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Texas A&M requested to audit: Standard operating procedure or capitol backlash?

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News of Texas Gov. Rick Perry’s request that Texas universities conduct audits was announced to the Texas A&M community as resulting “in wake of University of North Texas expenses revelation,” by Allen Reed of The Eagle (Bryan-College Station daily) on June 7, 2014. Reed’s story shared two of the most poignant concepts to be written in a long time, when it comes to what really goes on inside the world of Texas A&M.

First, a little history. It’s been almost 20 years since the last major statewide announcement of an audit into Texas A&M has been announced, with this much interest given to expenses. Those who’ve had their eyes on the university, beloved around the world, may well remember that it was the famous “anonymous” letter in September, 1992, to then Texas Gov. Ann Richards, which outlined a series of misdeeds at the behest and bidding of (then) highly ranked university officials.

Remember the names (Aggie) John Robert Smith, then VP of TAMU Finance & Administration, or Chairman of the TAMU Regents (Aggie) Ross D. Margraves, Jr., both of whom were “convicted of criminal offenses.” Recall Margraves’ workday boss (Aggie) D. Mike Baggett, Chairman and CEO of the Dallas-headquartered law firm Winsted, Sechrest & Minick?

At the time Margraves at the time headed up the Houston office of WS&M and led the Aggie Board of Regents, Baggett was then also the Chairman of the Board of Trustees of the TAMU Development Foundation as it used to be called and CEO of WS&M. Think about the coincidence, albeit powerful. What were the chances? Two Aggies, one law firm (of 300+) essentially prevailed as leaders over the Aggie system and its largest private fundraising entity concurrently.

Now another man was seen as key in the Aggie situation at the time. Going in to try and “clean things up” at his alma mater was (Aggie) John S. Sharp, elected Texas State Comptroller in 1990 and reelected in 1994. He was there on the “other side of the fence.” Yet another Aggie, Rick Perry, was serving as Texas Agriculture Commissioner, elected in 1990 and reelected in 1994.

Perry rode in to that spot because “during 1990, former Commission Jim Hightower’s office was embroiled in an FBI investigation into corruption and bribery.” One interesting Wikipedia factoid was the date, September 29, 1989, when Perry “announced that he was switching parties, becoming a Republican.”

From more of “citizen-sponsored history,” Wikipedia notes that in 1998, in the race for Texas Lieutenant Governor, Rick Perry posted 1,858,837 votes (50.04%) to the 1,790,106 (48.19%) cast for Democrat John Sharp. Libertarian Anthony Garcia acted as Sharp’s potential spoiler, drawing 65,150 or 1.75% of the votes, the ones that kept Sharp from beating Perry, or kept Perry from having a more decided victory. Tough race, tough call in 1998. Time marches on.

As a young man fresh out of Texas A&M, Sharp, as a Democrat, had been mentored by (Aggie) and fellow Democrat, Sen. William T. Moore, Speaker of the Texas Senate, better known as the “Bull of the Brazos.” In the mid 1990s when a local private school honored the Moore family philanthropy by naming a key building in his honor, John Sharp came to town to help celebrate the occasion. He delighted the appreciative crowd with stories of how he, as a young man full of potential and not yet much working knowledge of state politics, was called “My boy, Sharp” by Moore.

The stories were the stuff inherent of classic Texas political legends—good-hearted and hilarious. It’s less well known, but current Texas A&M Board of Regents chair (Aggie) Phil Adams was also a mentoree of Bill Moore’s, and Adams grew to become a dynamo in both the insurance industry, as well as a respected leader in state and national Republican party fundraising, most notably for Presidents, Governors and Senators. Aggie accomplishments are unbounded when you have the right mentors and are willing to put in the long hours required to achieve your goals.

In the department of heartwarming trivia, it was just last October 19, 2013, when John Sharp as Chancellor of the TAMU System and Phil Adams, as Chairman of the TAMU Regents presided over a renaming ceremony for the TAMU System Headquarters Building on Tarrow Drive in College Station.

Eagle reporter Allen Reed was on hand and shared remarks from Sharp, Adams, and William T. Moore, III (Trey), who was successfully elected to his very first public office just days later, on November 5, 2013, as a member of the Bryan Independent School District Board of Trustees. It was a poignant moment of the “passing of the torch” from one Moore to another, courtesy of two young protégés, both now power brokers in Texas politics. Also present at the event was Sen. Moore’s beautiful and gracious widow, the lovely Macille Moore, as well as the Senator’s son, Tyler and family.

Without Sen. Moore, and Gen. Earl Rudder, there would be no women at Texas A&M today, and that’s a fact. The Moore-Connally System Building was a special tribute to a most deserving gentleman. Now, back to Texas A&M, Aggies, and Texas state politics.

Turning again to the “anonymous letter,” in 1993, with that lineup of Aggies on the front lines, lots of things were going on at Texas A&M. A few interesting documents reside in the State of Texas files. There’s a fascinating report issued by (then) State Auditor Lawrence F. Alwin, in August, 1994, entitled “A Special Report on The Financial Statements of Texas A&M University Department of Food Services,” and the first page summary of the “Facts and Findings” refers you to contact Catherine A. Smock, Audit Manager, at her then Austin office. Cathy Smock, as she’s known to friends, was on the “other side of the fence.”

At the time some of the best investigative reporting that helped journalists work their way through to understanding what it took 30 pages to summarize was done in the local and state media outlets. These included The Bryan-College Station Eagle (Joe Toland), KBTX-TV Media (Sherry Williams) and the Dallas Morning News (Olive Talley, award-winning news journalist, and Doug Bedell, sports). It would be really useful for those studying Educational Administration to go back and read all of what the journalists reported at the time, because it’s likely to include the same cursory areas of review during 2014 Texas A&M system status.

In January 1995, Lawrence F. Alwin as Texas State Auditor also released Report No. 95-041, “An Audit Report on Management Controls at Texas A&M University and the System Offices,” 62 pages of some of the most fascinating, exciting reading (no joke) about higher education management. A few key findings included:

Management’s override of policies and procedures, laws, and channels of communication have eroded the effectiveness of control systems designed to protect resources from misuse and safeguard assets…The development of the cogeneration project was impaired by mismanagement….The University has not managed its risks and liabilities associated with contracting for services. Consultant services for almost $1 million were rendered without a contract in place…The Human Resources Department does not have monitoring processes to determine departmental compliance with applicable policies and procedures…If departments were able to eliminate processing duplicate transactions, the University could redirect approximately $1 million each year to more productive uses.”

Remember TAMU Presidents Bill Mobley, (Interim) Dean Gage, and Ray Bowen, the university leadership throughout the process? No, probably not, because really, these days the only two Presidents Aggies really remember are Dr. Robert Gates and Dr. R. Bowen Loftin, each of them well known and regarded for entirely different attributes. Nevertheless, after the audit, quite a bit of spinning of the Texas A&M “brand” (before “branding” became a buzz word) had to be installed and instilled.

Robert Smith served at state expense as a Special Advisor to TAMU Presidents with an office out at the Riverside Campus (including his favorite office desk and a secretary) for seemingly forever, before relocating to Houston, where sources say he became affiliated with the sale of luxury autos. Margraves is still today a lawyer in good standing, and the last Internet search showed him as a Managing Shareholder of Winstead Sechrest & Minick’s Houston office, so don’t cry for them, Argentina. Wait, what? How did that happen? More history.

A king-sized reboot was required to let Aggies feel really good about Aggieland again. One interesting aside was from Paul Burka, of Texas Monthly, the scribes of all the Bum Steer Awards fame—he wrote a story in April 1997 entitled, “Not Guilty: Two Former High-Level Administrators at Texas A&M May Have Acted Unethically—But That Doesn’t Make Them Criminals.” Aggies, unethical? Apples, barrel, rotten one, every bunch.

Those of institutional memory and a penchant for trivia would then recall, a quite different Texas Monthly story, back, back, back to the August 1985 issue, and a revealing story by Gary Cartwright, entitled “An Aggie’s Revenge.” Reading that would help you understand the “administrative culture” of Aggieland during those days that led up (very, very slowly) to the 1992 letter to Gov. Ann Richards. Hard not to chime in with, “those who do not learn from history are doomed to repeat it,” but fast forward to 2013.

Just last year, Rick Perry and John Sharp together sought world peace and the advancement of higher education Aggie-style, as they traveled to Israel to announce the Texas A&M University at Nazareth—Peace Campus. Check out Allen Reed’s story in The Eagle on Nov. 22, 2013, and read through all the comments there beneath the story. Texas A&M has a campus in Galveston, in Qatar, and now the plans for Nazareth.

Yes, that’s the same Qatar, the same country, that saw a lot of attention just last week, when the five prisoners were flown from GITMO to Qatar to make the exchange for an Army sergeant held by the Taliban. Someone will be doing more than a few dissertations on U.S. political policy at the Aggie Qatar campus in the future, to be sure. Perhaps some local College Station campus Aggie administrators will be dispatched to Qatar for cost-savings measures after the audit is completed. Who knows?

But before that expenditure is finalized, likely the audit of the homeland or “mother ship” will come first. Meanwhile, Gov. Perry attended the World Jewish Values Network second annual gala dinner on May 18, 2014, in New York City (see inset photo). Not sure whether or not Chancellor Sharp joined him at that event, but there is Gov. Perry with the Aggie “thumbs up” symbol on his hand bearing his Texas Aggie ring.

Allen Reed has been doing a tremendous job in documenting what’s happening in Aggieland. Meanwhile, some 16 years later from his blog about Robert Smith and Ross Margraves being “Not Guilty.” Paul Burka wrote a different story: “A Perry-Sharp Rivalry at Texas A&M” posted online Dec. 12, 2013.

Ironically, Burka references Allen Reed’s story in The Eagle. Check it out online. Says Burka, “The split among the regents could reflect a strong difference of opinion between Perry and Chancellor John Sharp, with Perry likely to support Diedrich, and Sharp siding more with the academic side of the university. Perry usually gets his way in these matters, particularly at his alma mater.” But, Burka called it wrong in December.

In one more “by the way,” the Texas A&M System wisely hired (Aggie ’79) Cathy Smock as the Chief Auditor for the System Internal Audit, back in 1999, to spearhead making sure A&M could do what it said it would in the follow-up audit and response to the audit, also found online. Sharp and Smock working together once again, to keep Aggie finances under strong oversight.

Oh, there’s been a little..call it backlash…because of all the “changes” going on the past two years with Sharp as system head. But you can expect that with any level of substantive change and revamping of how things are done, sort of unilaterally, as the campus has privatized some of the units for cost-savings measures.

It needs restating that Sharp can’t do anything without the Texas A&M Board of Regents’ permission, and they were all appointed by Gov. Perry, and continue to serve in their roles at his pleasure, so it’s very confusing to wonder why Perry ordered, or requested, an audit of a campus run by his own people.

Could Gov, Perry, at last, be expressing some level of displeasure at the entire Board of Regents voting, unanimously, against his choice of Guy Diedrich to serve as TAMU’s Interim President? Is this audit actually just standard operating procedure or is it capitol backlash?

It’s quite the game of educational fencing, as we watch the thrust and parry of the sword of all things Texas and all things Texas Aggie. For those keeping score at home: in 1993—State employees and officials: Perry, Sharp, Smock. In 2014—state official: Perry; TAMU system employees: Sharp, Smock. What have Texas A&M’s system and university administration leadership learned in the past almost 20 years?

For that answer, it’s time to turn to Allen Reed’s key sentence in today’s (June 7, 2014) Eagle, describing the process: “This week Gov. Rick Perry sent a memo to Phil Adams, the A&M system’s board chairman, A&M System Chancellor John Sharp and other top Texas higher education administrators requesting audits from each of the state’s university systems.

And now we have the standard operating procedure duck-and-cover response from the Aggie spokes-team. As Reed writes in the Eagle, “Texas A&M System spokesman Steve Moore said Friday that internal auditors have been checking for similar problems for about two months, after a similar report came out that UNT overstated its finances by #23 million in 2012 and 2013.”

As the audit begins and proceeds, maybe it will all work out for the positive, and show that Aggies have led the state in best use of state funds. There have been a few blunders in the past decade come to light, like the hiring of the “not-a-Navy-Seal-but-said-he-was,” plus another high-ranking official who was let go, a heightened level of “making some jobs and exorbitant salaries” out of the blue, plus a few unilateral firings to save money that are part of virtually any state university.

To try and second-guess the outcome, one must study the most recent history between the two prime players, Sharp and Perry. Remember the kerfuffle between Perry’s candidate for interim TAMU President, Guy Diedrich, and Sharp’s candidate, Dr. Mark Hussey? Remember how all Texas A&M Regents have been appointed by Gov. Rick Perry? Remember the unanimous vote of those regents against Perry—for Sharp—for Dr. Hussey to lead the University during its interim nationwide search for a new President?

Then recall Allen Reed’s Eagle story of December 21, 2013, and how Gov. Rick Perry “recently encouraged the Texas A&M System Board of Regents to promote Guy Diedrich—his choice for interim A&M president—to an expanded role that would be ‘on par’ with that of Chancellor John Sharp’s position, according to a memo written by the governor.”

Reed’s article detailed “an email to board Chairman Phil Adams the day before a Dec. 14 meeting to name an interim president, (where) Perry suggested that Diedrich, the system’s vice chancellor for strategic initiatives, be promoted to serve as a direct line of communication between the board and the executive and legislative branches of government in Austin.”

Didn’t happen. Strike two. Would that be the last of Texas A&M and Chancellor Sharp hearing from Gov. Rick Perry? Things were deathly silent for five months, until the launching of an audit at A&M (and some other schools) just because the University of North Texas had misspent some taxpayer funds “without being caught.”
Comparing and contrasting the latest at Aggieland to actions and activities of almost two decades ago, with respect to Governor Perry, a certain movie comes to mind.

Remember that scene in Aaron Sorkin’s movie, “The American President,” where Michael Douglas has to go on camera and refute some more slings and arrows tossed at him by opponent candidate Bob Rumson, played by Richard Dreyfus? Check out the quote on imdb.com; this one's a favorite.

We've got serious problems, and we need serious people, and if you want to talk about character, Bob, you'd better come at me with more than a burning flag and a membership card. If you want to talk about character and American values, fine. Just tell me where and when, and I'll show up. This is a time for serious people, Bob, and your fifteen minutes are up. My name is Andrew Shepherd, and I am the President.’

And, until November, 2014, Rick Perry is the Governor. The audit is now done on John Sharp’s watch as Texas A&M Chancellor. Now, these audits take almost a year to conduct and even longer to write up, discuss with the parties in place at A&M, negotiate what items stay in the audit report (behind closed doors, yes this does happen), and which ones get filtered out because administration has already shown how controls have been put in place to clarify and correct some things out of whack.

So, what was the point of ordering the audit? Was it standard operating procedure or was it Capitol backlash? What does the future hold in Texas and national politics for Aggies John Sharp and Rick Perry? What do they really want next, from what will likely be the very last political offices or appointments of their employment careers? With what legacy will they each leave Texas A&M and the State of Texas? Which young Aggies do they both mentor today, as they were mentored? Which buildings in the state will bear their names in the future, signifying the contributions each made to their respective positions in office?

Texas Aggies are as loyal to their school, they believe, as no other students could ever be devoted to their alma mater. Aggies are leaders, to be sure. Aggies are generous, to be sure. Many still believe the Aggie Code of Honor: “Aggies do not lie, cheat, steal, nor tolerate those who do.” Time and likely additional quality investigative reporting from The Eagle’s Allen Reed and other statewide journalists, will reveal the answers to those questions posed…to be sure.

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