By Monica Alonzo
By Stephen Lemons
By Jason P. Woodbury
By Dulce Paloma Baltazar Pedraza
By Ray Stern
By Pete Kotz
By Monica Alonzo
By New Times
Months before a lucrative state contract was offered for public bid, Governor Fife Symington and former top aide George Leckie conspired with an official from the governor's personal accounting firm, Coopers & Lybrand, to steer millions of dollars of work to the firm, an internal Coopers & Lybrand memo obtained by New Times reveals.
Coopers & Lybrand landed a $3.1 million state contract on July 10, 1992, six months after Symington and Leckie held a series of meetings with Coopers & Lybrand partner Henry J. Schultzel. During those meetings, deals were struck that later benefited the governor politically and Coopers & Lybrand financially.
The contract in question was one of two that Coopers & Lybrand won in connection with Project SLIM, the governor's controversial cost-cutting initiative. The first contract, for $1.5 million, was to develop recommendations for streamlining state government. The second contract, worth twice as much as the first, was for actual implementation of the recommendations.
The second contract was not envisioned when Project SLIM was conceived. As originally planned, state employees were to implement the contractor's cost-saving recommendations.
But Coopers & Lybrand and Symington and Leckie would not only conclude that an outside consultant must do the implementation work, they would work earnestly to see that Coopers & Lybrand would get the contract.
The September 1991 awarding of the first, $1.5 million Project SLIM contract is already notorious. It triggered a criminal probe by Maricopa County Attorney Rick Romley, who found no wrongdoing, and an ongoing civil investigation by Attorney General Grant Woods.
In contrast, the awarding of the second major Project SLIM contract to Coopers & Lybrand has attracted little scrutiny, even though it was worth twice as much.
State records and internal Coopers & Lybrand memorandums obtained by New Times indicate that Symington, Leckie and Schultzel discussed ways to ensure that Coopers & Lybrand would implement Project SLIM. They mulled "good faith" actions the state and Coopers & Lybrand would take.
For example, Symington and Leckie asked that Coopers & Lybrand begin implementing some of its cost-cutting recommendations at one state agency before the end of fiscal 1991-92, even though the firm was not under contract to do so and was not supposed to be immediately paid.
Symington, however, needed something tangible to show a skeptical legislature that was balking at Project SLIM spending. A jump-start implementation of the cost-cutting recommendations would prime the pump.
Symington and Leckie asked Coopers & Lybrand to do the work "on the come" with the "understanding" that payment for the implementation work would be made the following fiscal year--even though no money had yet been appropriated.
Coopers & Lybrand agreed to the request, and as a result established a sizable head start in the race for the implementation contract. Indeed, at that point, other potential bidders were not even aware there was a race.
These discussions and others are outlined in a three-page memo prepared by Schultzel, who was overseeing the firm's first Project SLIM contract. New Times found the memo among more than 10,000 pages of documents collected during Romley's probe.
In the memo--dated January 10, 1992, and directed to his superiors in San Francisco--Schultzel waxed optimistic, assuring his bosses that Coopers & Lybrand was in the driver's seat to win the newly conceived implementation work. He assured his bosses that Symington and Leckie could deliver on their promises, and urged the firm to agree to begin early implementation work at one state agency with the pledge of payment in the future.
"Based on the fact that the project is large, the client is good for the money and the Governor is also a private client of the Firm, I think the risk is minimal," Schultzel wrote.
Schultzel's memo also gloats over the removal of foes from decision-making posts within Project SLIM. "We have finally defused all attempts by those people to interfere in the project by having them removed from the project," Schultzel wrote.
Symington has long-standing ties to Coopers & Lybrand. The firm has handled his personal accounting since at least 1985, and kept the books for the Symington Company, the development company that succumbed to bad real estate investments. Coopers & Lybrand also played a major role in Symington's election campaigns. Partner John Yoeman was Symington's 1990 campaign treasurer, which brought Yoeman into regular contact with Leckie, Symington's campaign finance chairman.
It isn't known whether Symington or his development company was indebted to Coopers & Lybrand at the time the accounting firm landed the Project SLIM contracts, although the governor's personal financial disclosure statements filed with the state show no personal debt.
The Governor's Office refuses to return New Times' phone calls. Coopers & Lybrand spokesman David Nester declined to discuss the memo. Leckie also declined to comment on the Project SLIM contracts, but he called Schultzel's memo "very interesting" and "substantive."
Symington considers Project SLIM to be a centerpiece in his administration. He has touted the cost-cutting program based on "total quality management" as "revolutionary" for state government. Project SLIM's efficacy, however, is debatable. (See chart on page 6.)
Last year, allegations surfaced that Leckie improperly funneled inside information to Coopers & Lybrand during the final bidding for the initial Project SLIM contract.
To quell the furor, Symington asked Romley to conduct a criminal investigation to determine whether the contract was rigged. Romley and three other county attorneys reviewed the case and determined three months later that there was no evidence that Leckie, who was on the state panel reviewing the Project SLIM bids, passed confidential information during telephone calls with Yoeman.