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Texas' No. 2 politician stays mum on his wealth

Tuesday, August 19, 2008

AUSTIN, Texas —  He's said to be the richest man in Texas politics, but the disclosures Lt. Gov. David Dewhurst has filed to the state Ethics Commission have only the barest details.

Nowhere does it say the former CIA agent, through a privately held trust, is a major shareholder in a Houston energy and investment company. There's no mention of his far-flung cattle ranches, private bank investments or luxury condo. Nor is there any word of the hedge funds, stocks and bonds or publicly traded fuel distribution company that he acknowledges are or have been part of a trust fund estimated to be worth up to $200 million.

It just says the David Dewhurst Trust is valued at "$25,000 or more."

Some ethics watchdogs question whether Dewhurst has complied with disclosure requirements and say the lack of transparency makes it impossible to determine whether he has any conflicts.

"It certainly flies in the face of the spirit of financial disclosure," said Edwin Davis, director of research at Common Cause in Washington.

A Republican elected in 2002, Dewhurst holds one of the most powerful jobs in the nation's second-most populous state. As presiding officer of the Texas Senate, he plays a major role in deciding the fate of thousands of bills affecting business, consumers, education, roads and other issues. He also has contributed hundreds of thousands of dollars to elect GOP candidates in Texas and beyond.

Dewhurst told The Associated Press in an interview that he has disclosed everything required under state law and that he never mixes his public duties with his private business. He bristled when asked how much he was worth and whether he would release his tax returns.

"We're not going there. Do I look stupid today?" Dewhurst said during an hourlong exchange at the state Capitol last week. "In Texas, we have a long tradition of not talking about the number of cattle you own or your net worth."

Dewhurst worked for the CIA in early 1970s and struggled at first after returning to his native Houston. But by the late 1980s, one of his companies, Falcon Seaboard, entered the lucrative energy cogeneration business, selling electricity to utilities and industrial users.

In 1996, Falcon Seaboard sold three power plants to CalEnergy Co. for $226 million.

Dewhurst told the AP that most of his assets were put in a standard grantor trust from the day he took elective office, as Texas land commissioner, in 1999. The reason: taxes.

"A blind trust businesswise is not very different from this grantor trust, but you're taxed on passive income versus income," Dewhurst said. "There's a huge penalty with that."

Watchdog groups say Dewhurst is trying to have it both ways. A blind trust, like it sounds, is supposed to be managed independently from the beneficiary. That way, a politician wouldn't know how an official action affected his or her personal wealth.

Dewhurst acknowledged he discusses and reviews his holdings with his trustees _ his brother, Gene Dewhurst, and longtime business partner Martin Young _ and actively manages his cattle ranching operations.

The disclosure statement Dewhurst files annually with the Texas Ethics Commission does not itemize any of those holdings, even though the law requires the "identification of each trust asset, if known to the beneficiary, from which income was received by the beneficiary in excess of $500."

Dewhurst's lawyer, Ed Shack, said Dewhurst can't identify which assets are producing more than $500 because the proceeds get "mixed up all together with all the other income."

Tim Sorrells, deputy general counsel for the Texas Ethics Commission, said he could not comment on specific cases or even whether a complaint has been filed.

Fred Lewis, an activist who has lobbied the Legislature to adopt stricter disclosure laws, said he does not believe Dewhurst has complied with existing ethics law.

"In my interpretation of the law you only have two choices: you either disclose your assets if it's in a regular trust, or you have a blind trust," said Lewis. "As best I can determine, he's done neither."

Dewhurst said voters shouldn't worry because he has instructed his trustees to avoid potential conflicts of interest. He also said his net worth has dropped since getting politics, though he declined to provide any figures.

"Absolutely everything we've done is squeaky clean," Dewhurst said. "We're not trying to hide anything."


AP investigative researcher Randy Herschaft in New York contributed to this report.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.



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