When Rice University financial officials and their lawyers packed their briefcases and drove to City Hall for a Council committee hearing earlier this summer, they thought they'd be discussing plans for new dormitories and academic facilities for their students. They had come seeking city sponsorship for $220 million in educational bonds, which involve no taxpayer dollars or liability to the city.
Some Rice board members had been reluctant to go through the city on the bond issue for fear of political complications and bad publicity. But the fact that Mayor Lee P. Brown was a former professor at the school assuaged their fears. At least till the committee meeting got under way.
Mayor Pro Tem and Councilman Jew Don Boney began peppering the Rice delegation with questions, and it quickly became clear that the subject on his mind wasn't education. It was employment; more specifically, employment of minority lawyers.
Although Boney didn't mention the firm by name, the most likely beneficiary of his effort was Burney & Foreman, a law firm that includes the councilman's longtime campaign supporter Zinetta Burney and partner Peggy Foreman. The two are qualified to do bond work, but it is clear they would not have been hired without the intervention of their friend.
During his questioning Boney wondered why Rice didn't have minority co-counsels on the bond issue as did the City of Houston, which sets goals for participation of minorities. Never mind that Rice wasn't using city funds and was under no obligation to follow city guidelines. In fact, a previous city sponsorship of St. John's School for an identical bond issue had carried no such strings.
Rice treasurer and vice president of investment Scott Wise was clearly a babe in the woods of city politics as he stood at the committee's podium. Wise told Boney that Rice did indeed include black and Hispanic-owned bond underwriting firms, but that they "didn't really feel a need to have co-counsel."
With an earnestness that had some crowd members behind him giggling, Wise told Boney that the school hired downtown legal giant Vinson & Elkins, which was more than up to the task of handling the routine bond issue.
Boney eyed Wise wearily, like a professor dealing with a rather dense student. "It is an opportunity to increase diversity, more participation," he recited softly, as if reading from a primer. Then in rapid-fire succession, he inquired, "You have co-underwriting counsel on this?" Wise said no. "So that is something that can still be done," Boney said. It didn't sound like a question so much as a verdict.
For a moment, the Rice treasurer looked like a deer transfixed in Boney's headlights.
"Scott was an old baseball pitcher in his days at Rice," recalls one meeting participant, "and this was like somebody threw him a real tight inside pitch and sent him into the dust."
Michele Vobach, representing underwriters Goldman, Sachs & Co., tried to explain to Boney that in bond issues by nonprofits, co-counsels were not necessary. She said minority attorney Yava D. Scott had turned down work on the bonds. Boney responded that there are numerous other minorities who could be hired for the work which is not quite true.
According to a Houston bond specialist, only three local African-American firms have extensive experience as bond counsel. Scott's firm is one. Another was already representing the issuer of the bonds. That left only Burney & Foreman.
Burney had contacted V&E earlier about working on the bonds. Rice's bond counsel, Hank Coleman, said V&E was handling it but that he'd recommend Burney's firm for work if the opportunity came up. Boney seemed hell-bent on making sure that opportunity materialized.
He wasn't alone. Councilman Carroll Robinson took it upon himself to pass a note to Coleman just to make sure the slow learners at Rice got the message.
"How can you consider doing a deal without using Peggy Foreman?" the councilman inquired. "She is the greatest!"
Following Robinson's heavy-handed assist, the Rice delegation bowed down to the perceived pressure.
After a flurry of whispered consultation, school officials ran up the white flag.
"In terms of the underwriting counsel, that's their call," Wise told Boney. "In the case of Rice, yes, we could add some financial counsel."
In a post-meeting huddle, V&E agreed to give Foreman work valued at about $20,000. Thinking ahead, the group decided that they'd better throw the Hispanic community a bone as well. Al Luna, a former state representative, was added as a co-counsel. Thus were the interests of diversity served.
Robinson explained to the Insider that he passed the note praising Foreman because he wanted to demonstrate that there were minority bond counsels available. He and Boney said they were not pressuring anyone to employ her.
"I share names with people," commented Robinson, "and say, 'Here's as many people as I know who are qualified, and you can reach out to them.' "
Boney later said the only issue was Rice's insensitivity to diversity, rather than getting a particular attorney hired. "Some constituents concerned with Rice University raised the issue with me. I asked the same questions."
Boney denies discussing the matter with either Burney or Foreman before the committee meeting and notes he never used their names during the discussion.
Burney says she did not ask Boney and Robinson to help her firm get in the deal. As for her long political relationship with Boney, she laughs. "I've had a long political relationship with everybody there is to have one with."
She warmed to the subject. "You know, I think this is racist, that you call us when you know Vinson & Elkins has had a long political relationship with everybody in the government organization. Where's the difference?"
The difference may be that V&E knows to cut its political deals behind closed doors, rather than in a public arena under the watchful eyes of the Municipal Channel. Committee chairman John Castillo says he personally would not have passed the name of a potential hire to someone seeking his vote. "I think I would have suggested a list of people they could pick from and let it go at that," says Castillo, who did not question the Rice group about the lack of Hispanic bond counsels.
City Councilwoman Martha Wong was one of the committee members on hand. She says she was "surprised and disappointed" at the behavior of Robinson and Boney. She represents District C, which includes Rice. "If those guys had issues with that, they should have come to me first."
A Rice source explained the decision to hire the additional lawyers. "You're stuck in front of [the committee]. Legally, you probably don't have to do [what they want]. If you don't, what happens is you ultimately get the approval for the bonds, but you get delays and probably come down a few notches in the eyes of the minority community. So you have to decide what it's worth to have friends in high places."
Adds the source: "This is part of the rough-and-tumble of being in the community. I hope Rice uses this as an opportunity. They made a bunch of friends doing this."
And by Rice standards, they came very cheaply.
When the Insider returned from vacation, it was as if he'd never been away. The Houston Community College board high jinks [Insider, July 22] continued, as trustees Herlinda Garcia and Abel Davila walked out of their meeting last month to kill the quorum for a vote to hire two Anglo administrators recommended by Chancellor Ruth Burgos-Sasscer.
The stalling tactic only delayed the hiring until a special meeting last week. The board voted 6-1 to name Howard Pardue director of human resources and Dr. Charles Cook vice chancellor of educational development.
Meanwhile, two HCC computer technicians fired by the administration and later rehired insist they did not destroy computer work files, a charge made by HCC sources. Wayne Sitton says he and Carlos Aya had installed their own software on their work computers, and when they were unjustly terminated by superiors they removed the programs. Burgos-Sasscer reinstated the pair under pressure by the board. She is personally directing an investigation and is scheduled to present the results on August 26.
The confrontation between the administration of UH Chancellor-President Art Smith and the Equal Opportunity Employment Commission just keeps expanding. The EEOC issued a finding last week that a second woman who filed a sex-discrimination complaint against UH General Counsel Dennis Duffy suffered retaliation by the school when she sought a new position.
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Glena Yerby claimed she had been subjected to harassment by Duffy, her boss. She then applied for transfer to three other departmental business manager positions. The EEOC found that Yerby was denied those jobs, while the school selected less qualified applicants in some cases.
Yerby joins former UH staff attorney Susan Septimus in a mandatory mediation period before they can file lawsuits against the school. The EEOC found that Duffy discriminated against Septimus and that the school retaliated against her when she filed a complaint.
UH Chancellor Smith had issued a memo two months ago defending Duffy and questioning the validity of the EEOC findings. In that missive he described the complainants against Duffy as troublemakers who undermined his efforts to reorganize the General Counsel office.
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