Texas Governor Rick Perry was asked during Tuesday evening’s Republican presidential debate about a grant-allocating program that moderator Karen Tumulty suggested was similar to the one administered by the Department of Energy — the program which awarded a $535 million loan guarantee to the failed solar panel company Solyndra.
That program, the Texas Emerging Technology Fund, was created in 2005. Perry signs off on all grant allocations, along with his lieutenant governor and the speaker of the Texas House of Representatives.
The fund has provided businesses with about $250 million in grants. Perry hailed the financial awards Tuesday as the springboard for “54,600 jobs that have been created.” (RELATED: Read more Rick Perry news)
But the program has not been without the taint of scandal. The fund has made grants to companies operated by several prominent Perry donors, and at least one company receiving grant money went bankrupt — an uncanny similarity to the Solyndra scandal.
In 2007 Perry’s office approved a $1.5 million award to ThromboVision, a biomedical diagnostics company. When it declared bankruptcy in September 2010, ThromboVision revealed that businessmen Charles W. Tate and Charles Miller owned hundreds of thousands of preferred shares in the company.
Tate was involved in the initial vetting process for the company’s Texas Emerging Technology Fund grant, a step before the request was evaluated by a statewide board and then approved by the governor, lieutenant governor and House speaker. The Dallas Morning News reported that Tate made two investments in the company between the April 2007 grant approval and the October 2007 public announcement of the grant.
Tate donated roughly $424,000 to Perry’s campaigns between 2000 and 2010, while Miller donated $125,000 during that time.
Another grant that raised eyebrows became an election issue during Perry’s successful campaign for a third term in 2010. In August of that year, Convergen LifeSciences Inc. received a $4.5 million grant from the fund. That company focuses on developing cancer therapies.
The Convergen grant circumvented a regional approval board, a highly unusual move, after it failed to win its approval. Convergen owner David Nance donated approximately $80,000 to Perry’s political campaigns between 2000 and 2010, according to figures made public by the Texas Ethics Commission.
Perry’s Democratic opponent in the gubernatorial race, former Houston Mayor Bill White, used this news as an occasion to allege a “pattern of corruption” in Perry’s political history, proclaiming that “for those companies that open their pockets with campaign contributions, indeed the governor’s office has been open for business.”
“Nance’s application for the money did not follow usual channels for approval,” The Austin American-Statesman reported. “An Austin-area screening board rejected the initial application, and then Nance sidestepped another screening by a board that focuses on life sciences applications.”
“Instead,” the paper reported, “he took his application to a 17-member statewide advisory board, made up mostly of Perry appointees, and asked Alan Kirchhoff, Perry’s director of economic development at the time, to intervene.”
Perry trounced White in the gubernatorial election. Three days later, the governor released the contract with Convergen, “after first contending it should be kept secret,” the American-Statesman reported.
Chris Ladd, a frequent New York Times and Boston Globe freelancer, wrote in September that Perry’s Texas grant plan was in many ways worse than the parallel Department of Energy loan program.
“Here’s a successful Texas investment strategy,” Ladd wrote. “Invest $75,000 in the Governor’s campaigns. Then fund the rest of your business with a $4.5m taxpayer funded grant from the Governor’s ETF. That’s not a loan like Solyndra received, that’s cash on the barrelhead, delivered from the state and never to be repaid.”
Minnesota Rep. Michele Bachmann has taken aim at an award issued by a similar, but distinct, fund in Texas: the Texas Enterprise Fund. Created in 2003, that program has doled out more than $400 million to companies.
Bachmann targeted a $35 million grant to Lexicon Pharmaceuticals Inc, alleging that Perry “gave $35 million and a grant to a private company and there were donors in that private company.” Bachmann noted that Lexicon failed to meet its promise of creating jobs, actually reducing its workforce.
Other issues involving these investment funds have caught the attention of the Texas press. The Dallas Morning News reported in 2010 that Verve Public Relations Inc., a company operated by Christiane “CJ” Nance, was paid $70,000 to produce promotional videos supportive of the Emerging Technology Fund. CJ Nance’s father is Convergen owner David Nance. He supplied $100,000 for the promotional work.
IRS adviser James P. Joseph told the Morning News that the situation was “highly unusual” and “looks very suspicious.” A donation in the form of an “earmarked grant to pay your child, that’s the definition of an insider transaction,” Joseph said, suggesting that the IRS might be interested in whether Nance reported the donation on tax returns.
The Morning News compiled a list of investors who had donated to Perry and later received grants from state government programs.
Perry acknowledged that “from time to time, I may know someone who has an interest in a project. That is a pretty rare occurrence.” He said he didn’t read disclosure forms identifying investors before signing off on deals, saying that “whether they contribute to my campaign or not has nothing to do with whether or not the project is appropriate.”
According to the Morning News, grants totaling $16 million were awarded by the Emerging Technology Fund to major Perry donors.
The Club for Growth, a fiscal conservative advocacy group, has expressed concern that the two development funds “create huge market distortions in a place that should naturally be a nationwide leader in attracting jobs.” The group cited Perry’s role in the funds a evidence that “he has at times an interventionist streak rather than consistent free-market principles.”
Perry has consistently denied insinuations of malfeasance in the Texas grant programs, and touts the state’s job-creating figures as one reason he should be elected president in 2012.