Texas governor's race heats up over business deals

July 20, 2010 7:07:20 AM PDT
Gov. Rick Perry and his Democratic challenger accused each other Monday of lying about or trying to hide their profits in the oil and gas industry, the latest escalation in an increasingly nasty gubernatorial race. Perry, seeking an unprecedented third full four-year term, said former Houston mayor Bill White lied about profiting from his investment in an oil exploration company he founded.

White confirmed in a published report Sunday that he has made $1.7 million in capital gains and $1.1 million in net profit from the sale of more than 1.4 million shares of Houston-based Frontera Resources since 2006. He still owns almost 96,000 shares, but resigned his chairmanship in 2001.

"Just this last weekend we find out he was lying about making money off of Frontera," Perry told reporters Monday after speaking at a Combined Law Enforcement Associations of Texas meeting in Fort Worth. "He needs to be honest with the people of this state. There's something in his records that he doesn't want the people to know."

During his first mayoral run in 2003, White said he had made nothing on his investment in the company. That was true at the time, and in fact, he didn't make a profit until after the market turned around and the company went public in 2005, said his spokeswoman Katy Bacon.

In 1997 when White was the state's Democratic Party chairman, he reported selling between 5,000 and 9,999 shares Frontera stock for net gains of $25,000 or more, and two separate sales of less than 100 shares for net gains of less than $5,000. He also reported earning from $500 to $4,999 from interest, dividends, royalties and rents from Frontera in 1997, according to his financial statement provided to The Associated Press by Perry's campaign.

But those amounts did not represent an overall profit for White compared with his investments in the company, because "he lost money for a long time," Bacon said.

However, Perry's spokesman Mark Miner said White's 1997 financial statement filed with the Texas Ethics Commission is clear evidence that the Democrat challenger is lying or misleading voters.

White has never tried to hide his business dealings, and his profits were in his tax returns that he has released since 2003, when he was elected to the first of his three terms as Houston mayor, Bacon said.

White's campaign accused Perry of trying to distract the public from his own troubles, including two recent ethics complaints over his alleged failure to disclose debts and income on his home in College Station.

"Gov. Perry was caught red-handed hiding a debt, so now he's attacking me for starting an oil and gas company, then selling the stock when the company was successful," White said in a statement.

"Perry's handlers don't want him to answer unscripted questions in a debate or from editorial boards. Perry wants to hide from his record of nearly doubling state spending, doubling state debt, and helping create an $18 billion budget hole."

White's campaign also said Perry should "come clean" about his conflicts of interest, saying he has made millions while in office. White said that one of Perry's most profitable assets has been his interest in MKS Natural Gas, a company with about $3.4 million in mineral rights in the Barnett Shale, one of the nation's biggest natural gas fields.

But Perry's campaign said White was the one with something to hide, saying he has refused to release his tax returns before 2003, including his time as deputy energy secretary in the mid-1990s.

"Gov. Perry did the right thing by putting all of his assets in a blind trust to avoid a conflict of interest," Miner said.

Last week White reported more than $9 million in campaign cash on hand Thursday, well more than Perry's $5.9 million. White, Texas Democrats' best hope in years to take back the governorship, also raised more than Perry in the reporting period running from late February through June. White's campaign said it raised $7.4 million in that span, compared with Perry's $7.1 million.

Perry, who has never lost a race in his 25 years in state government, had to spend a big chunk of his money on a highly competitive spring GOP primary against U.S. Sen. Kay Bailey Hutchison and an unexpectedly strong third candidate, Debra Medina. No candidates in the Democratic primary posed a serious threat to White.


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