ANALYSIS:SLIM PICKINGS AG'S PROJECT SLIM PROBE HASN'T TARGETED SYMINGTON, DESPITE EVIDENCE OF HIS INVOLVEMENT
Given the opportunity last week to go head-to-head with Governor Fife Symington, Attorney General Grant Woods flinched.
Not only did Woods pull his legal punches, refusing to seek criminal charges in his investigation of Project SLIM, the attorney general's actions also raise serious questions about why Symington is being distanced from the apparent rigging of two state contracts awarded to the governor's longtime personal accounting firm--Coopers & Lybrand.
In the last two weeks, two of Symington's closest longtime aides, John Yeoman, a tax partner at Coopers & Lybrand, and George Leckie, Symington's former deputy chief of staff, have signed settlement agreements with the state attorney general to avoid civil or criminal prosecution concerning two state contracts worth $4.6 million. The contracts dealt with the governor's centerpiece government reform initiative, Project SLIM.
Woods is now washing his hands of the affair, announcing Monday that the agreement with Leckie "resolves [the] Project SLIM procurement issue"--an issue that has mortally wounded two of Symington's confidants, but left the governor untouched.
Woods has failed to directly address the governor's role in SLIM contracting, even though powerful evidence in Woods' possession suggests Symington is as deeply implicated in some Project SLIM bidding irregularities as Leckie and Yeoman.
Further, Woods has not resolved a simple question that goes to possible motives for the strange activities surrounding the SLIM bid process: How much money, if any, did Symington owe his longtime accounting firm when the Project SLIM contracts were awarded in 1991 and 1992?
Woods' investigation so far has gone only slightly further than the probe Maricopa County Attorney Richard Romley conducted last year. That inquiry found no evidence of criminal wrongdoing and has been widely dismissed as a whitewash.
Woods' probe, even with the two settlement agreements, adds little but a thin veneer of public relations spin to Romley's ugly whitewashing.
The attorney general's settlements call for Coopers & Lybrand to pay $725,000 to the state to end a procurement fraud investigation that focused on the accounting firm's amazing ability to suddenly lower its bid for a Project SLIM contract at the last minute by $440,000.
Leckie, meanwhile, admitted violating state procurement laws only tangentially related to his dealings with Coopers & Lybrand. He agreed to pay the state $25,000 and to cease his lobbying activities for three and a half years. In both cases, the state agreed not to seek criminal or civil charges in relation to matters involving Project SLIM.
Woods has deflected attention from Symington's role largely by focusing, at least publicly, on the first Project SLIM contract awarded to Coopers & Lybrand. That first contract was awarded in September 1991 and was worth $1.5 million. The second contract was awarded in July 1992 and was worth $3.1 million.
That second contract has Symington's fingerprints all over it, and Woods knows it.
Documents in Woods' possession show Symington and Leckie made promises to a Coopers & Lybrand official in early 1992 that the firm would be paid for additional Project SLIM work--six months before the contract for that work was publicly offered ("Anatomy of a Greased Bid," March 16, 1995).
What seem to be quid pro quo offers between Leckie, Symington and Coopers & Lybrand appear to violate the state's procurement laws, which forbid state employees from promising payment for work before contracts are awarded. The promises are documented in a three-page memorandum dated January 10, 1992, and prepared by Coopers & Lybrand partner Hank Schultzel.
Woods has a copy of the memorandum. So did County Attorney Rick Romley when he closed his criminal probe into Project SLIM in August 1994, declaring he had found no evidence of criminal wrongdoing. So do the state's largest newspapers, the Arizona Republic and the Phoenix Gazette, which have never mentioned the damaging Coopers & Lybrand memorandum or details of the second Project SLIM contract.
Woods' settlement with Coopers & Lybrand focuses on a well-publicized series of August and September 1991 telephone calls between Leckie, who was on the state selection committee reviewing bids to provide consulting services to Project SLIM, and Yeoman, who helped prepare Coopers & Lybrand's bid submissions. Coopers & Lybrand's initial $1.9 million bid was lowered at the last minute by $440,000--after documented telephone calls between Leckie and Yeoman.
Woods said investigators found no evidence that anyone in the Governor's Office other than Leckie was involved with leaking confidential bid information to Yeoman. It may be the case that Symington didn't know what his two closest campaign aides were doing. (Leckie and Yeoman did not return telephone calls; both men have said in the past they did nothing wrong.)
But even though Woods is considered a political foe of both Romley and Symington, all three are Republicans. Like Romley, Woods has chosen so far to ignore evidence that puts Arizona's governor in the middle of the bid-rigging scandal. In fact, Woods' agreements with Coopers & Lybrand and Leckie protect them from future criminal and civil prosecution involving not only the first Project SLIM contract, but also the second contract--a contract that clearly had gubernatorial involvement.
There is no doubt that Symington is deeply involved with all the major players in the Project SLIM scandal.
So far, despite two investigations, no one has answered--or, perhaps, even asked--a key question concerning Symington's possible motive for wanting Coopers & Lybrand to do the work.
That question is an obvious one: How much money, if any, did Symington or his failed development business owe Coopers & Lybrand in 1991 when the Project SLIM contract was improperly awarded to Symington's personal accounting firm?
Symington's development empire crashed in the late 1980s, wiping out what he said was a personal net worth of $12 million. Did he owe his longtime business accountants Coopers & Lybrand anything in the wake of the collapse of The Symington Company?
If Symington didn't owe any money, then the Project SLIM scandal can be written off as political cronyism.
But if Symington did owe money, more questions are raised--questions concerning misconduct in or malfeasance of office. The possible answers to those questions might make Evan Mecham's infamous protocol fund loan, which led to his impeachment, look like a speeding infraction.
Even business associates are wondering why the governor's financial situation at Coopers & Lybrand has not been probed.
"Fife didn't want Coopers to get the contract because he just thinks they're nice guys," theorizes one businessman familiar with Symington's business strategy. "I'll bet you 50 to 1 there is some kind of financial involvement someplace."
By the end of 1991, Symington's personal finances and his role on the board of directors of the defunct Southwest Savings & Loan were the focus of federal civil and criminal investigations. The criminal probe continues. As part of the criminal investigation, Yeoman was subpoenaed to testify before a federal grand jury.
Another grand jury witness tells New Times that as recently as six months ago, federal prosecutors were zeroing in on Symington's alleged practice of submitting different financial statements to different lending institutions during the same time period. Lying on financial statements in connection with a bank loan is a felony.
Federal prosecutors have been asking questions about Symington's use of multiple financial statements for some time. In 1993, prosecutors grilled Symington's former personal secretary, Joyce Riebel, about Symington's alleged use of multiple financial statements, according to a transcript of the interview obtained by New Times. Riebel also stated that Coopers & Lybrand was involved with preparation of Symington's financial statements ("She Was Only Following Orders," February 2, 1994).
Coopers & Lybrand is deeply involved with Symington on many levels: an extensive federal grand jury investigation, his personal and business accounting and his centerpiece initiative, Project SLIM.
The key question remains: Did the governor use state funds to pay off private debts to Coopers & Lybrand? The only way this question will be answered is through a state or federal investigation, or by a public disclosure of Symington's personal financial records.
Symington's behavior in the wake of the state's settlement agreement with Coopers & Lybrand can charitably be judged strange. That behavior also provides fodder to the theory that Leckie and Yeoman have the governor over a barrel.
Rather than distance himself from two men who had been publicly disgraced in Woods' press conference, Symington continues to embrace them.
Symington said Leckie--a man who fled a hit-and-run accident, botched the Governor's Office finances and improperly billed his girlfriend's Hawaiian vacation to the state, among myriad other improprieties--is "a person of very high integrity."
The governor said Yeoman--who has been questioned by a federal grand jury investigating Symington's personal finances--"did a wonderful thing for this state" in winning the Project SLIM contract for Coopers & Lybrand.
Symington stands by Leckie and Yeoman, two men who know the intimate details of his turbulent financial and personal life. As long as Yeoman and Leckie do not divulge those details, and if Woods and the daily press ignore evidence that implicates the governor, Symington will likely not be sucked into the SLIM sinkhole.
The story of Coopers & Lybrand and Project SLIM doesn't end with George Leckie's telephone calls to John Yeoman. In fact, the story gets more interesting--and more damning of Symington--in the months after Leckie's cellular calls.
The run-up to the second SLIM contract provides extraordinarily direct evidence of Symington's intimate involvement in promising future work to Coopers & Lybrand.
Eleven days after Coopers & Lybrand was awarded the first contract on September 9, 1991, the Governor's Office assumed direct control over "all budgetary and expenditure decisions" on Project SLIM from the Office of Strategic Planning and Budgeting, according to a September 20 memo from Symington aide Elliot Hibbs to budget director Peter J. Burns.
"This memo is notification that you have no responsibility in these financial decisions and will not be held accountable for them," Hibbs' memo reads, even though the Legislature appropriated Project SLIM money to Burns' office.
Hibbs then makes it clear why the appropriation is being removed from Burns: "This relief of budgetary responsibility and accountability reflects the governor's desires as to how the appropriation should be controlled."
The first SLIM contract worth $1.5 million called for Coopers & Lybrand only to develop cost-cutting recommendations. But implementing those recommendations was where the real money was--as much as $6.8 million.
By January 1992, Coopers & Lybrand and Symington agreed to expand the role of the firm to include implementation of its cost-cutting recommendations, Coopers & Lybrand documents show.
Coopers & Lybrand partner Hank Schultzel updated other partners on the implementation talks with the stunningly frank, three-page, January 10, 1992, memo. The memo speaks volumes on how the accounting firm viewed its relationship with the state and the governor.
The firm saw its personal relationship with Symington as a clear signal it could milk the state cash-cow, so long as the company went along with the governor's requests to do extra work with promises of future payment.
"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.
The need to go through normal procurement procedures was never discussed in the memo. After all, the company already had won the first contract with insider information. Schultzel's memo indicates neither the firm nor Symington and Leckie seemed worried about any future problems.
"They [Symington and Leckie] asked that we begin implementation on one of the agencies in good faith 'on the come,' with the understanding that we would be paid in the next fiscal year," Schultzel wrote in the memo, addressed to Coopers & Lybrand partner Nick Moore.
Coopers & Lybrand could not be paid in the next fiscal year for the implementation work unless the firm's first Project SLIM contract was modified or a new contract was awarded. Neither Symington nor Leckie could legally guarantee, ahead of time, that such steps would be taken. But that didn't stop the governor and his top aide from doing just that--promising future payments for Project SLIM implementation months before a formal proposal for such work was publicly offered and bids were received, according to Schultzel's memo.
Schultzel didn't immediately bite at the promise of future reward offered by Symington and Leckie. Instead, he raised the ante with two requests.
First, Schultzel told Leckie and Symington that Coopers & Lybrand wanted the state to approve a $437,000 change order on its initial Project SLIM contract.
Second, Schultzel demanded that the state begin immediate payment of the $1.5 million in fees related to that contract, even though the state wasn't required to pay the fees until Coopers & Lybrand completed the work in July 1992.
According to Schultzel's memo, the governor and Leckie agreed to the terms.
"I believe that their actions this week demonstrated that they are solidly with us and mean to be our partners in this endeavor," Schultzel wrote.
Indeed, the state agreed in February 1992 to begin early payment of the Project SLIM contract to Coopers & Lybrand. Leckie also made a strong run at having the $437,000 change order approved, even obtaining legal advice from a private law firm. It was this action--the improper commissioning of outside legal advice, which is a minor infraction of state procurement law--that Leckie admitted in his settlement agreement with Woods.
Even with a legal opinion contending the change order was justified, however, Leckie was unable to overcome strong opposition from other Project SLIM officials.
Coopers & Lybrand also kept up its side of the deal. But the firm didn't have to do the work "on the come." Instead, the state Department of Transportation awarded a no-bid contract that paid $80,960 to Coopers & Lybrand in the spring of 1992 to begin Project SLIM implementation at ADOT.
About the same time, the Governor's Office attempted to quietly modify Coopers & Lybrand's first Project SLIM contract to include implementation programs that could be worth up to an additional $4.5 million. The contract modification would avoid any public bidding on the implementation work and fulfill Symington's and Leckie's earlier commitments to Coopers & Lybrand.
The Attorney General's Office shot down that attempt to steer money to Coopers & Lybrand through a contract modification, saying the amount of money and change of work required a new contract.
The Governor's Office was then forced to offer public bids for the implementation project. Eighteen firms, including Coopers & Lybrand, submitted bids. Two of the five members of the selection committee were from Project SLIM and a third was from the state Department of Transportation--both departments under Symington's direct control.
Coopers & Lybrand won the bulk of the implementation work and was paid more than $3.1 million over the next year.
The Attorney General's Office hasn't completely closed the door on additional action in the case.
"The settlement with Coopers does not interfere with our investigative authority and does not release any person not named," says Assistant Attorney General Suzanne Dallimore, chief of the antitrust unit.
The settlement agreements also require Coopers & Lybrand and Leckie to assist the attorney general in any further investigation of Project SLIM contracts.
"We will take advantage of that," she says.
But so far, Woods and his staff have given no public indications that the attorney general is undertaking a serious investigation into Governor Symington's financial relationship with his personal accounting firm, or his role in awarding of state contracts worth $4.6 million to Coopers & Lybrand.
And these last two weeks would have been the time to expect such indications.
Get the This Week's Top Stories Newsletter
Every week we collect the latest news, music and arts stories — along with film and food reviews and the best things to do this week — so that you’ll never miss Phoenix New Times' biggest stories.