Jo Clifton Swanner sits next to Barnes’ vacant seat plained to the subcommittee, the agency “is not in the business of making money.” \(“Yes,” answered chairman St Germain, “but you’re not in the business of losing Harper got the loan on the theory that the plant would help reduce the high level of unemployment in Maverick County. The plant did employ approximately 125 people from Oct. 1, 1975, until July of 1976. Then it cut back on its operation, and on Sept. 16, it closed its doors. By July of 1976, Harper was in financial difficulty. He had a $1 million overdraft at Banco -Comercial in Piedras Negras, and he told one potential lender that if he didn’t cover the overdraft, Banco Comercial would take his ranch. duced Harper to Larry B. Parker, chairman of the board of Surety Savings of Houston willing to lend Harper $1.9 million but only if Surety Savings could take a first lien on the beef packing plant. Parker explained to the subcommittee that savings and loan institutions are required by law to have first lien collateral. Harper and Barnes then went to Joe Swanner to ask the EDA to subordinate its lien on the plant in favor of Surety Savings. Barnes and Swanner were old friends from Brownwood. “I voted for him when he first ran for the state Legislature from my home county,” Swanner explained. But Swanner insisted to the subcommittee that his long acquaintance with Barnes had nothing to do with his decision to release Harper from the lien. As he remembered the transaction, Barnes located him by telephone in the Dallas-Fort Worth Airport as he was returning from a conference. “He said he was trying to arrange a line of credit to get us out of trouble once and for all. Barnes said, ‘If we can buy some time, I think we can work something out so that it [the plant] will be a financial success,”‘ Swanner remembered. This was right before the Fourth of July weekend. Swanner said he made a quick call to Washington, D.C., and got delegation of authority to put the EDA in an inferior lien position on the property. Then he drove from Dallas to Austin and met with Harper, Barnes, and two EDA administrators who had worked on the packing plant deal. That night Swanner and his staff worked late into the night putting together the subordination agreement. Under the agreement executed on July 2, EDA gave up its first lien on the packing plant, and Harper gave the agency $450,000 to put in an escrow account. Another subordination agreement was signed on July 21. This one released $250,000 of the EDA’s $450,000. In exchange, the EDA got liens on several pieces of property. But six of these were inferior liensthat is, someone else had first claim on the land. On the largest piece of prop erty, the EDA got a fifth lien. The $250,000 released went to Ben Barnes to pay off a note that Harper owed him, Rosemary Stewart, a federal attorney, testified. Swanner claimed he did not know that Barnes was the beneficiary of the $250,000 until the subcommittee told him. “Mr. Chairman, you’ve introduced a whole new wrinkle that I didn’t know anything about,” he told St Germain. “I don’t consider that a new wrinkle. I consider that a U-turn,” snapped St Germain. The chairman wondered aloud why an agency set up to help the poor should instead aid Harper in paying off his million-dollar overdraft and his $250,000 obligation to Barnes. St Germain pointed out that none of the $1.9 million loan from Surety went to the beef packing plant. Indeed, the operations at the plant were significantly reduced.the very month that EDA agreed to the subordination agreements. St Germain asked the EDA witnesses if they had required any written guarantee from Harper that the $1.9 million loan would be used at the plant. One of Swanner’s assistants said no, “It was a gentleman’s agreement.” Barnes has said that he originally became involved with Harper when the rancher asked him to act as a go-between with a New York firm to consolidate Harper’s debts. Both Barnes and Harper disappointed the subcommittee in failing to appear at the San Antonio hearing. \(The subcommittee does not have subpoena power, so witnesses were merely “invited” to attend. But St Germain pointed out that there will be more hearings in the future, and if important witnesses fail to cooperate, they might well be subpoenaed by the full House banking The former lieutenant governor sent St Germain a mailgram stating that he would be willing to testify in a closed session but that his libel suit against The Dallas Morning News prevented him from testifying in public. St Germain responded that the subcommittee rules did not provide for private sessions. Facing the wrath of the subcommittee alone, without the testimony of Harper and Barnes, Swanner chose to blame his assistants at the EDA for the embarrassing state of affairs. Pointing to the two who sat beside him during part of the hearing, Swanner said, “If it hadn’t been for [Henry Troell and Merle Burr] I never would have signed this agreement.” Troell is chief for business development and Burr is a business development specialist. Neither were able to shed much light on the Harper transactions. Swanner did assure the subcommittee, however, that Harper and his sons had personally guaranteed repayment of more than $1 million still owed the government on its loan. It seemed that EDA might have a chance to test those guarantees on Dec. 7, but such was not the case. That was the date Parker of Surety Savings said he would sell the beef packing plant and property pledged to his institution for the $1.9 million loan. Surety’s board voted on Dec. 7 to postpone selling the plant and property. Charles Laswell, general counsel for Surety, told the San Antonio Express that the note is not due until Jan. 2, adding that the foreclosure notice had been posted “on a technicality.” Laswell echoed the remarks of Parker, who earlier assured the subcommittee that the property is “worth enough to protect both the government and Surety.” J.C. An editor is someone who separates the wheat from the chaff and then prints the chaff. Adlai Stevenson December 24, 1976 7
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