Barry, Barry, Quite Contrary

A fired investment banker ignites a City Hall rumble

In mid-March, Houston Chief Deputy City Controller Judy Johnson and Banc One executive Barry T. Smitherman were winding down a tense conversation about the technicalities of a controversial bond deal, when Smitherman asked a colleague to leave Johnson's office.

According to Johnson, Smitherman then had a few choice words of advice concerning her boss, Controller Sylvia Garcia. She is running as the Democratic nominee for Harris County's Precinct 2 commissioner.

Relations between the 44-year-old investment banker and the controller had turned icy after Councilman Mark Ellis had offered an unusual amendment at the council table. He proposed inserting Banc One into a potentially lucrative $400 million bond transaction for which the city's Financial Working Group had already approved another candidate, PaineWebber. The maneuver resulted in an indefinite delay and renegotiation of the so-called bond swap and angered Garcia to the point she re- fused to return Smitherman's calls.

When Controller Garcia refused to talk to him, Smitherman appealed to a deputy.
Kent Manor
When Controller Garcia refused to talk to him, Smitherman appealed to a deputy.

Johnson says that during the meeting with Smitherman in her City Hall office, he made a blunt attempt to insert politics into the bond deal.

"Barry said, 'Well, Judy, under these circumstances, what am I to do? I've got lots of friends in Precinct 2, and when they call me and say, "Are you still supporting Sylvia, should we be supporting Sylvia for the Precinct 2 race?" what was I supposed to tell them?' "

Johnson says she broke off the conversation with "Hey, that's not my area." She later told The Insider, "I thought it was totally inappropriate on his part." Johnson says she cannot recall a similar incident during her years in the controller's office. "Investment bankers just don't do that," she notes.

About the same time, another subordinate of Garcia's, Sharon Adams, reported that unnamed "friends" of Smitherman had called her to lobby for Banc One.

"I was told that Barry's family and his wife's family are very influential in Precinct 2," Adams wrote in a memo to Garcia. "It was strongly suggested that your support of Banc One would lead to his support in your County Commissioner race. I found this 'suggestion' to be offensive and certainly counter to good public policy."

Garcia says she is "disappointed and offended" by Smitherman's alleged attempt to mix business and politics. "It's an affront to my integrity and professionalism and that of my office," comments the controller. "But it certainly says a lot more about his." Garcia admits she was disturbed when Ellis and Smitherman "blindsided" her staff with the bond swap amendment.

Last week, Banc One fired Smitherman. Company officials cited the reason as his unapproved co-authorship of an op-ed piece in the Houston Chronicle with Ellis and Councilman Michael Berry, offering a formula for elevating the city's sagging bond rating. Councilmembers Ellis, Berry and Bert Keller charged that Mayor Lee Brown had his unpaid special assistant Cindy Clifford complain to Banc One about Smitherman. They later backed down from that position in a letter to Brown, saying the mayor may not have known about Clifford's call but asking him to intervene to get Smitherman rehired by the company.

Contacted at his Chicago-area home, the now jobless Smitherman denies attempting to use the commissioner's race as leverage with Garcia.

"She and I did not talk about the commissioner's race," Smitherman says of his conversation with Johnson. "I'm not a resident of Precinct 2. I'm not registered to vote in Precinct 2. My father is supporting Johnny Isbell" -- Garcia's Republican opponent -- "and that's his own decision. I wouldn't presume to try to influence anyone about what to do in that race."

County records show that Smitherman is registered to vote in Precinct 2 at the Highlands home of his parents, former Houston port commissioner C.C. Smitherman and Billye Smitherman, a former aide to current Precinct 2 Commissioner Jim Fonteno. Smitherman says the registration "must be a mistake," since he is also registered to vote in Illinois.

A councilmember who asked to remain nameless cited Smitherman's aggressiveness and unsubtle connections to Ellis and the conservative bloc on council. The source says that made Smitherman a liability to a banking outfit trying to do business with the current administration.

"Barry Smitherman has pissed twice on the mayor's leg," says the official, referring to Smitherman's role in the Chronicle op-ed piece and the Ellis bond swap amendment. "What did they expect to happen?"

Smitherman's style is certainly higher-profile than most bond executives', who prefer to work behind closed doors in financial committee meetings. By contrast, Smitherman has chewed his way through a series of securities employers, including First Boston, Lazard Freres and J.P. Morgan, acquiring a reputation in the process as a hard-charging executive who speaks his mind. When J.P. Morgan did not get a piece of a deal with the Texas Turnpike Authority in 1995, Smitherman went public to question how the agency chose its underwriters.

Council friends Ellis and Keller say Smitherman is aggressive, imaginative and a hard worker. He's also developed a reputation for being difficult to work with, according to a recent article on his firing in the Bond Buyer. It suggested that Banc One seized on the unauthorized op-ed as a pretext to get rid of him for other reasons.

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