Historic Misconduct

The grand jury has expanded the scope of its investigation.
On October 13, attorney Stephen Dichter shipped a large volume of Coopers & Lybrand documents to the FBI.

According to a leaked internal memorandum from Bryan Cave, the law firm representing Coopers & Lybrand, Dichter's records were dispatched to Special Agent Ken Hancock.

Dichter refused comment.
Hancock is the FBI agent gathering data for the Symington grand jury.
All of the files requested by Agent Hancock pertained to Project SLIM.

Until now, the grand jury has limited its investigation into allegations that Symington provided false information to lenders on his multimillion-dollar developments prior to taking office.

Today, Governor Fife Symington's conduct in office is under examination by a United States attorney.

Let us begin with the thorny data in Coppers & Lybrand's internal files.
The accounting firm's own records show a disturbing pattern. As Fife Symington moved from the private sector into the Governor's Office, the amount of Symington debt that was recorded as uncollectable by Coopers & Lybrand skyrocketed.

During this time, Coopers & Lybrand picked up $4.6 million in state contracts from Project SLIM I and II, contracts that the governor and his deputy chief of staff steered to the accountants through a combination of bid rigging and influence peddling.

Coopers & Lybrand would pay a fine of $725,000 for its role in this corruption.
While many of the details of the bid rigging have been reported in New Times and the state's dailies, what has remained unanswered is the fundamental question: Did the governor benefit from his relationship with Coopers & Lybrand?

The answer is yes.
Every year, Coopers & Lybrand "reserved for loss" ever greater sums of Symington's debt. An accounting term, "reserved for loss" simply means that Coopers & Lybrand had no expectation of collecting the money owed.

Here are the numbers from a source inside Coopers & Lybrand.
Coopers & Lybrand's in-house counsel in New York, Michael Garrett, refused to comment on this data, demanding instead that we give up our source for obtaining it.

"Well, isn't this charming," sneered Garrett. "Who stole these filesYou can't have them legally. We'd like to prosecute whoever stole them. You're talking about a felony here."
Garrett concluded the interview, "We don't comment on stolen material."
Coopers & Lybrand has done Symington's personal accounting since at least 1985. When elected governor, his first major undertaking was Project SLIM. Symington dispatched his deputy chief of staff, George Leckie, to run the steering committee that selected Coopers & Lybrand to do the first phase of Project SLIM. The accountants ended up with their competitors' confidential bids and cut their own quote by $440,000 to win the contract.

A second and larger SLIM contract was also steered to Coopers & Lybrand by Symington staffers.

Coopers & Lybrand's role in the bid rigging not only cost the firm a six-figure fine; the accountants also promised never to engage in "fixing" another state contract. Leckie, now in the private sector, paid a substantially smaller fine but was barred from government lobbying for three and a half years.

As the SLIM contracts were steered to Coopers & Lybrand, the firm was classifying more and more of the bills Symington owed it as "reserved for loss"--that is, the bills were well on the way to being forgotten.

Certainly, there is an argument to be made that, as Symington's developments went belly-up, it was to be expected that he would have less ability to pay his debts. But that argument does not explain why Coopers & Lybrand continued to supply its services to a client who could not pay.

In 1991, the accounting firm's own records show that it had to write off nearly half of the governor's bill. Yet afterward, Coopers & Lybrand continued to supply high-priced professional assistance to Symington and discounted these services by 94 percent.

In addition to the staggering "reserved for loss" entries, the accounting firm simply wrote off two more large chunks of debt for the governor.

In 1991, Coopers & Lybrand forgave $22,000. In 1994, the accountants wrote off another $45,000 due from Symington.

Under the terms of the Project SLIM bid rigging settlement agreement, announced in July, the attorney general has the right to ask for all of these files at Coopers & Lybrand.

Yet when we contacted Suzanne Dallimore, chief counsel of the antitrust unit at the Attorney General's Office, she refused to comment on whether those records have been requested.

Marjorie Jane Kendall is the woman who tumbled the house of cards in the Project SLIM scandal. It was her testimony that forced Coopers & Lybrand to pay the State of Arizona to put an end to the attorney general's investigation of bid rigging.

Kendall was John Yeoman's secretary.
A partner in Coopers & Lybrand, Yeoman was the accounting firm's pipeline to Symington and the governor's deputy chief of staff, George Leckie.

Not coincidentally, Symington was Yeoman's largest account.
The governor sent Leckie, as his representative, to confidential planning sessions on Project SLIM in which bids from assorted accounting firms were discussed. It is against the law to leak the bids.

Yet prosecutors had phone records that showed Leckie repeatedly phoned Yeoman after the conferences.

When questioned, both Yeoman and Leckie had amnesia about the content of their conversations.

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