Perry's ties to UBS, Phil Gramm, lobbyists

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Perry’s lobbyist contacts cloud lottery-sale plan
Houston Chronicle
Feb. 9, 2007

AUSTIN — Gov. Rick Perry’s ties to lobbyists have drawn scrutiny in the days since he proposed selling the Texas Lottery to a private company.
Former U.S. Sen. Phil Gramm, a friend of Perry’s, is handling discussions for the proposed lottery sale, a spokesman for Gramm’s company acknowledged.

Gramm is vice chairman of UBS Investment Bank, which has been advising the governor on the proposed privatization of the state lottery. Gramm was a federally registered lobbyist for UBS last year.

Ray Sullivan, a lobbyist registered with the investment firm in Texas, worked as a spokesman for Perry several years ago. Sullivan is now in business with Michael Toomey, Perry’s former chief of staff.

Toomey said he does not represent clients with lottery-related interests, and he added that Sullivan does not work on lottery-related issues for UBS.

A spokesman for the governor dismissed suggestions that Perry’s personal friends might profit from a future sale.

“There have not been any agreements signed. Just conversations,” spokesman Ted Royer said.

The denials have done little to temper the skepticism.

Craig McDonald, director of Texans for Public Justice, an Austin group that tracks money in politics, urged Texans not to allow “a high powered team (to) convince the government that this is in the public interest when it may be in the interest of (the team’s) clients.”

He called the state lottery “a public asset that we have to be very careful with.”

Perry, a conservative Republican, used his State of the State address Tuesday to propose selling the state lottery as a way to fund cancer research and health insurance for as many as 600,000 low-income Texans.

Initially, he said he thought the state could get $14 billion from the sale, but he later raised that estimate to $20 billion. At $14 billion, he said the state could raise $300 million more each year through interest generated by a sale than by keeping the monopoly. That’s assuming a 9 percent return on the state’s investment.

The proposal has been given a cool reception, even among fellow Republicans.

Rep. Warren Chisum, who chairs the powerful House Appropriations Committee, said he didn’t know “anyone who’s supporting it.”

Sen. Robert Duncan, R-Lubbock, who heads the Senate State Affairs Committee, where the proposal would likely land, raised questions about the numbers.

Michael Granof, a professor of accounting at the University of Texas at Austin, said it would be risky for the state to bank on a 9 percent yearly return.

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