's hoary political past. One state official contends it was not only original -- it was illegal.

Brown's re-election was marred by a GOP cash infusion against his arena plan.
Steve Lowry
Brown's re-election was marred by a GOP cash infusion against his arena plan.
Polland insists his scheme to mask contributors is legit.
Polland insists his scheme to mask contributors is legit.
State Senator John Whitmire, an arena backer, watched the election fizzle.
Steve Lowry
State Senator John Whitmire, an arena backer, watched the election fizzle.

Chairman Polland readily admits he collected nearly a quarter-million dollars from contributors around the state who were opposed to the arena. He deposited the checks into his chairman account, which is shielded from public scrutiny because he is a political party leader, not a government official.

Usually the county chair's account is used for nothing more than to campaign for the party post and cover mundane office expenses such as postage and entertainment. Polland hit on the notion of using it as a campaign slush fund that veils the identities of contributors.

Polland collected $223,000, which he passed on to Citizens for Accountability, the anti-arena political action committee, without disclosing who gave him the money. In the final pre-election PAC report, Polland's cash infusion dwarfed all other contributions, except for the $100,000 from Chuck Watson, the owner of the Aeros hockey team and the Compaq Center operator who is Alexander's archrival. According to Polland and Bettencourt, that political money laundering is legal.

"What happened was that, prior to the PAC being formed, when people started sending money to fight the arena they sent it to me," says Polland. He says he told the contributors, "you can write a check to the Republican Party, you can wait till the PAC forms, or you can write a check to my campaign account." Polland says most of them took the last option, writing a check to his chairman account. Had any of the donors contributed directly to the anti-arena effort, they would have been required under law to reveal their identities.

Asked for the names of those faceless folk who forked over the money to him, Polland replies, "I'm not obligated to disclose that." Then he grins.

"What I will do is when this is all over, I'll send a letter to everybody who gave me money asking for permission to release," vows the chairman. "If they give me permission, I'll give it to you first!"

Bettencourt, the former county GOP treasurer who had the reputation as the financial brains behind Polland, explains that "the funds the chairman raises all across the state of Texas by statute is his money and not party money." "In fact," he adds, "the chairmen of political parties do not have to report their campaign money under election lawŠ.Any political party chairperson from the county level anywhere in the state can raise those monies, and they are effectively unrestricted."

While Bettencourt defends the anti-arena campaign as nonpartisan and grassroots, he agrees that "the monetary sources on this one are probably not as diverse as the grassroots team. That much I'll give to you."

State Representative Steve Wollens of Dallas, chair of the state affairs committee and an election legislation expert, was stumped by Bettencourt's explanation. "I didn't know that," says Wollens, of the private nature of a county party chair's account. "I had no idea." Wollens wonders how Polland could collect money for a specific issue such as the arena without becoming a political action committee himself.

In justifying Polland's cash maneuver, Bettencourt speculates that Democratic County Chairwoman Sue Schechter is also collecting big bucks through her private account.

"I tell you what. I wouldn't put it past her to get some money from [lawyer John] O'Quinn and some of the others that are doing extremely well from the tobacco settlement," says the county tax assessor-collector. "It's strictly up to them, because that's the way, at this time, the system exists."

Schechter is nonplussed by the accusation. "Get outta here," she exclaims. "You're talking to someone whose account has sat on $900 for the last year and a half. It was such a pain in the ass I was thinking about closing it."

Schechter says the intent of the state law is to exempt internal party activities from reporting requirements, not to create an unreported political slush fund.

"I think it's dishonest," the Democratic leader says of Polland's maneuver. "I think it shows a lack of integrity, using the system in a way it was never meant to be. It shows another reason why people are so turned off to politics."

As for the idea she might emulate her fellow chair, Schechter laughs. "I keep thinking nothing ever surprises me, but that thought had never crossed my mind."

During the campaign, Polland called Schechter to ask her to bring her party into the anti-arena coalition with him, but she politely declined.

"I've got enough problems running the Democratic Party without trying to do anything with them too," says Schechter. "My life's hell enough without having Gary Polland calling me."

If anyone wants to give Polland grief by complaining to the Texas Ethics Commission over his campaign tactics, one official believes they would be on solid legal ground. Commission attorney Karen Lundquist questions the legality of taking money for a specific purpose and passing it on to a political action committee. She opines that if the money was given to Polland specifically for opposing the arena, then the GOP chair is obligated to identify the original contributors.

"Clearly, if I gave money to you and said, 'I want you to contribute this money to a specific PAC for me,' then you are required to tell that PAC this is not really from you, it's from Karen," explains Lundquist. "You're supposed to give the name of the original contributor, and that's clear where the original contributor is earmarking it and you are passing it through."

Lundquist concludes that "the election code prohibits a person from making a contribution in the name of another, unless they disclose the original source."

An illegal pass-through contribution is a Class A misdemeanor subject to maximum penalties of a $4,000 fine and one year in jail.

Republicans who are locally elected officials seemed bemused by Polland's campaign gambit. County Commissioner Steve Radack is no fan of the current party leadership. He unsuccessfully fought Polland and Bettencourt by pushing his own candidate, Willie Alexander, for the tax assessor-collector position won by Bettencourt.

"I don't dispute the ability of Gary Polland to use his campaign money for whatever he cares to use it for," says Radack. Just because Polland opposed the arena doesn't mean Republicans are against it as a party, Radack adds.

"He as an individual funded a tremendous amount of money on an issue he saw as a conservative Republican issue, when in fact a whole lot of people saw it as an issue that dealt with the economy. If he wants to throw $200,000-plus into a deal, it becomes more of a Gary Polland deal than a Republican deal."

City Councilman Orlando Sanchez, a Republican, questions whether the GOP leadership's new emphasis on local issues might detract from the effort to elect party members.

"I think any political issue is fair game for the Democratic or Republican Party," observes Sanchez. "But I think that probably candidates, and to some extent contributors, might want to see the money and the activities of the party go towards promoting causes and candidates in partisan races." With GOP leaders blowing $200,000 on the arena fight, Sanchez fears the party may neglect traditional partisan activities such as voter registration.

Councilman Chris Bell, a Democrat, is amused by the Republican leadership's sudden interest in nonpartisan municipal issues. "Bettencourt's been coming down to Council bringing us opinions on every controversial issue we have," Bell says with a chuckle. "You would think the county has a good many issues of their own he could probably be dealing with."

In the afterglow of the arena defeat, Polland and Bettencourt are looking to expand their involvement on local issues. The tax assessor-collector figures that Citizens for Accountability will become an all-purpose advocacy group that could give downtown deal-makers headaches for years to come.

"I think it's incumbent on both political parties to look for issues that they believe have some bearing on the health and long-term well-being of the community," says Bettencourt. "It's actually been very easy, even though it's only been a few weeks, to form what I call this good government coalition. I expect the Citizens for Accountability will stay as a PAC and receive multipartisan support."

According to Bettencourt, the mission of the new organization will be "to help citizen-taxpayers understand these deals, watch 'em and try to say we want better performance out of our elected officials." "We have to stand for something," he adds. "It's a different game."

Likewise, Polland is looking to the future.

"By the party being involved in local issues, we have brought more focus and given both sides the opportunity of being heard," says Polland. He says the arena supporters "thought they could take $2.5 million and just shove it down the voters' throats." "Well," he adds, "a new day is dawning in Houston and Harris County politics."

With Brown unable to persuade enough voters to approve the arena, Polland figures opposition to the mayor will intensify on City Council.

"The public has rejected his leadership on this issue and found it wanting," says Polland. "I'm not surprised, since he was so ashamed of his handiwork he refused to discuss it in public in a pro-versus-opposition session. Lanier wouldn't have made this deal. He was a much harder trader."

The 1997 mayor's race between Democrat Brown and Republican Rob Mosbacher introduced a level of partisan politics not previously seen in municipal contests, but Polland wants to make the election in 2001 a partisan odyssey.

"If it had been more partisan, Mosbacher would have won," claims the chairman. "It wasn't partisan enough."

The arena fight has drained his campaign account, according to the GOP chairman, but he isn't worried. "I think it's down to about $35,000," Polland estimates. "I don't have much left, but I'll be raising money again!"

Maybe next time he'll have to tell us where all those bucks are coming from.

Pass through your news tips to the Insider. Call him at (713)280-2483, fax him at (713)280-2496, or email him at insider@houstonpress.com.

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