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The Nation

A Texas-sized campaign loophole

Donation amounts need not be reported, state ethics officials say.

November 29, 2006|Miguel Bustillo | Times Staff Writer

HOUSTON — Looking for that special something to give a Texas politician this holiday season? Don't fret: A suitcase stuffed with $100 bills is perfectly fine.

The Texas Ethics Commission affirmed this week that state officials could accept unlimited gifts of cash from donors without revealing how much they received. All public officials have to do is report a gift of currency and the source of the money.

The legal interpretation shocked campaign finance watchdogs and some Texas officials, who argued that it was tantamount to legalizing bribery. Under Texas law, elected officials, board appointees and many other public officials are supposed to disclose and describe any gift worth more than $250.

"This creates a loophole big enough to drive an armored car full of cash through," said Craig McDonald, director of the nonprofit group Texans for Public Justice. "It makes a mockery of our ethics laws."

Ronnie Earle, the Travis County district attorney leading the corruption prosecution of former House Majority Leader Tom DeLay, called the interpretation absurd in a letter to the panel. He joked that Texas officials could reveal receiving a gift of a wheelbarrow, "without reporting that the wheelbarrow was filled with cash."

The issue came to light after Texans for Public Justice protested a disclosure filed last year by Bill Ceverha, a board member of the Employees Retirement System of Texas, which administers benefits for about 250,000 former state workers and oversees a $19.9-billion fund.

Ceverha reported receiving a check from Bob Perry -- a Houston homebuilder and major Republican Party benefactor who is the biggest political donor in Texas -- but did not state its amount. Perry is best known nationally for funding the Swift Boat Veterans and POWs for Truth ad campaign against 2004 Democratic presidential candidate Sen. John F. Kerry.

Perry and Ceverha said the gifts were two checks for $100,000 intended to help Ceverha defend himself against a civil suit related to his former role as the treasurer of a Texas political action committee created by DeLay.

Campaign finance watchdogs were outraged when the Texas Ethics Commission ruled that public officials who receive large sums as checks do not have to disclose the amount -- as long as they report a gift of a check and whom it was from.

Critics argued that such a loose interpretation of the law allowed a large donor to give thousands to a candidate as a personal gift. The candidate could then act as if he were funding his campaign out of his own pocket.

Some ethics panelists conceded that there was a problem, but argued that it was the wording of the law that needed to be fixed. State legislators and Gov. Rick Perry have said they will consider tightening the restrictions next year.

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miguel.bustillo@latimes.com

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