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tant move toward diversification and reduction of risks in a speculative investment into which the Foundation [is] now locked.” November 1, 1969. The board is still holding Applied Devices, but now thinks the stock “should become more valuable within the next twelve months” and decides not to sell. It also decides to give Harry Ransom, UT chancellor and UTF board member, $10,000 to underwrite the costs of his fundraising activities and to meet his “emergency needs.” September 19. 1970. The board decides to “appoint a small committee to study the feasibility of the Foundation receiving Applied Devices common stock donated by the president of that company to be distributed to members of the faculty.” This idea is never heard of again. September 17. 1971. The board meets, for no apparent reason, at the Disneyland Hotel in Anaheim, California. And the foundation clones itself by creating the University of Texas Foundation No. 1, Inc. The new foundation then acquires an oil production payment which it, for some unspecified reason, is better equipped to handle than is the old foundation. February 11, 1972. The board gets a report on Applied Devices from Gene Woodfin, one of its members who also happens to be a partner in Loeb, Rhoades: the company is reported to be “nearly bankrupt.” Woodfin suggests that the foundation “consider liquidating part of its holdings in the stock.” Unfortunately, no one will buy it. UTF also gets a shot at another oil production payment and sets up the University of Texas Foundation No. 2, Inc., to accept it. February 9, 1973. The board learns that its assets, which are carried at a value of $1,257,955.93, have a market value of only $351,372.47. And the foundation gets another present from Loeb, Rhoades: “a residual interest in contractual rights to receive payment for shares of Editorial Codex, S.A., an Argentine corporation.” September 15, 1973. The board travels to Pawling, New York, to hold its meeting at the Dutchess Valley Club. Woodfin, who is now UTF’s president, sees fit to reassure the other directors “on the Argentine matter . . . that it would not be a loss or liability in any manner to the Foundation; he said he would personally sustain any loss that might occur.” The board also gets some bad news about an oil well it owns in Lea County, New Mexico, and decides to write the well’s value down to $1 since there’s no market for it. This is the first mention in the minutes that UTF owns an oil well. The board gives UT chancellor Charles LeMaistre $5,000 for “development expenses.” March 22, 1974. The market value of foundation assets is now down to 10 DECEMBER 15, 1978 $329,476.66, and Austin investment banker E. G. Morrison, who serves as UTF treasurer, lays the blame right where it belongs: “the big drop in Applied Devices.” The board then accepts the gift of an airplane from the Eugene McDermott Foundation. \(Yes, other action. chancellor LeMaistre brings up his need for “unrestricted funds” in the neighborhood of $25,000 to $30,000 a year “to underwrite such things as official functions, receptions, and the like,” but Woodfin politely informs him that he “doubted the wisdom of the use of Foundation funds for this purpose.” LeMaistre’s little kitty is nixed by the board. October 18, 1974. The board leases its plane to the university for $50 a month. September 13, 1975. Two more clones appear: the board creates University of Texas Foundations No. 3 and No. 4. Meanwhile, back at the Lea County oil well, the lease has expired and the equipment is being sold off; the foundation will lose only around $50 on this venture. April 10, 1976. The board discovers a problem with an Atlantic Richfield oil production payment: its participation could involve the foundation in a violation of Texas usury statutes. Solution: authorize the foundation officers to bypass Texas law by creating a new foundation outside Texas. The board also accepts a gift from Austin auto dealer Lowell Lebermann’s familythe Lebermann home at 1506 West Lynn in Austinand leases it to Bob Dorsey, former president of Gulf Oil. \(Dorsey, newly fired after being implicated in the operation of Gulf’s multimillion-dollar illegal political slush funds, moved to Austin to take a job with the Austin National Bank and an endowed chair in the university’s engineering department, funding for which came largely from Gulf. He served on the foundation board from 1968 to 1972, and he is allowed to rent the stately Lebermann home from UTF for $400 a month, considerably less than its true rental value. Foundation director and UT regent Tom Law, a Fort Worth attorney, executed the lease, but he refuses to comment on the $400 figure; he told the Observer he doesn’t remember the deOctober 22, 1976. A new solution to the usury statute is agreed upon: have the foundation staff work up “an appropriate clarifying amendment” to be introduced at the next legislative sessionthis in spite of the foundation’s articles of incorporation which prohibit it from “attempting to influence legislation.” \(Sure enough, the necessary law was enacted in 1977 under the sponsorship of Rep. Tom Schieffer of Fort Worth. According to Schieffer, the idea for the bill originated with Dick Lowe, an oil producer whose office happens to be in the same Fort Worth bank as Tom Law’s law firm. Asked about this coincidence, Law told the Observer he and Lowe had never discussed the matter and suggested it might be a case of Meanwhile, Applied Devices has begun trading on the American Stock Exchange. April 15, 1977. Applied Devices is moving up, increasing foundation assets by $37,000 since October. And the board comes up with $4,000 for the chancellor’s “expenses that cannot be paid from another source.” Still no details on what these expenses might be. But enough. What we’ve recorded here are only a few of the activities mentioned in board minutes that deserve and don’t getany sort of public scrutiny. There are dozens of other hints of land deals, stock deals, oil leases, annuity arrangements, and property transfers in which the foundation allows the donor to keep the gift until his death \(a scheme whereby the donor not only gets an income tax break now but also avoids inheritance taxes on his estate operated to the obvious tax benefit of “friends of the university”could go on and on. The benefit to the university’s public purposes is harder to discern, yet the foundation is raising money in the public’S name and won’t tell what it’s doing. Don’t call us, we’ll call you How does it get away with all this secrecy, you may well ask. What about the Open Records Act? What about federal laws governing foundation affairs and state laws governing nonprofit corporations? The UT Foundation claims that none of these apply, and it’s right about the last two. The stringent federal requirements for open records of foundation assets and grant activities apply to private foundationsthe kind set up by an individual, a family, or a corporation, like the Hogg Foundation or the Exxon USA Foundationnot public foundations like UTF. And there’s a state law passed by the 65th Legislature that took effect January 1 of this year requiring nonprofit corporations to make their financial records, including income and expenditures, available for public inspectionbut it specifically exempts “a public institution of higher education and foundations chartered for the benefit of such institutions or any component part thereof.” With the Open Records Act, the foundation is on shakier ground. The Ohserver has been trying for a year now to gain access to UTF records, and these efforts illustrate some weaknesses in the act. Here’s what’s happened so far. Armed with the information that the foundation’s accounts are kept by the Austin National Bank \(the bank headed