Andrew Wheat

The Whistleblower and the Messengers


Like the lantern of Diogenes–who crisscrossed ancient Athens in a vain search for one honest man–the recent whistleblower lawsuit against David Dewhurst, Texas’ oil-baron Land Commissioner, shined a light on political money trails that taint every public official with any role in the tawdry affair. Dewhurst prevailed in the suit on June 28, but the real loser may have been the public interest.

Whistleblower David Scott was a General Land Office (GLO) lawyer who watched over the companies that drill oil and gas on state lands. These companies pay royalties on this energy into a GLO-administered fund that helps educate Texas kids. These royalties are supposed to be based on the market value of the harvested energy. Since companies can–and often do–boost profits by low-balling the market prices they report to the state, the GLO needs aggressive auditors to stop corporate raids on the kids’ cookie jar.

Scott’s lawsuit alleged that he was fired in 1999, right after he presented newly inaugurated Land Commissioner David Dewhurst with evidence that energy companies were illegally chiseling the state out of millions of dollars in royalties. Dewhurst–who funded his 1998 election campaign with $3.8 million in personal proceeds from an oil company he owned–says Scott was but one of 103 agency employees that he fired to cut costs. Dewhurst, who has started spending more of his millions to get elected Lieutenant Governor in 2002, says GLO royalty collections have gone up during his administration.

GLO royalty collections almost certainly have risen lately as a result of skyrocketing oil and gas prices. The real indicator of Dewhurst’s diligence is how much money GLO audits have collected under his leadership. But State District Judge Suzanne Covington sealed these records from the public, after the defense argued that they were covered by “attorney-client privilege.”

We may never know the full story contained in those documents, but this suit already has exposed how private campaign money eats away at the integrity of public officials.

Among the evidence that has been made public is an exhibit that Scott prepared on 13 oil and gas companies audited by the GLO. For each energy company, Scott listed:

The amount that state auditors determined the company owed to Texas school kids (up to $38 million in Exxon’s case);

The amount that GLO has recovered (typically pennies on the dollar); and

What the company and its law firms contributed to Dewhurst’s campaign (up to $20,000 in the case of Rutherford Oil).

With Scott on the witness stand, Roy Minton, Dewhurst’s high-powered private attorney, thrashed this exhibit on June 21st, suggesting that Scott had misled the jury by not revealing that some of the cases that he cited had been settled by Dewhurst’s Democratic predecessor, Garry Mauro. Minton also expressed skepticism about any quid pro quo.

“What do you think $1,000 to Dewhurst from Enron had to do with this settlement?” Minton asked.

From the stand, Scott replied, “I think it sent a message to Mr. Dewhurst, ‘Hello, here we are.'”

Scott said he could not directly link any contributions to a specific settlement but he said that the money helps explain the GLO’s “failure to maximize royalties.”

While Scott’s testimony often went softer on Mauro than Dewhurst, the data he presented suggest that both administrations failed to “maximize royalties.”

Above all else, this whistleblower case raises grave doubts about the GLO’s ability to protect taxpayer interests on public lands. Even Dewhurst, who self-financed most of his campaign, has taken more than $330,000 in contributions from energy interests regulated by his office since 1997. Neither Dewhurst, Mauro nor anyone else is likely to aggressively defend taxpayer interests against the energy interests that bankroll their campaigns.

Other money trails in this case entangle Attorney General John Cornyn–who defends state agencies in lawsuits–and even the judge overseeing the case. Cornyn ran for office criticizing his predecessor’s decision to hire outside lawyers to handle Texas’ lawsuit against the tobacco industry. Rather than relying on his own 600-lawyer staff, however, Cornyn paid private attorney Roy Minton up to $100,000 to defend Dewhurst from a whistleblower who is far less menacing than the Marlboro Man. Minton’s law firm, Minton Burston Foster & Collins, contributed $2,500 to Cornyn’s 1998 campaign, an investment that Minton recouped in his first seven billable hours on the job.

Scott’s attorney, Texas Civil Rights Project Director James Harrington, filed a motion to dismiss Minton from the case because he had defended one of five oil companies in a GLO royalty case that recovered $12.6 million in state funds when it was finally settled in 1999. Judge Covington–who dismissed the motion and barred Harrington from telling the jury about Minton’s past life–took $500 in campaign funds from Minton’s law firm in 1997.

To paraphrase Minton: What does that $500 have to do with Judge Covington’s handling of this case?

To paraphrase a whistleblower: It sent a message to her saying, “Hello, here we are.”

Andrew Wheat is research director of Austin-based Texans for Public Justice, a non-partisan, non-profit organization that follows money in Texas politics (