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Lies on Tape

At Dallas City Hall, it can take a long time to find the truth.
That's because this city manager and city council don't like the public to know what they're doing.

So they play games.
They have a lot of closed-door meetings. They discuss things they're not supposed to discuss in those meetings. And then, when the press and public, tired of being shut out, start requesting documents about the handling of public business, the powers that be at City Hall work zealously to keep them from being released.

Sometimes, though, their efforts fail. The staff and the council screw up: they overlook things, they get forgetful, or they just get caught--and information gets out. And when it does, the twisted manner in which our government is run comes to full light.

It happened last November.
That's when this newspaper, after months of closed-door meetings at City Hall and fruitless attempts to obtain public records, finally pried loose a mountain of documents involving the sports arena. Among some 15,000 pages, there was a draft of a secret $50,000 arena study--called "the ASAP study"--undertaken seven months earlier by the city manager's office without the city council's knowledge.

The mere existence of the study was bad enough. After all, the city staff wasn't supposed to spend more than $10,000 without the city council's approval. It was also unclear why the city staff had done a study at all when a parallel arena study was being conducted for free by Dallas businessman John Crawford and several architectural and mortgage firms he had recruited for a city-sanctioned panel.

This was a bad situation--but given the lazy, trusting nature of the council, the staff could easily have airbrushed it into oblivion. Instead, the naturally underhanded proclivities of our city manager and some of his top deputies mushroomed a simple mess into a full-fledged scandal.

Because City Manager John Ware and Company reacted to the news that the Observer had unearthed the secret study by being...secretive. For almost two weeks, they met behind closed doors to discuss how to explain it. Then they met behind closed doors on November 16 with the council and presented their carefully-honed version of events.

Even then--even there, in private--what they told the council wasn't true. They blamed the whole thing--all $50,000 of unauthorized spending--on Louise Elam, an unassuming architect in the public works department. And they fed that preposterous story to The Dallas Morning News, which regurgitated it, virtually word for erroneous word.

On and on it went--until the city manager's office had managed to create a full-blown scandal.

Councilman Paul Fielding, who can smell rats in the City Hall basement even when sitting in the sixth-floor council chamber, called for City Auditor Dan Paul to investigate. Which he did.

Paul methodically interviewed 26 people with knowledge of the secret study. Then, to compare their version of events with the one the city manager's office had dished up to the council--in short, to see who was telling the truth--he obtained permission from the city attorney to listen to a tape recording of the November 16 closed-door meeting with the council.

Paul almost didn't get the tape. Several council members, led by Donna Halstead, inexplicably challenged Paul's right to listen to the tape. Temporarily successful, they postponed its release to Paul by an entire month.

Now, six months later, it's clear why people in City Hall wanted to keep the tape locked up tight.

It's all on the tape, a transcript of which city officials mistakenly released last month to the Dallas Observer--along with several hundred pages of work papers that Paul used to prepare his final report on the secret study.

The tape reveals the unvarnished behavior behind closed doors of First Assistant City Manager Cliff Keheley, who dished up a load of lies to the council; of council members like Halstead, who too easily embraced his story; of Assistant City Manager Ted Benavides, who remained silent as he listened to what he knew were lies; and of City Manager John Ware, who should have known they were lies, but instead promised to punish the falsely accused.

The work papers reveal that, no matter how much various council members, the Morning News, and--by his profound silence--Ware backed Keheley up, City Auditor Dan Paul's harsh judgment of the affair was right on target.

Actually, he was downright charitable.
After investigating for three months, Dan Paul reached three critical conclusions in his audit.

No. 1: The architect in public works, Louise Elam, did nothing wrong.
No. 2: Cliff Keheley, Ware's top deputy at the time, actually commissioned the secret study.

No. 3: Keheley, rather than own up to his actions, instead chose to make a scapegoat out of Louise Elam, the lowest-ranking member of the secret study group that he personally assembled.

 

Of course, Keheley--who wouldn't return repeated phone calls for this story--didn't like this version of events. So when the audit report was released, he issued a combative, two-page response, which began by reiterating the implausible version of events he'd given the council, and ended by calling Paul, in so many words, an unprofessional scoundrel.

As far as The Morning News and the local TV stations were concerned, the truth lay somewhere in between--you just had to decide whether you wanted to believe more of Paul's version or more of Keheley's. (The News clearly favored Keheley. Shortly before Paul released his audit, the newspaper ran a long, highly critical story about the quality of Paul's work during his 14 years with the city.)

Incredibly, during the three months that it took to complete the audit, none of the daily media did any independent reporting on the matter, making it impossible for them to separate wheat from chaff. All, however, liberally quoted people saying all manner of off-the-wall things--like this priceless statement from then-mayor Steve Bartlett, who told the News: "I think Cliff's getting a raw deal. It's born in the seamiest sort of politics. I sincerely regret the way it's been handled by some council members and the auditor's report."

The Observer not only had 15,000 pieces of paper (available to everybody else in town at that point) which told the true story, it had plenty of city employees who were outraged at the spineless way their bosses were behaving. Those employees helped me navigate--albeit reluctantly, for fear of reprisal--the arena material, filling in gaps in exchange for anonymity.

What emerged was a series of stories--starting the week Keheley lied to the council and ending the week he announced his early retirement in March--that made clear Keheley was responsible for the secret study. Paul, armed with the same documents, plus a tape of the closed-door meeting and unfettered access to every city employee, reached the same conclusion.

Unfortunately, though, City Attorney Sam Lindsay had barred Paul from quoting any part of the executive-session tape in his final report without explicit approval. As any cautious auditor with a political hot potato on his hands would do, Paul also declined to reveal any more of the gory details than necessary to justify his conclusions.

That left the damning tape transcript and some of the fascinating play-by-play Paul obtained from employee interviews unexamined--as it were, on the cutting-room floor of the city auditor's office.

Until now.
In a formal request to the city, this newspaper asked to see all of Dan Paul's work papers, hundreds of pages all neatly indexed in file folders labeled in Paul's hand.

Revisiting the issue was more than a matter of capturing the details for posterity. It provided an opportunity to answer some of the many questions that lingered even after Keheley resigned--questions to which the city council never demanded answers.

In fact, the documents make even clearer the lamb-like docility of most of Dallas' elected officials, who first bought easily into the staff's outrageous explanation of blaming it all on Louise Elam--and later acted as though it was no big deal that city staffers had misled them.

The records also shed new light on the behavior of John Ware--so quick to criticize a mid-level subordinate on mere hearsay, but unwilling to publicly acknowledge the confirmed misdeeds of his top deputy.

This final chapter in the story of the secret arena study adds to the book on how our city government--without proper guidance from the council--can careen out of control. For the newly elected council and the public, it should serve as a lesson--and as a warning.

The document on the very top of the stack of Dan Paul's work papers awaiting my inspection was a December 2, 1994 letter to him from City Attorney Sam Lindsay, about the use of the tape of the council's closed-door meeting.

"NO INFORMATION FROM THE EXECUTIVE SESSION TAPE IS TO BE INCLUDED IN A PUBLIC REPORT UNLESS OUR OFFICE HAS APPROVED THE RELEASE OF SUCH INFORMATION," Lindsay wrote in screechingly bold type.

To highlight his point that executive session tapes are strictly confidential, Lindsay had forwarded Paul a copy of Sec. 551.104(c) of the Texas Government Code, which states: "The...tape of a closed meeting is available for public inspection and copying only under a court order..."

I was, of course, then surprised to see the very next document in the pile of work papers: a complete, 10-page transcript of the relevant portion of the forbidden tape.

Oops.
It's not hard to see how the mistake was made. The Observer had requested the work papers back in March. The city attorney's office had responded by authorizing most of the information for release, removing only the tape transcript and selected portions of two employee interviews, which the city claimed could be withheld because they contained accusations that were not confirmed by the other interviewees.

 

Between the time the Observer requested Paul's work papers, and the time I reviewed the material in mid-June, Dan Paul had retired--something he had planned to do for some time. A new auditor, unfamiliar with the intimate details of the secret study audit, had just started work. And the audit work papers, by this time, had been put away--until the day I called, asking to see them. The transcript somehow ended up back in the stack.

The most striking thing about the document--typed up by a secretary after Paul personally transcribed the tape--is not that it was inadvertently released. It's that it was ever kept secret at all.

By law--and by common sense--there's no top-secret information in here.
No real estate deals to sabotage. No police undercover operations to compromise. No delicate legal strategies to reveal.

There is absolutely nothing in these 10 pages of strikingly inarticulate conversation that warrants a closed-door meeting--just the routine of a particularly awkward bit of city business.

According to the Texas Open Meetings Act, there are only six exceptions, all of them narrowly defined, to the requirement that a public body conduct its business in public. Those six exceptions are: consultation with attorney on legal matters; deliberations regarding a prospective gift; certain personnel matters involving a public officer or employee; deliberations regarding security devices; a briefing from city employees, so long as there is no deliberation of public business; and real estate issues, when it involves "the purchase, exchange, lease or value of real property."

That's it. If the subject of the meeting doesn't fit one of those exceptions to a "T," the meeting must remain open to the public.

And when a city wants to close a meeting, it must cite publicly the reason for shutting the doors. By law, nothing beyond the limited matters posted in a public document may be discussed in executive session.

When the city council held its closed-door meeting on the arena last November 16, the posted council agenda cited two of those exceptions--attorney consultation and real estate--as the justification for going behind closed doors. Unfortunately, neither applied--at least not to the 10 pages of conversation about the secret arena study, according to a prominent Texas media attorney who has reviewed the material.

"The city council's written agenda lists two reasons for a closed meeting," notes Bill Ogden, a Houston attorney who represents the Houston Chronicle and serves as a director of the non-profit Freedom of Information Foundation of Texas. "First, the council set up a meeting in closed session to discuss 'Reunion Arena leases.' No leases were discussed. In fact, they weren't deliberating the purchase, lease, or exchange of real property at all. They were discussing who should be held accountable for spending $50,000 of public money in the past.

"Second, the city council stated that it was meeting in closed session for 'attorney briefings.' But the city attorney never said a word.

"Neither of the city's excuses could legally justify a secret meeting. If the city is claiming now that it met in closed session to discuss personnel matters, then the city is dead wrong. Personnel matters were not listed on the agenda. The law is very clear that subjects not disclosed on the posted agenda cannot be discussed in a closed meeting."

The problem appears to be that City Attorney Sam Lindsay doesn't understand the law regarding open meetings. Paul Fielding, who walked out of a closed-door council meeting three weeks ago because he felt it was being held illegally, has been seeing this first-hand for several years.

A federal judge confirmed Fielding's suspicions last month when he issued a stern legal opinion against the city, making hash out of Lindsay's advice to council members that a handful of them could meet secretly with Mavs owner Don Carter and landowner Ray Hunt to cut an arena deal. The meetings were illegal, the judge ruled, and Lindsay's advice to neither publicly post nor tape record the meetings was flat wrong.

It is not surprising then that Lindsay skids all over the map when you ask him for the legal reasons he allowed the November 16 discussion of the secret study to take place behind closed doors.

"I do recall the meeting," Lindsay told me in late June. "There were questions raised about personnel and all of that. And who authorized what and things of that nature. Personnel is proper for a closed-door subject."

 

But the city posting never cited personnel as the reason for the executive session, I pointed out. "I don't have a copy of the agenda before me," Lindsay responded. Thinking better of his answer, he then said, adding that he was using Chapter 14 from a 1992 Texas Attorney General handbook on the open meetings act as his justification: "You don't have to cite what section you go behind closed doors on. Nothing is required."

Huh?
"If you cite, for example--we had an example the other day--the appointment of municipal judges. There was no mention about executive session, but if somebody wanted to go into executive session under personnel, we can do it. We don't have to cite that...Go read the handbook."

The AG's office, which produced the handbook, is confused, too. "As a general rule, you have to post it, before the meeting starts, that you're going into executive session and what you're going to discuss," Ward Tisdale, a spokesman for the AG's office, told me last week. "I really don't understand what he's talking about." Tisdale then faxed me Chapter 14 of the AG's handbook on the open meetings act--just in case there was some obscure exception to the law that he and I were missing. There wasn't.

What's most intriguing, though, is Lindsay's contention that the secret study discussion was a personnel matter. Two weeks earlier, he had told me something quite different.

Before obtaining the executive session transcript, I had asked him why the manager and council had been allowed to discuss Louise Elam behind closed doors when, according to the open meetings act, if a personnel matter is going to be discussed, "an employee may demand that his hearing be in public." I had been told Elam would have done just that--only Elam wasn't given that option. In fact, I told Lindsay, she never had an inkling that her name was even going to be brought up.

Elam didn't have the option of being discussed publicly, Lindsay responded then, "because she was not the subject of the inquiry. Council was being briefed on the ASAP study, and they wanted to know the issues behind it. In fact, without violating any privilege on what's on any executive-session tapes, she was not discussed in any long, drawn-out way."

The transcript makes very clear that's not true.
Keheley blamed her for the entire scandal. And Elam's alleged wrongdoings remained the focus of the rest of the discussion. In the process, her stellar reputation was savaged, and councilwoman Halstead repeatedly shrieked for her head. Elam's ultimate boss, John Ware, had already assured the council that he was not opposed to swift and severe punishment.

The entire scenario has always befuddled Elam's attorney, Thomas McGraw, with the Dallas office of Gibson, Dunn & Crutcher. Elam consulted with McGraw immediately after the November 16 meeting and the accompanying Morning News stories identifying her as the employee responsible for the secret study. McGraw was further surprised by the council's reluctance to release the executive session tape to Paul so that he could conduct his investigation--and clear Elam's name.

"We ask that you review the closed door session of November 16 concerning the ASAP Study to determine if that portion of the discussion pertaining to the origination and authorization of the ASAP Study can be withheld from the public under the Texas Open Meetings and/or Open Records Acts and if the notice of the closed door session complied with applicable law," McGraw wrote in a letter to Lindsay on December 19, five days after the Dallas City Council postponed its vote on the release of the tape.

Lindsay responded in a December 23 letter: "The city attorney can't authorize review or release of the tapes. Only the city council can authorize review of executive session tapes. The tapes of the executive session will not be released to the public because such release is prohibited by the Texas Open Meetings Act."

Louise Elam has, of course, been left in the dark for eight months about what was said about her in that meeting. She would have been crushed to hear her old boss, Keheley--who, as director of Public Works, once helped Elam supervise construction of the Morton H. Meyerson Symphony Center--blame her for his own misdeeds. She would also have been shocked to hear Halstead, a person to whom Elam has never spoken, go directly for her throat--or at the very least her job and reputation.

Halstead urged swift punishment, in the name of making things look tidy and under control for the public. "Assuming that the public is going to be made aware or has been made aware about the existence of this study, I think it was critical that we immediately respond very strongly to the fact that an employee under the due direction took it upon herself to spend $50,000 of the taxpayers' money to do something that was not authorized," Halstead said, according to the transcript.

 

"...A city employee paid this contribution with the public's money without direction from senior management and once it was completed, not sharing this information with senior staff. It's incredible, it's unforgivable."

Damage control for the arena project--rather than the problem itself--was also what concerned some other council members that day. "...I think that we'll lose in the long run if a big flap is made out of this..." Sandra Crenshaw proclaimed. "And I'm sure that this is not the only time that this has happened--but considering the amount of publicity, the pressure, the intensity, the great speed in which we are moving, obviously someone thought they were doing the correct thing, and I would hate for it to just kill the whole project because of this misfortune."

Councilman Don Hicks, addressing Ware, offered his own advice on spin control: "...if it's already out of the bag, I tell you what we need to do is drop the blow, cut our losses, and step up and say that it was an error in authorization, while technically, nothing was wrong, strategically it might have been an error, and I would move to correct that--or something like that."

Elam was only slightly better off at City Hall after Keheley's skullduggery was revealed.

Elam, who had previously enjoyed a stellar 15-year tenure with the city, immediately became persona non grata with the city manager's office, especially after Dan Paul cleared her name and dumped the blame squarely back on her bosses. Today, Elam has quietly moved out of the direct line of fire of Ware and his lieutenants--to the Park and Recreation department, which answers only to the park board. Surprised and nervous, though clearly pleased to hear that the executive session tape is finally going to be made public, the intensely private Elam said only: "I'd really like just to put this whole thing behind me."

But, of course, that can't ever happen. Because Elam's fate is lost on none of the 13,000 people who toil away by her side every day, certain that no matter how hard they work, no matter how loyal they remain, enduring low wages and cramped offices for the privilege of serving the public good, the arrogant bastards at the top will stick it to them if it looks for a minute like their own jobs are on the line.

In his audit interview with Dan Paul, Frank Poe, the low-key director of the city's Convention and Event Services department--and the ultimate company man--recalled a fascinating conversation with Benavides in May 1994, when the secret ASAP study was in high gear. Poe recalls telling the assistant city manager, as the two were standing in a room behind the city council chambers one Wednesday, that he was concerned about the "secrecy of the study" and that funds were "being expended for a study that would parallel what the John Crawford group was doing with pro bono consultants." Poe said he was also curious what the position of the city manager's office would be if, and when, the secret study became public.

When the two men finished talking, Poe watched Benavides walk over to Keheley and engage him in a 15-minute conversation. When Benavides returned to Poe's side, the veteran department head recalls that Benavides had this to say: "Mr. Keheley appreciated my expression of concern, but he wanted the study to proceed as a secret analysis, and in the event the study became public, he would be prepared to justify the actions taken."

But, of course, Keheley didn't. Instead, he ran like a yellow dog.
In the end, when Keheley was finally beginning to see the benefit of an early retirement from public service, he became a rather tragic figure around City Hall--an angry, bitter man who couldn't understand what had happened to him. To the contrary, he was heard saying at one point, his voice filled with incredulity, that Dan Paul "believed them instead of me."

It is hard to blame Paul for doing so. The records of his interviews with 23 city employees and three city-paid consultants reveal why.

All one has to do is compare Keheley's own words--the ones he spoke on tape at the November 16 meeting and the ones he wrote in his vitriolic statement the following February--to the record of the employee and consultant interviews Paul personally conducted. To assure that he got everything right, Paul took notes during each interview, then prepared a written statement, which each individual reviewed and signed.

 

Keheley, on tape: "I had no knowledge that the Public Works department had asked JPJ Architects, who are still under contract with the city on the convention center expansion, to prepare some data for the particulars, some drawings representing a particular set of locations on parking Lot E, which is Site No. 1."

Keheley statement: "I had no knowledge whatsoever that JPJ Architects were involved in a detailed study and were being paid on invoices submitted on their Convention Center expansion contract until the inquiry following the public release of the ASAP study."

Frank Poe: "I do know that Cliff Keheley knew that JPJ and ACI consultants were working on the ASAP group study and knew they would be paid.

"...On May the 5th [1994], there was a meeting with Cliff, [acting Public Works director] Jill (Jordan), myself and Ted (Benavides) in which Jill told Cliff she received a proposal from JPJ in the amount of $85,000. I recall Cliff's instruction that that was too much--go back to JPJ and have them lower the amount."

Ted Benavides (Paul put Benavides' remarks in the third person): "...He remembers meeting with Frank Poe, Jill Jordan, and Cliff Keheley and advised them that Frank Poe had a proposal for $85,000 from JPJ...Cliff said it was too expensive, and the meeting was disbanded."

Jay Macaulay, Public Works facilities manager: "The first proposal of $85,000 by JPJ had been reviewed by at least Frank [Poe], Ted [Benavides] and Cliff, and we had received instructions to reduce it. We were not told at that time to limit the work to $10,000, nor were we told to stop work with the consultants."

Jill Jordan, acting Public Works director: "My information all along was that we had a right (from management) to use consultants."

Roger Files, ACI consultant working on the ASAP study: "It was made clear to me that the city manager's office gave authority to hire consultants, and they were to be briefed on May 25, the time set by management to complete the city study."

Keheley would also claim that he had never blamed Louise Elam for the secret study, writing in his response to Paul's audit report: "Several pubished reports on this matter have stated that I accused Louise Elam of wrongdoing...Mr. Paul contends that I withheld information from the city council in executive session. My statement was that as of that date I had no information beyond the approved invoices to JPJ Architects signed by an employee of the Public Works department. I shared this recollection with the auditor during his interview and urged him to carefully listen to this portion of the executive-session tape because it would also clarify my reference to Louise Elam, which has been grossly misrepresented by the newspaper and tabloid."

The executive-session tape reveals that Keheley did blame Elam from the start. The transcript shows he offered council members his story that a member of the in-house arena-site study group he had assembled had spent $50,000 on consultants without his knowledge, then entered this exchange with a skeptical councilman:

Fielding: "Who in Public Works asked for this information to be done?"
Keheley: "As near as I can determine the project architect who had worked on the convention center and who also was one of the two architects working on the study group that I appointed."

Fielding: "Is this a city employee?"
Keheley: "Yes, sir."
Fielding: "Does he or she have a name?"
Keheley: "Yes, sir."
Fielding: "Did I need to ask what it is? Or are you going to tell me?"
Keheley: "Yes, you do!"
John Ware: "Tell them!"
Keheley: "Louise Elam."

The greatest mystery surrounding the saga of the secret arena study has been the nature of John Ware's role.

The city manager, after all, was in charge of this cast of characters toiling away to bring Dallas a new sports arena. Yet he claims to have known nothing about an ambitious study involving many of his top deputies--and the most sensitive project in city government. True, Paul generally clears Ware of wrongdoing in his formal audit conclusions. But Paul was only looking at Ware's actions in commissioning the study--not in covering it up, which was outside his formal charge from the council.

"I have determined that City Manager John Ware was not aware of the confidential 'ASAP' study nor was he aware of the use of consultants to be paid without notification to or approval by the city council," Paul wrote.

Assistant City Manager Benavides did tell me, in a long interview on November 21, just hours before his session with Paul, that he had personally briefed Ware on the progress of the secret study--including the use of consultants--as the work was going on.

 

That night, when I confronted Ware with this information, he denied that Benavides had ever briefed him, then said, as he was getting off the phone, that he was going to call Benavides to discuss the matter.

Benavides subsequently refused to discuss the issue with me again. And according to Paul's work papers, Benavides said nothing to the auditor about Ware's knowledge of the ASAP study.

What does seem certain, however, is that Ware's peculiar behavior in handling this matter served to obscure the truth. Once again, it's all in the auditor's work papers.

The records show Ware met with his top assistants behind closed doors to lay a strategy for breaking the news to the council. Then he and those same top assistants briefed the council in executive session, laying out their tale about Louise Elam--which they had already given to the News.

Ware's promises to the council that day in executive session sounded good. He vowed to get to the bottom of the mess, and would punish the responsible staffer. He also pledged to review the city procedures that had allowed a single bureaucrat to hide a $50,000 expenditure by simply diverting the money from another project--in this case, the convention center expansion. And once he identified the loophole in the system, he promised to act swiftly to plug it, to assure that this fiasco could never happen again.

In truth, he didn't do much.
Ware did ask his chief financial officer, Jennifer Varley, to review the city's 52-page contracting policy. And yes, at Varley's recommendation, a paragraph was added to city administrative directive 4-5 to tighten up the policy. The provision requires written approval by the city manager's office and city attorney of "any change to the scope of work of a professional or personal service contract" even when the change does not involve an increase in the amount of the contract.

But that change in procedure, in fact, would probably not have blocked the secret study. In numerous audit interviews, including one with First Assistant City Attorney Charles Bierfeld, Paul was told that Bierfeld assured the study team it was legal to shift convention center funds for the secret arena study, because the move had no effect on the "scope" of the convention center contract. That meant it wouldn't require written approval by the manager's office or formal approval by the city council.

If Ware's remedy to this problem seems weak, it looks positively aggressive compared to the followup on his promise to punish the person responsible for the secret study.

Ware left town the week after the November 16 council meeting to go to Houston for a month of cancer treatments, leaving the city government in, yes, Cliff Keheley's hands. After getting back from Houston, Ware recuperated at home for about another month.

Even after returning, he never officially punished anyone. If Keheley retired early under pressure from Ware--certainly a possibility--the manager's given no public indication of it. In fact, he's uttered only a few public words about the affair since November. And when Dan Paul's scathing audit report was released, Ware said only that he was "reserving judgment on the report" until later.

But later never came. Keheley left without a single harsh public word from his boss. Elam never got her apology. And as far as the arena project is concerned, we're back in the pattern of secret council meetings and "no comments" from the staff.

Even during the executive session, the transcript reveals, Keheley would not give council members--his bosses--Elam's name until Ware nodded his approval. His hesitation prompted an angry response from Paul Fielding: "John, I really have a problem with asking questions that a city employee spent $50,000 of taxpayers' money on something, and Cliff needs to look at you to see if it's okay to tell me. I have a problem with that....I have a problem with him feeling that there is some secret that he can't share with the council."

Fielding is one of the few council members who truly understand, on a fundamental level, how people should behave in government.

There should be no secrets. Period. No secrets about how the public's money is spent. No secrets about why people vote the way they do. No secrets about why there's no money for basic city services and maintenance and upkeep but buckets of it for a new sports arena.

No secrets.
But Dallas City Hall is filled with them. In fact, it doesn't know how to operate without them any more. The arena saga proves that. Although the audit papers and the executive-session tape are only a piece of that story, they offer a glimpse into the behind-the-scenes maneuvering that we can usually only speculate about.

 

Secrecy is the theme that emerges from the executive-session transcript and Dan Paul's work papers.

And perhaps the biggest secret of all--one that is, unfortunately, not resolved in Paul's work papers--is why Ware didn't tell the council about the secret study six months earlier, when he first learned of it.

It is not a revelation that Ware found out about the secret study in mid-stream. He admitted as much in a five-page memo to the city council last November that reported the results of his own internal investigation. Ware's admission--that he had discovered the secret study the previous May but said nothing to the council--stunned a number of council members, especially since, just a week earlier, Ware had sworn he'd only known about the secret study for a week. But no one called the manager to task for it.

Ware stated in the memo that he had received a call on May 18, 1994 from John Crawford, the Dallas Realtor heading up the larger pro bono arena study, wanting to know if the city staff was doing its own arena study. "After an inquiry I found out that we had engaged JPJ to work with the staff on arena issues. I then asked how did we pay them and was told, by Administrative Action (AA). I then asked for a copy of the Administrative Action, and none could be found. I then stated that we should send a memo to council and stop the work by JPJ. I did not ask about the amount owed. A memo to council was never sent, and I did not follow-up on making sure that we did."

No AA authorizing the payment could be found, of course, because there wasn't one--Keheley and his secret team had cleverly decided to use leftover funds in the multi-million-dollar contract for expansion of the convention center. Besides, any AA would have been limited to the $10,000 maximum that the city manager's office can spend without council approval.

In fact, Louise Elam told Paul she had been advised that Keheley had specifically asked that no AA be used. "Subsequently, within the last few weeks, Bierfeld told me confidentially that Cliff Keheley did not want an Administrative Action on this project," Elam said, according to Paul's notes.

Jordan recalls how she found out on May 18 that her boss knew about the secret study.

"John Ware called me and Ramon to stay later that evening, after a budget meeting," Jordan told Paul, referring to Ramon Miguez, then acting director of the housing department. "John Ware asked me and Ramon--with Cliff present--why we, Ramon and Jill, were doing a secret arena study. John was very angry. Cliff didn't say anything."

In her interview with Paul, Jordan recalled another meeting the next day, May 19, attended by Ware, all his assistant city managers, and several department heads. "John questioned me in front of everyone about the arena study," Jordan recalled. "John was concerned about the fact that word had leaked out that the city was doing a secret study. John told me to search the files again for the AA. And to search Frank's office for it. Frank (Poe) was out of town."

Jordan left the meeting to look for the AA--a document that Benavides and Keheley, both sitting mutely in that meeting that day, knew darn well didn't exist. She came up empty-handed, she told Paul, and returned to the meeting with Ware and the others to tell them.

"John then asked me what our strategy should be for handling the press," Jordan told Paul. "I told him to put word out to the council that staff was doing an independent arena study to confirm the work of the Crawford group, that this study was legal and warranted. John said that was a good strategy and to immediately terminate the study. Then he dismissed me from the meeting."

Ware promptly forgot--or ignored--Jordan's advice. The council would not learn about the study for six months. Ware did, of course, inform the council members in November. At that point, he had no choice, since they were about to find out from the newspapers.

Unfortunately, another $500,000 was spent on arena consultants in the meantime, supposedly to canvass downtown Dallas to pick the best arena site. In fact, they were zeroing in on--and would recommend--the Reunion Arena area that Keheley favored. (Keheley's concern that the Crawford group would give the Reunion area short shrift had spurred him to commission the secret study in the first place.)

In the council's executive session, Ware, of course, insisted that his assistant city managers had moved immediately to get to the bottom of the scandal and get the information out to the council. "...As soon as I found out about it, I directed them to get to the bottom of it and also put together a memo to be sent out to the council so it's not an 'us-vs.-them,'" he said.

 

In fact, the executive session--the manager's briefing to council--took place on November 16. But assistant city manager Ted Benavides had heard as early as November 2 that the secret study was about to come back to haunt him.

"On November 2, 1994, Ramon Miguez asked Ted if he could talk to him," Benavides told Paul in his audit interview, referring to the acting director of housing. "They went to the Flag Room, and Ramon asked Ted if he knew there was a report drafted by JPJ in Public Works files. Ted said, 'No!' Ramon asked if the information would have to be released in open records. Ted said, 'I hadn't seen it, but if it talks about specific sites, in my opinion, it would not have to be released.'" (The city attorney's office would overrule these objections.)

Two days later, on Friday, November 4, I found the documents among several boxes of Public Works papers, triggering a flurry of phone calls the next morning about how to handle the information.

"Frank Poe called Ted," Paul wrote in his notes during his interview with Benavides. "Louise Elam had called him; she was concerned that Laura Miller had found out about the ASAP report and wanted a copy of it. Ted discussed the subject with Frank Poe and told him that he thought it was serious and that Ted would ask Cliff if Ted could schedule a meeting on Monday, November 7. Ted called Cliff and updated him on the above, and Cliff concurred with Ted's request."

Two days later, at 5 p.m., many of the secret study participants were summoned to that meeting, where Keheley presided. "Keheley [had] requested Public Works to draft a memo to council to explain the circumstances of the ASAP report," Benavides told Paul. "Public Works had brought a draft of the ASAP report and the memo to the council to this meeting."

Keheley apparently didn't like the memo. "Mr. Keheley asked Mr. Marcotte to take over redrafting the memo," Paul's notes show that Benavides recalled, referring to Mike Marcotte, director of the sports arena project at the time.

It would not prove easy for Marcotte to produce an account of this matter that satisfied his bosses.

"Marcotte rewrote the memo on Wednesday, November 9," Paul wrote in his notes of Benavides' account. "More changes were made on November 10 and November 11. On Friday night, November 11, Ted gave copies to John Ware, Cliff Keheley and (assistant city manager) Mary Suhm. It was decided to meet on Sunday, November 13, to discuss the scheduled November 16 council briefing. At the end of the meeting, Ted asked John if he was ready to send out that memo. He said, 'No, let me read it again.'

"Monday, the 14th, Ted's assistant, Kim Tolbert, got a phone call from Mr. Keheley telling Ted that John had decided to send out a short version of the memo--Ted had approved a long and short memo prepared by Marcotte. The memo and the ASAP report were sent to the city council that night.

"Several public works employees called Ted to complain that Louise Elam was being treated unfairly," Paul added in his account of his interview with Benavides.

To this day, John Ware has never personally apologized to Louise Elam, publicly accused of something his own office did. Asked why he had never apologized to Elam, Ware told me last week, "Well, that's a personnel issue. I'm not going to have any comment." He has also never publicly admitted that his number-two man, Cliff Keheley, was the real scoundrel.

In fact, Ware has bent over backwards to protect his own. In the city manager's five-page memo to council back on November 23--the alleged result of his own "thorough" investigation into the matter--Ware avoided implicating Keheley in any way. (He did, however, make a point of clearing Elam, placing the responsibility for the study and her treatment, in essence, on no one.)

"It was established that the first assistant city manager, upon issuing orders to the staff to study options for an arena and also later changing the scope to an assessment of Lot E, had by the nature of his direction ordered the report which subsequently led to the hiring of JPJ," Ware wrote in the closest thing that came to casting blame.

According to Dan Paul's work papers, Ware had still not come clean to the council about what he really thought.

 

"Interviewed John Ware briefly on November 23, 1994, while he was drafting his memo to the council," Paul wrote by hand on a piece of paper. "He concurred with me that he was finding that Cliff Keheley was the one responsible for the ASAP study and not Louise Elam." Asked why he never made such a statement to the public or council, Ware confirmed that he met with Paul, but flatly denied ever blaming Keheley. "No, not true--I didn't say that," Ware told me.

Two months later, on January 30, the two men met again. Paul was just putting the finishing touches on his audit report, which he would release to the city council 12 days later. "I again met with John Ware and reviewed my forthcoming report summary," Paul wrote on the same piece of paper. "Very little was said."

On March 3, when Keheley announced that he was resigning after 19-1/2 years with the city--and only 18 months as first assistant city manager--a Morning News reporter asked Ware if Paul's arena audit was responsible for his deputy's departure.

Ware steadfastly responded: "It didn't have anything to do with that.


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