ustxtxb_obs_1971_03_12_50_00013-00000_000.pdf

Pretty please, Mr. Barnes? Austin Trying to get information on a politician’s finances in this state is harder than determining the sex of Houston. For the most part, elected officials look upon queries concerning their business dealings as a breach of taste, rather like asking them whom they’ve been out with lately. Even now, after the SEC’s stock fraud suit has severely shaken the public’s confidence in many, perhaps all, state officials, Texas politicians are making hollow sounds about ethics while continuing to act as if the public does not have a right to know how they make their money. It doesn’t take a subtle political mind to understand why some are reticent about their finances. Preston Smith and Gus Mutscher are avoiding reporters because they can’t explain to anybody’s satisfaction why they were getting uncollateralized loans and easy stock deals. But even officials who were not implicated in the stock scandal are holding back information on their financial interests. Lt. Gov. Ben Barnes is a case in point. After the questionable deals made by the Governor and the Speaker came to light, Barnes strutted around the state capitol with a smug look on his face, doing a good imitation of Mr. Clean. He happily announced that, unlike some state officials, he had never owned any stock in National Bankers Life or Master Control. THE LIEUTENANT Governor also allowed as how he was in favor of full financial disclosure by elected officials. In fact, UPI reported that at the 13th Annual Texas United Press International Editors Association Convention Jan. 22, Barnes said he planned to file a statement of his financial status “next week.” Other reporters quoted him during the week after the scandal broke as promising to make a disclosure “soon.” That disclosure has yet to come, and the Observer’s attempts to question Barnes concerning his activities on the periphery of the stock deal have been rudely rebuffed. Here is a brief rundown on how Barnes’ name crops up in the SEC depositions: The Lieutenant Governor borrowed $60,000 from Dallas Bank & Trust secured by stock in National Data Communications, Inc. DB&T has consented to a permanent injunction prohibiting the bank from manipulating certain stocks and selling certain unregistered stocks. NDC is not one of the companies listed as a defendant in the suit, but it is linked to the defendants in a variety of ways \(see Obs., On page 160 of the deposition of Donald Akins, president of DB&T and one of the defendants in the suit, an SEC investigator asks, “In connection with this made to you regarding the fact that it might have been a simultaneous loan made at another Dallas bank regarding this loan?” Akins answers, “No, sir, I’m not familiar.” The loan was transferred to the National Bank of Commerce because it was marked as a “problem loan” at DB&T. At this point it was guaranteed by Harold Hinn and Tommy Butler: That means that if Barnes had defaulted on the loan, Hinn and Butler would have had to pay it off. Hinn is on the board of directors of NDC. Butler is chief executive officer of NDC. The SEC questioned Barnes’ loan officer at National Bank of Commerce, Thomas Earl Jones, concerning a $105,000 loan at his bank. The SEC wanted to know what became of 1,000 shares of Barnes’ National Data stock. It was listed on one loan and then it just disappeared from bank records. Poof! Jones said he didn’t know what happened to it. Now, I don’t understand exactly what the SEC was getting at. But I was curious enough to ask the lieutenant governor about his loans and his stock. Barnes told me that Harold Hinn borrowed the $60,000 from DB&T for him. Hinn, he said, is a business friend. I asked him why Tommy Butler had also guaranteed the loan when it was transferred to NBC. He said Tommy Butler didn’t. I told him that the SEC had evidence showing that Hinn as well as Butler had signed the letter of guarantee. Barnes said he would check on it. I did not receive an answer about the guarantors; so later I questioned Robert Spellings, the aide who handles Barnes’ finances, about Tommy Butler. Spellings insisted that Barnes had never had any business dealings whatsoever with Butler. After hearing about the testimony of Barnes’ banker, Spellings promised he would check. I have never received an answer from Spellings. NEITHER BARNES nor Spellings would answer specific questions about Barnes’, or for that matter Spellings’, National Data Communications stock. Barnes said he owns 4,000 shares in all and that he has never sold any of it. “I bought it when it was low.” That’s about all he would say. During my first interview with Spellings, a telephone interview, Spellings ‘said that all of Barnes’ stock had been bought by a reputable dealer over the counter, that it all was registered. But at least 2,000 shares of the stock is unregistered, the SEC depositions reveal. And unregistered stock cannot be sold over the counter. Both Barnes and Spellings insisted that the stock had never been sold, but under SEC regulations, pleding stock as collateral is a sale; so, at least according to the law, Barnes did indeed sell his NDC stock. I had a second interview with Spellings, this time in his office, in which I told him that for the third and, hopefully, the last time, I was going to ask some specific questions about Barnes’ stock. I asked for the dates of the purchases, the price of the stock when purchased, the name of the persons from whom he bought the stock, if any of the stock had ever been sold and where the stock is now. Spellings was rude. At times he shouted. Barnes had been maliciously tied to the stock fraud scandal by the press. And he told me he would not provide any further information until I could prove to him that it was relevant to the fraud case. \(I suppose what he was saying was that Barnes’ office would not take my questions seriously enough to answer them unless I could prove that Barnes had broken the law. Grand. Forgive us our press passes. Maybe all the capitol reporters should sign on as investigators for Crawford Martin or Carol As I told Mr. Barnes and Mr. Spellings, it seems rather curious that a man who has endorsed full financial disclosure refused to answer questions about his finances. Barnes told me he certainly is going to make a disclosure. “But I’m not going to do it right now with misinformation and misunderstanding in the mind of the public . . . I’m going to let the air clear first.” I asked Barnes why, if he is so much in favor of financial disclosure, he has not made such a disclosure before. He told me emphatically that he had in 1968 when he was running for Lieutenant Governor. “I gave my sources of income . . . I gave them [the press] all my assets.” Unable to remember any such disclosure, I asked his press aide, Richard West, what Barnes might be referring to. West told me to check with Ralph Wayne, who ran Barnes’ campaign in 1968. Wayne provided me with Xeroxed copies of articles from The Houston Chronicle and the Dallas Morning News. The News article by Fred Pass and Carl Freund was dated Sept. 7, 1969, almost a year after Barnes was elected Lieutenant Governor. The only information it contained that , had not been March 12, 1971 13