From the Office of State Senator Troy Fraser

For Immediate Release
March 6, 1998
Contact: William A. Scott - (512) 463-0124

Senator Questions $40 Million Payment To Outside Lawyers Without Documentation

AUSTIN, Tx - Sen. Troy Fraser today said he would seek a state audit of the $40 million in expenses paid to private lawyers as a result of Texas' settlement with tobacco companies.

"Once the Attorney General complies with Gov. Bush's request for documentation of the private lawyers' work and expenses, and as soon as the courts rule that these are indeed state funds, I will seek a full review and financial audit by the State Auditor's Office," Fraser said.

Fraser said he made the decision to seek the audit after published reports indicated that Attorney General Dan Morales waived a previous requirement for the private lawyers to provide detailed documentation of their expenses.

"Requiring documentation for expenses is commonly accepted and required every day in the business world and all parts of state government, but when Dan Morales got five of his hand-picked friends together, he decided to waive that requirement," Fraser said.

A 1996 unauthorized contract between the State of Texas and five outside lawyers obligated those lawyers as subcontractors, or employees of the state, Fraser said.

Under that agreement, they were required to provide a monthly accounting and explanation of their expenditures, but Attorney General Morales waived that requirement after 1996, and did not require any documentation when the vast majority of the expenses were supposedly incurred in 1997.

"I think it's interesting that the private lawyers claimed $1.75 million in 1996 when they had to report their expenses, and then their expenses jumped to more than $38 million in 1997, after the requirement was waived by Morales," Fraser said. "The people of this state are entitled to know exactly who was paid, how much they were paid, and for what purposes."

"Under any agreement with the state, no one should expect to be paid without full documentation and verification, especially considering Morales' history of demanding receipts for much smaller expenditures like $6.50 cab fares," Fraser said. "I'm concerned that Morales may have waived the reporting requirement because some of these expenses are likely to be questionable.

Fraser noted that the only glimpses of the expenses incurred by the private lawyers were contained in recent newspaper reports. The first was published Feb. 21 by the Fort Worth Star-Telegram, which reported that expenses included $952 a business lunch, $300 for coffee services and $3,100 in charter aircraft expenses. The second report, in today's editions of the Houston Chronicle, indicated that the expenses included $669,702 in professional services.

"Nearly $132,000 of the $1.75 million in 1996 expenses went to hire political spin doctor George Shipley to put a happy face on this issue with the media," Fraser said. "If the same holds true for 1997 -- when the expenses jumped up to more than $38 million -- does that mean Shipley received another $2.8 million in 1997? And if so, why? Who else got paid?"

Fraser said he believes it is appropriate to ask the State Auditor to review the private lawyers' expenditures because they were hired to work for the state, and because their bills will be paid from state funds.

"Any part of the $40 million that cannot be identified, documented, and justified, should not be paid," Fraser said. "The same goes for the $2.3 billion in legal fees."

"Let's get to the bottom of this," Fraser said. "If Morales produces the documentation, we have a lot of auditing to do. If he does not, he's got some explaining to do."