Did Mitt Romney and Rick Perry Make an Illegal Million-Dollar Backroom Deal?

This story originally appeared at Salon.

 “Follow the money” is an elementary rule for understanding American politics, and in the case of Texas Gov. Rick Perry, the money trail leads to a case of apparent money laundering that involves his Republican presidential rival Mitt Romney and a $1 million contribution from the same Texas tycoon who bankrolled the “Swift Boat” attacks against the 2004 Democratic presidential candidate, Sen. John Kerry.

Bobby Jack “Bob” Perry, a residential construction magnate in Houston, is not related to Rick Perry by blood, only money. But there has been lots of that. As with the Swift Boaters to whom he donated $4.45 million, Bob Perry ranks as the single largest donor to Rick Perry during the latter’s 10 years as governor of Texas, according to official figures tabulated and analyzed by Texans for Public Justice, a nonprofit watchdog group in the state capital of Austin.

Bob Perry contributed $2,531,799 directly to Rick Perry from January 2001 to July 2011, TPJ reports in “Crony Capitalism: The Republican Governors Association in the Perry Years.” That puts him well ahead of such other notable donors as Koch Industries, the energy conglomerate owned by David and Charles Koch, the chief funders of the Tea Party, and Contran Corp., whose efforts to establish a nuclear waste dump in Texas have succeeded thanks to regulators appointed by Perry. (As Justin Elliott reported this week, Perry is also a leading funder of Karl Rove’s American Crossroads political action committee.)

But to truly understand Rick Perry’s “pay-to-play” approach, TPJ executive director Craig McDonald told Salon, one must also look at contributions to the Republican Governors Association, which he chaired from 2008 through August 2011.

In an apparent and possibly illegal attempt to hide the money’s true origins, Bob Perry has routed $11,450,000 — five times the amount he has contributed to Gov. Perry directly — through the Governors Association since 2006.

That same year, Perry donated $1 million to the Governors Association, which days later channeled $1 million to Gov. Perry’s troubled reelection campaign. When Chris Bell, Gov. Perry’s Democratic challenger in 2006, filed suit alleging campaign finance violations, Perry’s campaign agreed to settle the case and pay Bell $426,000, nearly half the amount of the contribution at issue.

The Governors Association, however, refused to settle. In 2010, state Judge John K. Dietz ruled that the group had violated Texas law by not registering as a political committee and not reporting the $1 million contribution until after the election. The judge awarded $2 million to Bell, a ruling the Governors Association is appealing.

“I think it was a pass-through,” Bell told Salon. “They were trying to hide the source of the contribution.”

Bell speculated that the Perry campaign wanted to avoid charges of hypocrisy after criticizing Bell for accepting a $1 million contribution from a Texas trial lawyer, a contribution that Bell announced publicly. Texas law allows individuals to contribute unlimited amounts to candidates.

“Bob Perry had contributed hundreds of thousands of dollars to Rick Perry’s campaign prior to 2006,” Bell said. “So why else would he pass it through the Republican Governors Association, if they weren’t trying to hide the source of the contribution?”

That $1 million contribution by Bob Perry could come back to bite Rick Perry during this year’s presidential campaign. Romney could also face trouble. He was the chairman of the governors group in 2006 and reportedly participated in the decision to channel money to Perry’s campaign.

As reporters Murray Waas and David Henderson of Reuters revealed on Wednesday, court documents describing Romney’s role indicate that two of Gov. Perry’s closest aides may have given “false or misleading testimony under oath” in their depositions for Chris Bell’s civil suit:

“[T]he testimony of [top Rick Perry] aides David Carney and Deirdre Delisi was directly contradicted by a sworn statement from Perry’s own gubernatorial campaign committee … which said that Delisi and Carney met with Romney in Washington DC on October 4, 2006 to discuss a last-minute contribution to [Perry's campaign] .”

Carney has long been Perry’s top political advisor. Delisi, who served as his chief of staff in the governor’s office, is now senior policy advisor to the campaign.

When asked about the Oct. 4, 2006, meeting, Mark Miner, press secretary of the Perry presidential campaign, told Salon that “due to a settlement by both sides we cannot comment on this case.” The Romney campaign did not respond to questions about the meeting.

To have the two presumed front-runners for the Republican presidential nomination and the funder of the infamous “Swift Boat” attacks implicated in a single money laundering scandal is a remarkable development in the Republican race. It raises a host of questions that other GOP  candidates — and the media — may want to address.

Did two of Perry’s closes aides commit perjury? Why the divergent statements about the last-minute contribution? Did Romney endorse passing along Bob Perry’s  $1 million to Gov. Perry? If so, why? And what did Rick Perry know about the source of the contribution?

In short, did the two now-bitter rivals for the Republican nomination forge a friendly backroom deal in 2006 that was possibly illegal?

An offensively low price

“Other Texas politicians have done pay-to-play before, but Rick Perry has taken it to a high art,” said Craig McDonald of TPJ. “In his 10 years as governor, he has raised $102 mil[lion], and half of that came from an inner circle of 200 mega-donors. George W. Bush never raised anything like that amount during his years as governor [1994 to 2000]. Bush raised $43 million for two election campaigns, and most of that came in the second campaign when everyone knew he was running for the president and people wanted to cozy up to him.”

At times, though, Perry’s pay-to-play proclivities have been less high art than low comedy. In the Sept. 22 candidates’ debate, Rep. Michele Bachmann, R-Minn., hammered Perry for issuing an executive order requiring Texas high school girls to get a vaccine that prevents cervical cancer. Right-wingers had previously attacked the morality of his order, saying it would encourage teenage promiscuity. Bachmann ventured a new line of attack, noting that the vaccine was manufactured by one of Perry’s campaign donors. Far from backing down, Perry took the offensive, naming the donor, the drug company, Merck, and stating — inaccurately — that the pharmaceutical giant had contributed only $5,000 to him. In point of fact, Merck has given $28,500 to Perry since 2001.

“I raise about $30 million,” Perry continued. “And if you’re saying that I can be bought for $5,000, I’m offended.”

Like many of Perry’s public comments, this one was more revealing than he seemed to realize. The Texas governor did not protest that he could not be bought; he simply joked that $5,000 was an offensively low price.

Which it may well be in Texas, a state where bragging about bigness is common.

After all, Bob Perry had to contribute 45 times that much to Gov. Perry before the state created what amounted to Perry’s own regulatory agency. To wit, the Houston home-builder gave the governor $225,000 between May of 2001 and August of 2003, according to the TPJ. Its “Crony Capitalism” report, based on contemporaneous accounts in the Texas news media, recounts what happened next:

Texas lawmakers created the Texas Residential Construction Commission in 2003. The agency ostensibly was supposed to mediate disputes between the buyers and builders of new homes. But construction defects made a lemon of this lemon-home agency. John Krugh, Bob Perry’s general counsel, helped draft legislation to create the agency. Governor Perry then skewed the agency’s foundation by only appointing housing-industry representatives — including Krugh — to the new commission. “In Texas you can buy your own state agency, then regulate yourself,” Houston Democratic Rep. Garnet Coleman quipped at the time.

The results were predictable. The de facto Bob Perry housing commission issued such egregiously one-sided rulings that public anger led the Texas Legislature to abolish it in 2009. Which, according to McDonald, “shows you that Bob Perry is not all-powerful.”

But it’s crucial to recognize, McDonald added, that beyond such direct business benefits, Bob Perry has also gotten his central ideological desires serviced by Rick Perry: “Bob Perry is for low or no taxes and regulation, no civil lawsuits. And Rick Perry has delivered on that broader ideological agenda day in and day out as governor.”

A second example of the hilariously blatant cronyism under Gov. Perry involves Harold Simmons, the billionaire CEO of Contran Corp. Contran ranks second only to Bob Perry as Gov. Perry’s most generous contributor. The company has given $1.12 million to Gov. Perry directly and $1.875 million to the Republican Governors Association for a total of $2.995 million.

Some people look at radioactive nuclear waste and recoil. Harold Simmons saw it as a profit-making opportunity. Waste Control Specialists Inc., a subsidiary of Simmon’s Contran Corp., had been operating a hazardous waste dump in west Texas since the 1990s; Simmons wanted the facility to handle nuclear waste as well.

In 2003, Simmons finally persuaded the Texas Legislature to allow a private company to store so-called low-level nuclear waste within the state’s borders. The Legislature stipulated, however, that Texas state regulators would have to approve the operating plans of any such waste site before granting a license.

The next part of the story has been well told by reporter Forest Wilder of the Texas Observer:

Three years into the review process at [the Texas Council for Environmental Quality], a team of geologists and engineers unanimously decided that the proposed dump was fatally flawed. The main problem, they wrote in a memo to superiors, was that the dump was within 14 feet of groundwater, raising the potential for radioactive contamination of water that could be part of the vast Ogallala Aquifer. Nonetheless, then-TCEQ executive director Glenn Shankle [who had been appointed by Gov. Perry] issued the license anyway and denied all the citizen protestors the right to contest the permit in an administrative court. Six months later, Shankle went to work for Waste Control Specialists as lobbyist taking in at least $100,000.

There’s more. Originally, Harold Simmons’ dump was to handle nuclear waste only from Texas, New York and Vermont. But in 2011, another set of Perry appointees at the Texas Low-Level Radioactive Waste Compact Commission voted to open the facility to nuclear waste from 36 other states.

And in another example of the shamelessness that permeates the pay-to-play culture under Gov. Perry, Simmons later publicly boasted about his achievements, telling the Dallas Business Journal:

“We first had to change the law to where a private company can own a license [to handle radioactive waste], and we did that. Then we got another law passed that said they can only issue one license. Of course, we were the only ones that applied.”

All of which recalls the old Texas political joke:

“What’s the difference between a bribe and a campaign contribution?”

“You report the contribution.”

“Who butters his biscuits?”

Few if any Texans have watched Rick Perry longer or more closely than Jim Hightower, the populist rabble-rouser and author. Perry first gained statewide office in Texas by beating Hightower, the incumbent, in the 1990 election for agriculture commissioner. The Svengali behind the scenes of Perry’s success was a political operative by the name of Karl Rove.

Perry and Hightower first crossed swords when Hightower, as agriculture commissioner, issued regulations limiting the amount of pesticides that could be applied in Texas.

“The chemical lobby was really pissed off,” Hightower told Salon, “so they wrote legislation to take pesticide authority away from my office and make my office appointed rather than elected.”

Perry, then a state legislator, carried the chemical lobby’s bill in committee, Hightower recalled, but it failed after Hightower drew hundreds of people to the hearing by inviting singer Willie Nelson as his lead witness. “When Perry called for a motion on his bill, nobody [else on the subcommittee would speak up] in front of this crowd. I remember Perry saying, “C’mon guys!’”

“That made the chemical lobby even more furious,” added Hightower. “So suddenly Karl Rove appears, recruits Perry to switch parties from Democrat to Republican and run against me.”

“Perry was a terrible campaigner back then, and Rove sent him out to attend [Texas] Farm Bureau meetings in the Panhandle to keep him away from the media. Then Rove raised millions of dollars for TV attack ads — typical stuff of a hippie burning a flag, and my face appears out of the flag.”

“What I learned from this about [Perry] is, he knows who butters his biscuits,” Hightower said. “He saw what they could do, which is to raise bucks and win him an election he probably didn’t think he could win. And that’s still who he is today: a corporate crony. You want an appointment to state office? You want a state contract? Just give him a contribution.”

“Twenty cents of every dollar he’s raised as governor has come from someone he appointed, or that someone’s spouse,” McDonald of TPJ noted. And the quid pro quo works in the other direction as well. Forty-three of Gov. Perry’s largest contributors have employed 89 people whom Perry has appointed to state boards and commissions, Crony Capitalism reports.

The “Wild West political past”

Whether Rick Perry’s apparent weakness for cronyism will hurt his chances of becoming president remains to be seen, but it does not appear to have affected his standing in Texas.

“He’s certainly been attacked on it, by both his Republican and Democratic opponents,” said McDonald. “Deborah Medina, the Tea Party candidate in the 2010 Republican primary, went after him for pay-to-play, as did [former Texas Sen. Kay Bailey] Hutchison. [Democrat] Bill White tried it in the general election too. White’s people would tell you, though, that cronyism and pay-to-play didn’t focus-group or poll very well with Texas voters. White kept pushing it, but it never did stick.”

“Why the hell not?” McDonald asked, chuckling. “Well, maybe there’s just less outrage about this stuff in Texas than in other parts of the country because of our Wild West political past and the extremely corrupt system it left us with. We have very few restrictions about how much money people can give to politicians; there’s actually no limit on what an individual can give, as long as it’s not during the legislative session. It’s outrageous, but it’s the system we’re used to.”

But in the wake of the U.S. Supreme Court’s Citizens United ruling that corporations are free to contribute unlimited amounts of money to political candidates, are the Wild West ways of Texas really so out of step with the rest of America? And if not, doesn’t that leave Rick Perry, with his abundant pay-to-play experience, better positioned than most to exploit the new rules on behalf of the rich and powerful in 2012?