AUSTIN, TX — Texas Land Commissioner George P. Bush is giving Douglass McDonald — head of the 100 percent taxpayer-funded “Alamo Trust” — lucrative private contracts, as well as appointments to oversee potentially millions of dollars at two other nonprofits.
Giving the head of a taxpayer-funded management company private contracts creates a classic conflict of interest and at the very least, produces the appearance of impropriety — both “ethical dilemmas” under federal and state law, according to experts.
The Texas General Land Office responded at length to our questions for this report. Their full statements are provided below.
Douglass McDonald was appointed to head the Alamo in August 2017 under the supervision of the Alamo Endowment and also the Texas General Land Office, which George P. Bush heads. The new management team touted a $400 million expansion plan — only $40 million of which would be devoted to refurbishing the Alamo museum.
Under a new solicitation agreement obtained by Big League Politics, Bush awarded Alamo Trust CEO Douglass McDonald’s private company, NGOGro, LLC, a management contract with the Texas General Land Office (GLO), despite the fact that McDonald currently receives a 100-percent taxpayer-funded salary to manage the day-to-day operations of the Alamo.
Bush promised to move away from nonprofits during his campaign for Texas Land Commissioner in 2014, but instead, Bush created three more nonprofits and immediately crowned himself chairman.
In his capacity as chairman, Bush appoints members of the board for each nonprofit and is empowered to sign contracts — in addition to running GLO.
So what’s the problem? Bush maintains “competing fiduciary duties” and obligations to multiple entities, a textbook conflict of interest. Bush can’t “rule” impartially if there’s a dispute, for example.
And, without question, Bush is the responsible party in all Alamo-related nonprofits. Bush is effectively signing contracts with himself(GLO). As head of the GLO and as chair of the both the Endowment and Alamo Foundation boards, Bush signs contracts between the GLO and the identified nonprofits for both parties.
The Alamo Endowment, the nonprofit in charge of “fundraising,” was recently at the center of controversy when Bush’s political director was caught trying to sell trustee positions.
“I’d have concerns about conflicts of interest and conflicts of fiduciary duty. If there’s no chance of a conflict or dispute, why would you need a contract? I would not have contracted with myself to run the Alamo,” stated former Land Commissioner Jerry Patterson. The retired Marine ran for Texas Lieutenant Governor against Dan Patrick in 2014 and lost.
Patterson announced his candidacy for Land Commissioner in early December.
WHAT DOES THE LAW SAY?
“A state officer or employee should not:
(1) accept or solicit any gift, favor, or service that might reasonably tend to influence the officer or employee in the discharge of official duties or that the officer or employee knows or should know is being offered with the intent to influence the officer’s or employee’s official conduct;
(2) accept other employment or engage in a business or professional activity that the officer or employee might reasonably expect would require or induce the officer or employee to disclose confidential information acquired by reason of the official position;
Commissioner Bush most likely violates Texas “private interest” disclosure requirements by default and out of necessity every time he chairs a nonprofit board meeting.
The State of Texas currently does most of the spending on Alamo preservation ($75 million in 2017), which raises questions as to the practical purpose of the GLO’s proliferating non-profits, especially when the GLO refuses to disclose the full financials of the nonprofits it currently runs.
Moreover, the nonprofits’ associated legal costs are placing a heavy burden on Texas taxpayers. Every time a new nonprofit is formed by the GLO, entire law firms have to be retained — costing the state unnecessarily in duplication and wasted resources — money better spent on preserving the Alamo.
In addition to the conflict of interest resulting from running a taxpayer-funded management company while contracting with the Land Office, Bush made McDonald CEO of THREE other Alamo-focused nonprofits.
WHERE IS THE MONEY GOING? HUGE INCREASE IN “PROFESSIONAL FEES”
All Alamo expenses fall under the Alamo Trust, which is run by McDonald, and lately the Trust’s “Exceptional Items Requests” have been getting a little lopsided where it concerns payroll.
After McDonald took over, “Professional fees & services” jumped dramatically from $450,000 in 2015, to an estimated $2 million in the request for 2016, and finally, surge to $7 million in the GLO’s 2018-19 Exceptional Item Request.
The amounts listed represent over half of all the Alamo Trust’s listed expenses for the baselines in the referenced data-set.
Moreover, the Alamo Endowment (McDonald CEO, Bush chairman) spent over $200,000 on “administration,” possibly indicating windfalls, or paychecks for one or more board members. The recipient/destination of this money is unidentified in any of the incomplete financials released by the Land Office.
Beyond conflict of interest concerns, the solicitation document shows that Bush also surrendered his right to communicate with would-be subcontractors to McDonald — an essential function of the land commissioner, especially since all the contracts are with the Texas Land Office.
Applicants for Alamo-related contracts are required to direct all communications to McDonald at NGOgro, LLC.
Partial financials were released after public outcry and ahead of a formal hearing by the Texas Senate Committee on Finance Dec. 5 2017, but itemized expenditures are still invisible, i.e. who was paid and how much they were paid.
Bush told senators Tue., Dec. 5, that full financials must be kept secret because “wealthy and successful” board members are worried about their “legal liability.”
“We have members of our board who are wealthy and successful and they have incredible amounts of liability … The idea is to prevent legal liability,” Bush explained to the committee.
SOLUTION: Get different “wealthy people”
In board minutes obtained for this report, Douglass McDonald is introduced by Bush as CEO of all three Alamo nonprofits. McDonald then advocates a “consolidated audit,” saying the current “corporate structure is overly complicated and should be simplified.”
Consolidated audits erase evidence of impropriety by reducing the public vantage point to that of a keyhole.
Finally, after McDonald announces he is merging the nonprofits into “one single meeting and voting structure,” a subsequent vote authorizes him to sign checks upwards of $50,000.
‘INDICATIONS OF FRAUD’
“A state agency may not accept a bid or award a contract that includes proposed financial participation by a person who received compensation from the agency,” according to Texas Government Code, Title 10.
McDonald has already been compensated by the Land Office for related duties.
Commissioner Bush was contacted for comment by Big League Politics. Bryan Preston, Director of Communications for the General Land Office, responded with clarification of the GLO’s relationship with McDonald.
Responding to the Title 10 concern, Preston explained,
“In plain terms, this means that a vendor cannot receive a contract that is awarded under an RFP if that vendor wrote the specifications for the RFP. That did not happen with respect to NGOGro LLC.”
“GLO currently has a Management Service Contract with NGOGro, under which Douglass McDonald provides management services in connection with Alamo operations. NGOGro did not assist in preparing specifications for any such Alamo management services RFP because there was no such RFP. GLO is not required to issue such an RFP under Texas Natural Resources Code Section 31.451(c),” Preston continued.
Preston’s response reveals a chicken or egg problem, since McDonald is also CEO of the other nonprofits, including those on the Alamo “management” committee that prepared the RFPs in question.
Bush was asked repeatedly during the Dec. 5 hearing why he didn’t just make the Alamo Trust employees, state employees, since the state of Texas owns the Alamo anyway.
His response? “I am going to defer to legal counsel to protect the liability of the board members and the employees.” And later, “This is a question for…our judicial system.”
If there were nothing unsavory about current Land Office activities, why take the Fifth? Waving legal counsel in the face of senators, lawyering up makes Bush look guilty.
That was also the conclusion of Ronald Meyer, Retired Special Agent in Charge, Department of the Army’s Criminal Investigation Division and former member of the Association of Certified Fraud Examiners.
“Based on my 28-years of experience conducting, supervising, and directing Major Procurement Fraud Investigations, there are certainly indications of fraud in the GLO and the Not-for-Profits on which George P. Bush is a member of the board,” Meyer told Big League Politics.
John Griffing is formerly Associate Editor for The Daily Caller News Foundation. His interview credits include Fortune 500 executives, as well as key public officials. He is also featured on Fox, RT, Newsmax TV and numerous radio programs.