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Senator Whitmire’s Pension Provocations

When is advice a conflict of interest?

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In the heyday of free-wheeling investment banking, there was a saying: without conflicts there is no interest. For Houston state Senator John Whitmire, you might say that without conflicts he wouldn’t be nearly so interesting.

He is the Senate’s longest-serving member, a remarkable feat for a Democrat in a Republican state. He has been a champion of criminal justice reform, prison reform and is one of the few true experts in state government on public pensions. But he also is one of those politicians about whom conflict of interest stories seem to spring up like mushrooms after a spring rain.

The latest is a Dallas TV station allegation that Whitmire advised the Dallas Police and Fire Pension System on how to deal with its $1 billion shortfall and battle with Dallas Mayor Mike Rawlins before the Legislature, and then the pension plan hired Whitmire as its lobbyist: “A state senator who will be voting on a bill to overhaul the Dallas Police and Fire Pension System is now advising the pension board—and under Texas law, it’s all legal. John Whitmire (D-Houston) spoke to the Dallas Police and Fire Pension board in November, one month before the board hired him as a lobbyist.”

Whitmire is livid, saying the story is a misrepresentation of his appearance before the board and his law firm’s contract with the pension fund. “I go out of my way to have a Chinese wall between my firm’s government relations people and me,” Whitmire told me. He said the firm where he is of counsel, Lock Lord in Houston, has represented the Dallas pension for 20 years and merely renewed its contract. Whitmire said if a Dallas pension bill came before the Legislature, he would abstain from voting to avoid even the appearance of a conflict of interest.

But like much with Whitmire, its just not that simple.

Whitmire told me his briefing to the pension board was nothing more than a discussion of the political atmosphere in Austin that the board members might be facing. “It’s a briefing, not representation,” Whitmire said. And for sure, some of it was. For instance, he told the board:

By the time my lieutenant governor and my colleagues deal with their social agenda, by the time we take care of restroom issues and sanctuary cities and guns, by the time we do all that, I don’t know that we’ll have time to get around to the public issues, which would include education, pensions and higher education.

Some of Whitmire’s advice was very specific, though. In a 33-minute video of his presentation that is included below, Whitmire told board members they needed to develop a plan to save the pension and not leave it up to city officials because then the perks of the pension will be whittled down to either being a 401K type savings plan or a defined-benefit pension that pays out like an annuity. He also said he would be willing to fight any plans by Rawlins or the Dallas City Council to take full control of the pension.

I would filibuster. I would preach all day long. Don’t take your pension plan and give it to the local city council. They have different pressure points.

If the city council was given control of pension assets, Whitmire said soon the money would soon be used as community investments. “If you let them control the assets of your pension, they will use it for local political patronage,” Whitmire said.

Though the Dallas City Council has four seats on the pension board, it’s essentially powerless because the majority of the board is named by police and fire groups. The Legislature in 1993 allowed the pension to establish savings accounts with a guaranteed interest rate that investments have been unable to match. That combined with some poor investments and the economic downturn have left the pension on the brink of bankruptcy, but the City of Dallas also has a responsibility to keep it solvent.

This type of conflict of interest story has dogged Whitmire for years. Whitmire last year worked with soon-to-be Houston Mayor Sylvester Turner to develop a plan for shoring up the Houston fire pension, which his law firm also counsels. In 1993, the Houston Chronicle reported that Whitmire passed a bill favorable to the Houston Firefighters’ Relief and Retirement Fund and then received a contract to represent the board in Washington. The headline was: “Whitmire backs bill, lands a job.”

 

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  • WUSRPH

    And you don’t even talk about the time some years ago when he was involved with getting public pension systems to invest in private golf courses……

    • John Johnson

      The stink is overbearing. “Chinese Wall”? Whitmire is not pulling money out of Lock Lord? How is the money paid into the law firm from the Dallas pension fund not segregated from the remuneration he receives from the firm?

      Any legislator, as a partner or employee of a lobbying entity, should be banned from either voting or “filibustering” for any legislation tied to that entity, or any association lobbying for the same, related legislation.

      Pretty simple really. People who were paid to find ways to politically obfuscate all their working lives, are great at coming up with “yeah, but’s”. Have you ever been able to get to a bottom line? The lowest denominator? I don’t think so.

      • WUSRPH

        I cannot speak to the terms of Sen. Whitmire’s relationship with Lock Lord other than that skillful accountants have always found way to keep funds separated…..
        As to “yeah, buts”…I didn’t see where I made any…but to make it clear: I oppose any member voting on a bill in which he has a direct financial interest and/or a firm, like Lock Lord, employs him, no matter how skillful their accountants may be. I also, although the law does not require, it would ban a legislator from voting on an increase in his wife’s pension, no matter how indirect it may be…..and, similarly, I would oppose voting by a solon who is a real estate agent on bills affecting real estate agents….BUT, as usual it is not as simple as you would like.
        For example, what about a lawyer who practices insurance law voting on insurance bills? Or one who practices criminal law on criminal law bills?…Or, since they could conceivable be involved in some way at some time, a lawyer voting on any proposed law? Of what about a legislator who owns stock in a company that could be affected, along with dozens of other companies, by a proposed law? (Not a law affecting only one company, but a whole class). Such questions can be carried out to clearly illogical extremes, as you would do. As such, it is in addressing such questions where the closeness of the potential conflict to the individual becomes important…
        I, however, do not favor banning a legislator with special knowledge of an area from sharing that expertise with his/her colleagues. Such sharing allows the legislators to obtain that “real world experience” that you say is so much more important than “book learning” in making their decisions. (Of course, they must also temper what is said with an understanding that the experience is biased.) As such, if I had the power to determine such things, I would let Whitmire debate the issue at length but not vote or filibuster on it.
        It is also because of the illogical extremes to which these distinctions can be drawn that DISCLOSURE is as important as it is. And that is why I, personally, support much more detailed disclosure than is now required. Let the public know….and let it—as the voters—decide what behavior they find unacceptable.
        To back up my beliefs, altho not required to do so, while I was in the Lt. Governor’s office I filed a letter with my office—distributed to all my colleagues—outlining the areas in which I felt I might have a potential conflict of interest and asked them not to discuss such matters with me.

        • St. Anger

          anyone who works for a company with a name like “locke lord” is surely aiming to be the first into the guillotine.

          • WUSRPH

            Whenever anyone starts talking about guillotines I remember what happened to Robespierre.

      • J Edgar Dallas

        Not shown in the video, but in the room at the time, were other Locke Lord attorneys knowledgeable about billing practices, and collecting the check each month. For the record, Locke Lord also lobbies for the City of Dallas, a clear and present conflict should Locke Lord continue to represent both during soon-to-be Representative Dan Flynn Pension Committee Hearings.

        • WUSRPH

          You are assuming that Dan Flynn will be the chair of the Pension Committee. That is not guaranteed. Unlike in Congress, the chairs often change in the Lege. from session to session.

          • J Edgar Dallas

            I stand corrected – thank you.

          • J Edgar Dallas

            Confirmed during Dallas Pension Board meeting today (01/12/2017) that Representative Dan Flynn has been coordinating committee mandates with the City of Dallas and the Dallas Police & Fire Pension Board, so it seems Flynn remains committee Chair for now.

    • Tall Talk

      i dont care if the smartest guys in the room are idiots, just like enron. a ponzi scheme is illegal and defined benefits meet all the criteria as an illegal ponzi scheme. just because it is sanctioned doesn’t make it legal. there are laws against ponzi schemes. these are called “white collar criminals”. they always try to hide behind a veil of legality when they are completely, 100 percent illegal. defined benefits are illegal ponzi schemes.

  • J Edgar Dallas

    We should each be concerned about what pension trustees are doing (if anything) to hold those responsible for this financial debacle accountable. The eventual (if ever) Diamond McCarthy report of findings and conclusions resulting from its so-called forensic audit; lawsuits against former pension system executives still not filed; and a well-paid audit firm responsible for verifying the integrity of pension system financial statements over these many years still not sued.

    The road to pension fund recover is not possible without a very large financial bailout. Important to note a 50% decline in investment portfolio (now experienced) will take a 100% return-on-investment simply to recover; no small trick to avoid eventual plan depletion, or termination. And pensioner DROP long since turned Bernie Madoff-style Ponzi scheme should have been easy enough for even the most simple among those responsible for pension fund oversight to see, and correct many years ago, unless…

    I am curious about what the FBI is doing.

    • John Johnson

      I have a friend who is a retired Dallas Fire Department Captain. He pulled his money out of the pension fund when he retired years ago. The city is now telling him that he has to give it back. Fat chance says he. Gross mismanagement without criminal consequences reminds me of the ’08 Wall Street meltdown. Is no one ever held accountable?

      • J Edgar Dallas

        It would be good to understand pension trustee’s August 2016 decision to authorize staff to enter into a settlement agreement with its former real estate manager, CDK Realty Advisors, having spent hundreds of thousands litigating the matter, but with no legal discover to show.

        In fact, according to an open records statement recently released by Dallas Police & Fire Pension General Counsel, Josh Mond, there are no written interrogatories, no requests for document production, and no depositions resulting from Diamond McCarthy’s lawsuit against CDK Realty Advisors, plus still no Diamond McCarthy report of findings and conclusions resulting from its never-ending forensic audit.

      • Tall Talk

        defined benefits are illegal ponzi schemes. technically, all payouts are clawed back. assets have to be sold to pay back the illegal ponzi returns.

  • Rules of Blazon

    Donald Trumpski is a pathetic white supremacist and a Russian puppet, and so is every single person who supports him.

    • Unwound

      BEEP BEEP

      • Rules of Blazon

        Nice one. I like long memories. I don’t do suffering, tho, so I’m afraid you’ve sounded a false alarm.

    • Tall Talk

      people that change the subject are practicing deceit. please become a better liar. you are too obvious.

  • Tall Talk

    defined benefits are illegal ponzi schemes. lump sums to 401 k s to all participants, not just old ones, shutter defined benefits and call a grand jury. the actuaries know these are scams.

  • J Edgar Dallas

    Seems the tide may have turned for those responsible for the police and fire pension fund debacle. Many thanks to the Dallas Morning News for a strong sense of community, and to the men and woman of the FBI for all they do.

  • J Edgar Dallas

    it’s been said, but when in charge, take charge – pension trustees have followed executive staff (key word, staff) and the advice of outside counsel (key word, outside) at nauseam; our city’s first responders deserve to know those responsible for this financial crisis, and so will the taxpayers of Dallas before this is all said and done.