So What’s the Truth About Dan Morales and Tobacco?

He says he took on entrenched corporate interests against impossible odds and won a $17 billion settlement for the state of Texas. His critics say he needlessly paid hefty fees to greedy trial lawyers and then tried to cut one of his pals in on the action. Now the question is whether his hopes of being governor have gone up in smoke.

DIME CON QUIÉN ANDAS, Y te diré quién eres” is commonly translated simply as, “You are who you friends are.” But in describing a Democratic primary in which two Mexican American candidates are running for governor, the literal translation of this expression is the better choice:

“Tell me who you walk with, and I’ll tell you who you are.”

Certainly it was a better choice to parse the political behavior at San Antonio’s Martin Luther King Day parade on January 21. On that day a group of the city’s most powerful and influential Democratic politicians linked arms and marched down Martin Luther King Avenue. At one end of the line was former San Antonio mayor and Clinton Cabinet member Henry Cisneros. Flanking him were congressmen Charlie Gonzalez and Ciro Rodriguez; state senator Leticia Van de Putte; state representatives Art Reyna, Trey Martinez Fischer, and Ruth Jones McClendon; county judge Nelson Wolff; and various candidates for the city council and the local bench.

On the south side of the avenue, a bit removed from Cisneros and his rainbow coalition—and far less conspicuous—walked another of San Antonio’s native sons. Wearing Western boots, a pinstripe suit, a bright white shirt, and a striped tie, former Texas attorney general Dan Morales waved, smiled, and shook hands. “Hey! Dan Morales. I’m running for governor,” he repeated, as he worked the line in front of the modest houses that lined the street. “Hey! Good to see ya!” Morales had come home to San Antonio, but this time, he was on his own. There was no exchange of pleasantries with his former mentor Cisneros. Not one of the two dozen politicians leading the parade was supporting Morales in his race for governor. All but Nelson Wolff, who can’t endorse candidates because he is a judge, were backing the other Democrat in the race, Tony Sanchez.

Ever since he won election to the Texas House of Representatives in 1985 without the blessing or the backing of any local political machine, Morales has made a career out of going his own way. He’s always had his reasons, even if they were sometimes hard for fellow Democrats to understand. If he was the loneliest member of the House Mexican American Legislative Caucus when he carried a criminal justice reform package his colleagues opposed, he did it because he was a former prosecutor and a law-and-order conservative. If he made national headlines as the maverick Hispanic attorney general who opposed race-based admission at the University of Texas, he did it because he believed affirmative action harmed minority students. Morales angered many in his party, but he was undefeated against Republican opponents, turned out Hispanic voters in record numbers, and because he was only 34 when he was elected attorney general in 1990, had a longer shelf life than most of the party’s aging stars. If they weren’t completely sold on a conservative, Harvard-educated Presbyterian with a limited command of Spanish, Texas Democrats were not going to walk away from Dan Morales either.

That was then. Everything changed after Morales brought his now famous lawsuit against the tobacco industry. On its face, the suit was a grand success. Morales hired a team of five private attorneys—known collectively as the Big Five—and forced the nation’s tobacco companies to pay the state $17.3 billion in damages. Few had believed he could win the suit, let alone a settlement worth billions of dollars. But along the way Morales did something that no one yet has quite been able to explain: He signed a contract that resulted in $506 million being awarded to his friend Marc Murr, a Houston lawyer who was never seen in the Beaux Arts federal courthouse in Texarkana, where the tobacco trial was held. At least, Murr wasn’t seen until shortly before the case was settled—about the time attorneys’ fees were being negotiated. The Big Five together made $3.2 billion—the biggest legal killing in history. But they had been out front, highly visible, had risked some $30 million of their own money, and would have gotten nothing if the state had lost. When Murr showed up to collect his paycheck, he based his claim on a contract with Morales that the principal lawyers in the case say had been executed in secret and later, by Morales’ own admission, backdated.

A questionable $506 million deal for a friend who had not worked with the trial team was too much to swallow—even for a public that had lost its gag reflex when it came to politics and corruption. But that wasn’t Morales’ only problem. First, Houston lawyer Joe Jamail—probably the most successful trial lawyer in America in the past thirty years—had accused Morales of soliciting a kickback when he tried to recruit Jamail to sue the tobacco companies. Second, Morales became a punching bag in the 1998 election for attorney general, even though he decided not to seek reelection: Republican nominee John Cornyn made the tobacco fees the centerpiece of his campaign. Third, the U.S. Attorney’s office launched an investigation into Morales’ handling of those fees. That investigation has now dragged on for more than two years but has yet to produce an indictment.

Indeed, Morales appears to be running two campaigns, one for governor and another against a federal grand jury that meets every Tuesday in the basement of the federal building in Austin. He has raised no money since the end of 1997, when he announced he would not seek reelection. But since July 1999, he has spent $516,627 of the funds left in his officeholder’s account; $458,429 was paid to lawyers.

Exactly why Dan Morales would risk destroying a promising political career to arrange a $506 million fee for an old friend is one of the deepest mysteries of Texas politics. The controversy he created might have faded away gradually, along with his name and reputation. But now that he is running for governor, it seems like a good time to ask the question again: Why did he do it?

IN SEPTEMBER I REQUESTED AN interview with

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