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Aug 19, 2008 7:44 pm US/Central
AP: Texas Lieutenant Governor Mum On Wealth
Click here to see a copy of Dewhurst's personal financial statement (.pdf file).
JAY ROOT, Associated Press Writer
AUSTIN (AP) ―
He's said to be the richest man in Texas politics. But voters might have a hard time figuring that out from the public disclosures Lt. Gov. David Dewhurst has given the state Ethics Commission.
Nowhere does it say the former CIA agent, through a privately held trust, is a major shareholder in a Houston energy and investment company. There's no mention of his far-flung cattle ranches, private bank investments or luxury condo. Nor is there any word of the hedge funds, stocks and bonds or publicly-traded fuel distribution company he acknowledges are or have been part of a trust fund estimated to be worth up to $200 million.
It just says the David Dewhurst Trust is valued at "$25,000 or more."
Some ethics watchdogs question whether Dewhurst, a Republican who has contributed hundreds of thousands of dollars to help elect GOP candidates in Texas and beyond, has complied with mandatory disclosure requirements. Either way, they say the lack of transparency about his wealth and personal dealings makes it impossible to determine if the long-serving lieutenant governor has any conflicts of interest.
"It certainly flies in the face of the spirit of financial disclosure," said Edwin Davis, director of research at Common Cause in Washington, D.C.
Elected lieutenant governor in 2002, Dewhurst holds one of the most powerful jobs in state government. As presiding officer of the Texas Senate, he plays a major role in deciding the fate of thousands of bills affecting business, consumers, education, roads and a host of other issues.
Dewhurst told The Associated Press in an interview that he has disclosed everything required under state law and that he never mixes his public duties with his private business. He bristled when asked how much he was worth and whether he would release his tax returns.
"We're not going there. Do I look stupid today?" Dewhurst said during an hour-long exchange at the state Capitol last week. "In Texas, we have a long tradition of not talking about the number of cattle you own or your net worth."
Dewhurst, who worked for the CIA in early 1970s, struggled at first after returning to his native Houston in 1978 for a career in the booming Texas energy sector.
When oil prices tanked in the early 1980s, his oil-field services company, Trans-Gulf Supply, went bankrupt. But Dewhurst bounced back and by the late 1980s another of his companies, Falcon Seaboard, had branched out into the lucrative energy co-generation business, selling electricity to utilities and other industrial users.
Dewhurst finally got his payday in 1996, when Falcon Seaboard sold three power plants to CalEnergy Co. for $226 million. When he ran for Texas land commissioner in 1998, it was widely reported that Dewhurst had put his assets into a blind trust, an investment tool designed to create a firewall between public service and personal business dealings. President Bush, for example, has placed most of his family's wealth in a blind trust.
But Dewhurst told the AP he decided against a blind trust years ago. He said he put most of his assets, including his shares of Falcon Seaboard and cattle ranches reportedly worth millions of dollars, into a standard grantor trust from the day he took elective office in 1999.
The reason: taxes.
"A blind trust businesswise is not very different from this grantor trust, but you're taxed on passive income versus income," Dewhurst said. "There's a huge penalty with that."
Watchdog groups say Dewhurst is trying to have it both ways. A blind trust, like it sounds, is supposed to be managed without any oversight or meddling from the beneficiary. That way, a politician wouldn't know if a particular action he took as a government official was impacting his own bottom line.
Dewhurst acknowledged he discusses and reviews his holdings with his trustees -- his brother, Gene Dewhurst, and longtime business partner Martin Young -- and actively manages his cattle ranching operations.
The disclosure statement Dewhurst files annually with the Texas Ethics Commission does not itemize any of those holdings, even though the law requires the "identification of each trust asset, if known to the beneficiary, from which income was received by the beneficiary in excess of $500."
Fred Lewis, an activist who has lobbied the Legislature to adopt stricter disclosure laws, said he does not believe Dewhurst has complied with existing state ethics law.
"In my interpretation of the law you only have two choices: you either disclose your assets if it's in a regular trust, or you have a blind trust," said Lewis. "As best I can determine, he's done neither."
Dewhurst's lawyer, Ed Shack, said Dewhurst can't identify which assets flowing into the trust are producing more than $500 because the proceeds get "mixed up all together with all the other income."
However, Dewhurst readily acknowledges he is aware of and has dealings with the major assets in his trust. The largest is Falcon Seaboard, which continues to lease space from the Dewhurst campaign in Austin. Dewhurst also makes frequent use of the Falcon Seaboard plane, an executive Gulfstream 3 jet whose tail numbers include his initials, "DD."
Tim Sorrells, deputy general counsel for the Texas Ethics Commission, said he could not comment on specific cases but pointed to the language in the statute requiring disclosure of trust assets known by the beneficiary to produce more than $500 in income.
Dewhurst said most of his holdings are in stocks and bonds. But his trust also has a significant stake in United Fuel & Energy Corp., a publicly traded distribution company based in Midland, where his brother serves as a member of the board, according to records at the U.S. Securities and Exchange Commission.
Dewhurst also acknowledged his trust had recently bought a ranch in Bastrop County, has a luxury condo in Houston valued at $403,795, owns part of a bank "in the midwest" and has made other investments in financial institutions in Texas and other states in recent years.
While none of those investments are disclosed to the Texas Ethics Commission, he said voters shouldn't worry because he's instructed his trustees to avoid potential conflicts of interest. He also said his net worth has dropped since getting politics in the late 1990s, though he declined to provide any figures.
"Absolutely everything we've done is squeaky clean," Dewhurst said. "We're not trying to hide anything."
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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