Are friends helping friends get contracts?

February 27, 2008 8:14:50 PM PST
Friends helping friends get huge government contracts. Is that the way you want business done with your money?

Deep in the country northwest of Houston, you'll come upon the huge Hat Creek Ranch. It's a nice place.

You know who owns the Hat Creek Ranch? It's owned by Leroy Hermes.

Leroy Hermes is a noted architect. He's a community leader and founder of a firm with a long history of lucrative government contracts.

"Where does giving to the community cross the line to benefiting yourself ethically or unethically, that's what needs to be looked at," said Harris County Judge Ed Emmett.

This pillar of the community finds himself part of an FBI investigation of public corruption. A federal conspiracy indictment charged developer Michael Surface with multiple crimes and claimed Surface got Hermes' firm to hire a particular consultant to help Surface get a city contract. Hermes' firm would then get to be the architect. Mr. Hermes was not charged with a crime.

Hermes says he hasn't read the now month old indictment. In a letter to 13 Undercover, he says he objects to any suggestion he is "dishonest, deceitful or otherwise corrupt."

But Mr. Hermes is one example why Harris County government and its contractors seem to make up such a small world. And that's why 13 Undercover has looked at the contracts for the Reliant Stadium complex.

I asked Judge Emmett if he had concern about the integrity of the process.

"Sure, you have to at this point, you have to look to find out," he replied.

You know who helped design the $425 million stadium? It was Hermes Architects.

The firm has been getting contracts at the Reliant complex since the Dome days. Thanks in part to County Commissioner Jerry Eversole.

And you know who was helping deal out Reliant contracts as chairman of the county's sports corporation for the last eight years?

It was Michael Surface.

Hermes Architects has gotten a piece of every single Reliant architecture contract since the year 2000, every single one.

"On the surface it looks bad, there's no question about that," said Judge Emmett.

"Certainly he is entitled to his opinion, I see no claim of harm," said Willie Loston of the Harris County Sports Corporation.

The relationship between Surface and Hermes goes back before Surface got the Reliant post.

Hermes Architects did the interior design work for a $35 million Harris County project Michael Surface developed. The project is now under an FBI investigation. His firm was also involved in design work for a controversial project at the city of Houston. That was the one that helped lead to the indictments.

But should the public have been told that for a time Mr. Surface and Mr. Hermes had neighboring properties?

"Based on facts, as I see it, there's a problem," said Loston.

Both men had placed some chips in Austin County real estate

It was January 9, 2003 when Leroy Hermes bought 96 acres of prime real estate in Austin County. On that very same day, Michael Surface bought 102 acres in Austin County from the same guy, right next to Hermes' property.

What a small world.

I asked Judge Emmett if it can really be that small of a world.

"It's a small world," he replied.

In 2004, a year later almost to the day, tax records show Michael Surface sold his property to Leroy Hermes for a $30,000 less than he originally paid. But he did keep the mineral rights under what is now a part of the Hat Creek Ranch. Hermes says he paid a price comparable to what Surface originally paid and he a handshake deal to buy him out from the outset

"The problem is it looks like cronyism when people find out after the fact there is a special relationship," said ethics watchdog Fred Lewis.

But did their prior business dealings give Hermes firm a better hand?

In a letter, Leroy Hermes denies any involvement in or financial benefit from any government project, including the sports corporation since December 2002 when he says he gave up any ownership or control in the firm. He was a consultant to Hermes Architects until last December, housed in the same offices.

It was during that time that he designed the Heights house where County Commissioner Jerry Eversole lives.

And he redesigned part of the ranch house for his friend Sheriff Tommy Thomas.

"The public has a right to know," said Lewis.

Mr. Hermes says they both paid, but neither official will say exactly how much.

"Believe you've just hit the surface of it, no pun intended," taxpayer advocate Bob Lemer said.

Both Schatte and Surface say they're innocent, but the political pressure is building on the commissioner and the sheriff to cough up answers on their house deals with Leroy Hermes -- even from their own political party.

"These things need to be done in the light of day and if you are a public official, folks need to know exactly what relationships are between you and people who come in contact with you in your official capacity," said Jared Woodfill of the Harris County Republican Party.

But who can the public look to in Harris County to investigate whose getting the winning hand? Wednesday at 10pm, a small world gets even smaller.

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