The Insider

Affirmative Transactions
Now it can be told: One Houston, the political action committee that funded the defense of the city's affirmative action policies for last November's referendum, received gifts from two unlikely and highly questionable sources -- the Houston Chronicle and Rebuild Houston, the PAC that promoted the city bond election while taking plenty of money from opponents of affirmative action.

The final campaign report for One Houston, filed earlier this month, reveals that the Chronicle donated $31,476 in free advertising space to the PAC at the same time it was editorializing against Proposition One, the ballot initiative to do away with affirmative action in city contracting. That's the price of a full-page advertisement in Houston's Leading Information Source. (One Houston reported that it purchased another full-page ad from the paper at the same rate.)

Prop One organizer Edward Blum believes the Chronicle had no business providing aid to one side in the election.

"My sense of fair play is violated," Blum avers. "It seems to me that the city's only daily newspaper has every right to editorialize about a topic, but not to fund that topic. To fund the referendum issue violates the Chronicle's commitment to impartiality."

When The Insider asked Chronicle editor Jack Loftis whether a supposedly impartial newspaper should donate advertising space to one side of a political campaign, Loftis basically pleaded impotence.

"I have no control over how the advertising department operates at the Chronicle," said Loftis. "We write stories and they sell ads, and that's well established."

Loftis acknowledged, however, that it "probably wouldn't be a bad idea" for the Chronicle to tell its readers about the paper's political donations, since Chronicle reporters often write stories about other contributors to campaigns.

So why didn't the paper disclose its gift to One Houston when it was made -- before the election?

"I wasn't even aware of it," said Loftis, who went on to predict that in the future the Chronicle's editorial hierarchy will consider disclosing the paper's political gifts in timely fashion.

Loftis's professed ignorance of the Chronicle's hands-on involvement in the campaign is hard to figure, considering that the paper donated $137,526 worth of free advertising to the PAC pushing the new downtown ballpark while keeping up a steady drumbeat of pro-stadium editorials. The 1996 gift to the ballpark PAC was reported at the time by The Insider, but not by the Chronicle. But perhaps Loftis doesn't read the Press. (Loftis, who's a member of the daily's editorial board, joined local business leaders on a trip to Austin to lobby state lawmakers when it appeared stadium legislation was in doubt --a highly unusual move that the Chronicle did report, although in a very inconspicuous place.)

Two days after The Insider's conversation with Loftis and nearly a week after the One Houston report was filed at City Hall, the paper's contribution was finally disclosed in the Chronicle at the end of a column by political writer Alan Bernstein. "A Chronicle editorial had already come out in favor of preserving affirmative action," wrote Bernstein. "But the role as a financial donor was not obvious until now."

When The Insider contacted representatives of the nation's biggest and best daily newspapers, they initially had trouble comprehending the notion of a journalistic operation giving free advertising to one side in a campaign. After getting a thorough explanation of the Chronicle's maneuver, the New York Times's vice president of communications, Nancy Nielsen, was emphatic that her paper would not donate ad space to a candidate or campaign it had editorially supported.

"Definitively no, and double no," said Nielsen. "We don't and wouldn't do that."

Howard Kurtz, who covers media issues for the Washington Post, was equally dismissive of the Chronicle's political gifts.

"The Washington Post certainly contributes to charitable causes, along the lines of the United Way," said Kurtz, "but I believe that any advocacy group or political campaign is considered to be totally out of bounds."

The Chronicle contribution isn't the only gift to One Houston that's stirring controversy. One Houston's campaign filing also revealed that it had received $65,000 in two contributions from Rebuild Houston, the PAC whose primary purpose was to raise money for the far less controversial city bond issue. The affirmative action PAC also borrowed $35,000 from the bond issue group and repaid it later.

The commingling of the two pools of money angers D'Ann Marro, the executive vice president of the Houston Contractors Association, which opposes affirmative action programs and supported Prop One. Marro says that during a pre-election meeting last fall with the members of the contractors association, then-mayor Bob Lanier, mayoral aide Dave Walden and city public works czar Jimmie Schindewolf all promised that Rebuild Houston would not be used to fund the pro-affirmative action effort.

"The mayor assured our members that none of the funds that go to the bond election would go to One Houston," says Marro.

Walden, she adds, explained that One Houston was created as a dual-purpose PAC simply to avoid illegalities if some of its efforts also benefited the campaign to retain affirmative action. According to Marro, Walden told the contractors, "I'm not prepared to go to jail for anybody in this room, including the mayor."

Marro personally collected $130,000 from her members for Rebuild Houston, and she says that the checks were individually earmarked to be used only for the bond issue. (Walden says he can't recall any checks given to Rebuild Houston that were specifically earmarked for the bond issue.)

Marro also claims that Rebuild Houston paid for political activities that actually promoted affirmative action, rather than the bond issue. She singled out payments from the bond PAC to the Politico firm run by consultant Kenny Calloway, which was responsible for turning out the black vote for affirmative action, the bond issue and the Lee Brown campaign.

No tape recording was made of the mayor's remarks to the contractors. "I wish we had," Marro now says regretfully, "but he probably wouldn't have said it if we had been recording."

Both Lanier and Walden insist that Marro has distorted their remarks.
"She remembers incorrectly," says Lanier, who claims the only promise he made to the contractors was that their specific contributions would not go for affirmative action efforts without their permission.

Adds Walden: "I'm not calling [Marro] a liar. She's too dainty for that, but her memory is absolutely wrong." Walden claims he told the contractors that the affirmative action and bond campaigns would inevitably feed off each other. As for Marro's singling out of Calloway, Walden ripostes: "Just 'cause Kenny Calloway's African-American, to say that all he's working on is affirmative action kinda shows you what kind of folks those are."

Walden says he personally contacted contributors to Rebuild Houston and got their okay to transfer an amount of money equal to their gifts over to the affirmative action effort. He lists Camp Dresser & McKee, Inc., Vinson & Elkins, Brown & Root and Thompson Engineering as the contributors who gave permission.

Not coincidentally, it was Walden's wife, Republican political operative and fundraiser Sue Walden, who kept the books for both PACs. "Everybody knew [the transfer] could happen," says Sue Walden. "But the intent was for it not to happen."

Apparently it was the need for last-minute cash for the anti-Prop One efforts that overcame the intent. One member of the Lanier camp says the One Houston forces never expected Blum and his allies to raise as much money as they did from contractors and out-of-state sources.

Blum believes Lanier and the Waldens are trying to justify a dishonest financial shell game. He says the bond-issue supporters who opposed affirmative action helped create the surplus in the Rebuild Houston coffers that Walden then transferred to their opponents. Had they known what would happen, says Blum, "I don't think a number of donors would have given money in the first place to create that surplus."

Lanier, in turn, is openly contemptuous of Blum's rationale. "That's crap," he says. "Blum's a whiner. He doesn't know how we used the money."

The problem is that not too many other people outside Lanier's inner circle do, either.

The Invisible Administration
You know someone's indecisive when it takes him over a month to hire a mouthpiece to communicate with the outside world. But last week, Mayor Lee Brown finally decided to offer the job of communications director for his administration to Rice University media man Mike Cinelli, who was mulling over the prospect as we went to press. A former political reporter for the Houston Post, Cinelli became the front-runner for the job after Harris County Psychiatric Hospital flack Geri Konigsberg turned down an offer from Brown.

Meanwhile, Al Haines, who was chief administrative officer in Kathy Whitmire's administration, returned to City Hall this week to work for Brown, raising hopes that someone will start making decisions in the mayor's office soon. Haines will act as Brown's chief of staff, while the mayor's longtime associate, Waynette Chan, has taken over Dave Walden's old office.

Chan is an Asian-American who worked for Brown when he was police chief in Portland, Oregon, and joined the staff of the Houston Police Department after Whitmire made Brown the city's police chief in 1982. Chan worked as a volunteer in Brown's campaign and then transferred from HPD to his mayoral staff. She's coordinating the personnel in the mayor's office, handling Brown's daily schedule and acting as gatekeeper for the mayor's visitors and phone calls.

Perhaps the most tantalizing speculation on future administrators concerns Brown's appointment of a new city attorney to replace the outgoing Gene Locke. Although he has consistently denied it, former city controller George Greanias is reportedly under consideration for the job. Other names bouncing around in the hopper are those of Vince Ryan, the former assistant county attorney and ex-councilman, and Anthony Hall, the ex-councilman and former Metro chairman. But at the glacial rate Brown is moving, it could be months before a decision is made.

Giant Sucking Sound
Maybe someone should tell Councilman Rob Todd, when he pauses from gazing in the mirror and combing his hair, that as a supposedly nonpartisan elected official he represents Democrats as well as Republicans. The smirky Todd, whose frequent pop-offs provide continuous evidence that his mouth works faster than his brain, reacted to the sex and lies allegations against President Clinton by telling Channel 13 reporter Don Kobos: "Well, I think that all Democrats are like that. Unfortunately, that's their problem, not mine." We doubt the several hundred thousand Houstonians who vote Democratic all embrace perjury, lying, adulterous oral sex -- or Rob Todd. At the rate he's going, Todd could be a cinch to win this year's Most Likely to Succeed Lloyd Kelley award.

Call The Insider at (713) 624-1483 or (713) 624-1496 (fax), or contact him by e-mail at


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