Rick Perry’s Emerging Corruption Fund

The state of Texas made a $4.5 million investment in a firm whose founders had invested only $1000 of their own money. One of those founders had made a $75,000 political contribution to Rick Perry.

The Wall Street Journal has the details. A group of investors sinks $1000 into a start-up, and one of them sinks $75,000 into the Rick Perry campaign. The start-up - over the objections of the local panel that vetted its application - then got $4.5 million of Other People’s Money from a Perry Administration venture capital operation. Now that’s leverage.

I assume the White House political operation is paying attention. The most egregious unforced error of the Gore campaign in 2000 was its failure to do due diligence on Texas. If a governor or former governor is the Republican nominee this time around - as seems likely - the Democrats can’t afford another such mistake. Think “Willy Horton” and “Boston Harbor.” If it’s Perry, let’s mess with Texas.

Footnote Good to see that the WSJ hasn’t been full Murdochized: or perhaps ol’ Rupe has decided to ride with Romney. The story does have a rather predictable spin: Perry’s corruption is supposed to demonstrate that a state-run high-tech VC fund is a bad idea. That may be true, but the fact that Perry ran a crooked game doesn’t prove that it’s impossible to run an honest game.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com

12 thoughts on “Rick Perry’s Emerging Corruption Fund”

  1. The Journal is following the lead of the Dallas Morning News, which has been all over this story:

    James Drew, Steve McGonigle and Ryan McNeill, “Perry’s tech fund aided firms with ties to his donors,” Dallas Morning News (3 Oct 2010), at: http://www.dallasnews.com/news/politics/state-politics/20101003-perry_s-tech-fund-aided-firms-with-ties-to-his-donors.ece

    Steve McGonigle and James Drew, “Perry says innovator who’s also donor deserved tech funds,” Dallas Morning News (4 Oct 2010), at: http://www.dallasnews.com/news/politics/state-politics/20101003-Perry-says-innovator-who-s-also-3955.ece

    “It’s time to fix the Emerging Technology Fund,” Editorial, Dallas Morning News (4 Oct 2010), at: http://www.dallasnews.com/opinion/editorials/20101004-Editorial-It-s-time-to-435.ece

    Steve McGonigle and James Drew, “Perry, White address issues around technology fund,” Dallas Morning News (5 Oct 2010), at: http://www.dallasnews.com/news/politics/state-politics/20101005-Perry-White-address-issues-around-9165.ece

    Steve McGonigle, James Drew and Ryan McNeill, “Perry donor’s start-up firm got $4.5M without regional board’s OK,” Dallas Morning News (13 Oct 2010), at: http://www.dallasnews.com/news/politics/state-politics/20101013-Perry-donor-s-start-up-firm-738.ece

    Steve McGonigle, Ryan McNeill and James Drew, “Perry says he, man whose firm got tech fund grant are ‘close’,” Dallas Morning News (14 Oct 2010), at: http://www.dallasnews.com/news/politics/state-politics/20101014-Perry-says-he-man-whose-1786.ece

    AP, “Bill White calls for halt in new Texas technology fund applications,” Dallas Morning News (14 Oct 2010), at: http://www.dallasnews.com/news/politics/state-politics/20101014-Bill-White-calls-for-halt-in-6787.ece

    James Drew and Steve McGonigle, “Ex-director of Texas technology fund, donor pitched alternative fuels venture to officials,” Dallas Morning News (15 Oct 2010), at: http://www.dallasnews.com/news/politics/state-politics/20101015-Ex-director-of-Texas-technology-fund-3007.ece

    James Drew, Ryan McNeill and Steve McGonigle, “Perry donor’s daughter got $70,000 to promote governor’s technology fund,” Dallas Morning News (30 Oct 2010), at: http://www.dallasnews.com/news/politics/state-politics/20101030-Perry-donor-s-daughter-got-5606.ece

    James Drew, “Governor’s office report says Texas owns 16.7 million shares in companies that got tech fund dollars,” Dallas Morning News (31 Dec 2010), at:
    http://www.dallasnews.com/news/state/headlines/20101231-governor_s-office-report-says-texas-owns-16.7-million-shares-in-companies-that-got-tech-fund-dollars.ece

    “The business of governing,” Dallas Morning News (17 Jan 2011), at: http://www.dallasnews.com/investigations/headlines/20110117-the-business-of-governing.ece

    James Drew and Steve McGonigle, “Man with checkered financial history profited on private deals while running Texas Emerging Technology Fund,” Dallas Morning News (5 March 2011), at: http://www.dallasnews.com/investigations/headlines/20110305-man-with-checkered-financial-history-profited-on-private-deals-while-running-texas-emerging-technology-fund.ece

    James Drew, “Convergen’s David G. Nance heads to courthouse again to block release of Texas Emerging Technology Fund records,” Dallas Morning News (8 March 2011), at: http://watchdogblog.dallasnews.com/archives/2011/03/convergens-david-g-nance-heads.html

    James Drew and Steve McGonigle, “State auditor’s office calls for more transparency from Texas governor’s Emerging Technology Fund,” Dallas Morning News (28 April 2011), at: http://www.dallasnews.com/investigations/headlines/20110428-state-auditors-office-calls-for-more-transparency-from-texas-gov.-rick-perrys-emerging-technology-fund.ece

    Steve McGonigle and James Drew, “Texas Emerging Technology Fund panel members tied to award recipients,” Dallas Morning News (28 May 2011), at: http://www.dallasnews.com/news/local-news/20110528-texas-emerging-technology-fund-panel-members-tied-to-award-recipients.ece?action=reregister

    James Drew and Steve McGonigle, “Tech fund official had ties to awarded firms,” Dallas Morning News (28 May 2011), at: http://www.dallasnews.com/news/local-news/20110528-tech-fund-official-had-ties-to-awarded-firms.ece

    Steve McGonigle and James Drew, “Perry donor and tech fund official had ties to companies that got awards,” Dallas Morning News (30 May 2011), at: http://www.dallasnews.com/news/politics/state-politics/20110529-perry-donor-and-tech-fund-official-had-ties-to-companies-that-got-awards.ece

    Theodore Kim, “Texas bill tightens rules on job-creation funds,” Dallas Morning News (30 May 2011), at: http://www.dallasnews.com/news/politics/texas-legislature/headlines/20110530-texas-bill-tightens-rules-on-job-creation-funds.ece

    “Perry-controlled tech fund continues to raise troubling questions,” Editorial, Dallas Morning News (1 June 2011), at: http://www.dallasnews.com/opinion/editorials/20110601-editorial-perry-controlled-tech-fund-continues-to-raise-troubling-questions.ece

  2. So to hear Perry tell it, it isn’t enough anymore to merely give tax incentives if we want to keep the peons working. Now we have to pay the landowners to till their own land!

  3. I have a feeling this guy’s “sunlight potential” is out of this world. One day has lapsed since his official announcement and I’ve already learned of 2 scandals connected to him.

  4. Of course it’s not impossible for a state-run VC fund to be run honestly. Look at Singapore’s Temasek. Although its CEO, IIRC, is the Prime Minister’s wife. (Disclaimer to appropriate officials: I have no assets in Singapore, so a libel suit isn’t worth it.)

  5. They should follow the money on the Thrombovision banckruptcy - did Perry’s supporters use their influence to pull their investment money out and leave taxpayers holding the bag?

    And to be fair, WSJ never described the overall performance of the fund, something that I’d consider relevant.

  7. And to be fair, WSJ never described the overall performance of the fund

    Actually, it kind of did. It said that (17+27) million had been spent corruptly, that it was funded with 200 million and has 140 million left. So that’s 60 million spent with ~72% of it spent corruptly.

  8. Eh, George Dubya engaged in blatant insider trading to parachute free with his I’ll-gotten gains intact as the meal ticket his daddy’s friends had arranged for him was about to go down in flames, and not only escaped meaningful SEC inquiry but also any public-image repercussions when he ran for Prez. And that was a matter of putting money in his own personal pocket, not his backers’ pockets. Of course, with Dubya it was the money of suckers in the stock market, not taxpayer funds as with Perry, so I suppose we can hope things will be different this time. But I’m not holding my breath.

  9. This may not harm him with the Tea Party, but the Gardasil order may create problems; the gummint making sixth grade girls get vaccinated against HPV just cannot be all that popular even with them. http://governor.state.tx.us/news/executive-order/3455/ has the text of the order from 2007. The potential for exemption on the basis of conscience is not likely to eliminate the problem for Perry. There may be no need for the Obama team to lift a finger if the righties get there first.

  10. What makes you think this story shows the WSJ isn’t Murdochized? This is what’s called innoculation - put the story out there early so that, when asked, the candidate’s surrogates can say, “This is more old news that’s already been addressed.” Even if it never actually is addressed.

    Do not underestimate Rick Perry’s handlers - they are top notch.

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