From Sharpstown to Funeralgate

By many accounts, Funeralgate threatens to become the biggest influence-buying scandal since Sharpstown, the banking controversy that rocked Texas in the early 1970s.

How do the two scandals compare to one another? "I can't think of anything where there's such a clear connection between political contributions and lobbying," observes Sam Kinch, the venerable statehouse reporter who co-authored Texas Under a Cloud (Austin; Jenkins, 1972), which details the Sharpstown scandal. "It has the appearance of stink. Big stink."

In Sharpstown, the big shot was Houston businessman Frank W. Sharp, the owner of Sharpstown State Bank. He wanted legislators to pass bank deposit insurance legislation that would have benefited his financial empire. To encourage legislators, Sharp allegedly made $600,000 worth of loans to state officials, who then bought stock in one of his companies. The officials later sold the stock, making a quarter-million dollar profit. The bank deposit insurance legislation that Sharp wanted passed would have required the state to insure large deposits at Sharp's bank. Although the bill was ultimately vetoed by Gov. Preston Smith, the details of the scandal ruined many political careers.

In the 1972 elections, nearly half of all of the members of the Texas House were voted out of office or chose not to run. Speaker of the House Gus Mutscher and two others, Rep. Tommy Shannon of Fort Worth and Rush McGinty, an aide to Mutscher, were convicted of conspiring to accept a bribe. Gov. Smith lost the governorship after it was disclosed that he had turned a profit on Sharp's stock deal. Former Lt. Gov. Ben Barnes, who had been a rising star in Texas politics, saw his career in politics end.

In 1973, a reform-minded Legislature passed a series of landmark measures, including laws on campaign finance disclosure, open meetings, open records, and lobbyist registration. But while some good came out of the Sharpstown scandal, the people behind the scandal were left nearly unscathed. None of them went to prison. Sharp was sentenced to three years probation for violating federal banking and securities laws and paid a $5,000 fine. Mutscher, Shannon, and McGinty got probation as well.

After the scandal, Sharp, a successful land developer, kept a much lower profile, spending much of his time at his home in the ritzy Houston neighborhood of River Oaks. He died in 1993. His funeral was handled by SCI. --R.B.