The Austin Chronicle

Looking for Tony

Texas Democrats Believe a Laredo Oil & Gas Magnate Can Win the Governor's Race and Save the Party. So Who Is Tony Sanchez?

By Amy Smith, December 8, 2000, News

The quiet man sipping a tall drink at a downtown Laredo bar doesn't hedge: "Tony Sanchez? Yeah, I know Tony," he says, drawing on his cigarette and exhaling quickly over his shoulder. "I knew his father, too." This is Sergio, a fiftysomething owner of a small construction company who, like most every other Laredo native over the age of 45, "grew up" with Tony Sanchez Jr., the way graying El Pasoans "grew up" with Sandra Day O'Connor, a former homegirl.

You won't see much of Justice O'Connor in El Paso these days, but Tony Sanchez hasn't forgotten where he came from; the Laredo businessman/lawyer still lives and works in the South Texas border town his Spanish ancestors founded nearly 250 years ago. Long before NAFTA made a bunch of people rich and turned Laredo into one of the fastest-growing boom towns in America, Sanchez and his father, the late A.R. Sanchez Sr., had already achieved folk-hero status for making it big by dint of hard work and a whole lot of prayer. The father-and-son duo sprang from modest roots to build from scratch an oil and banking empire, which over the years has generated a number of other successful side businesses and investments. Some unconfirmed reports have placed the family's wealth as high as $600 million. Whatever the actual figure, Sanchez has been generous with his money, giving large sums to various social causes, civic endeavors, and political candidates, most of them Democrats. But one Republican -- George W. Bush -- has benefited handsomely from Sanchez's generosity. All told (according to Texans for Public Justice, a nonprofit campaign watchdog group based in Austin), the Sanchez family has contributed more than $320,000 to Bush's gubernatorial and presidential campaigns.

Now that Nov. 7 has come and gone, Sanchez's friends are betting that the Laredo man will return his attention to the more familiar Democratic Party -- and his own political aspirations. It's no secret that Sanchez is considering running for governor in 2002, in what would be the outspoken UT regent's first run for elected office. Inner-circle Dems discuss the prospect of his candidacy with almost breathless anticipation. Should Sanchez win, the victory would give Texas its first Mexican-American governor, but certainly not its first multimillionaire governor. Bill Clements, the state's first Republican governor since Reconstruction, was a rich oil man when he was elected governor in 1978, and when George W. Bush was inaugurated in 1998, he was worth about $15 million -- most of it derived from the sale of his 10% stake in the Texas Rangers.

For months, some of the state's most powerful Democrats have been courting, cajoling, and prodding Sanchez to run for the top job. A Hispanic gubernatorial contender would be a dream come true for the Democrats -- especially one who could bring his own $25 million to the table. By comparison, Democratic gubernatorial candidate Garry Mauro raised only $3 million for his run two years ago, while Bush raised some $25 million. The Dem interest in Sanchez intensified when former San Antonio mayor and Clinton Cabinet member Henry Cisneros made it clear he will not be a candidate. As he bowed out before even jumping in earlier this year, Cisneros told reporters at the National Democratic Convention in L.A. that he would stand behind his friend Tony.

Sanchez is not nearly as well-known as Cisneros, he's not what you'd call a natural politician, nor does he have Cisneros' star quality. But Sanchez moves comfortably in political circles and has crossover Anglo appeal. That's apparently good enough for the Democrats, who see Sanchez as someone who could breathe new life into the hobbled party, pull in the bulk of the estimated 40% Latino vote in the state, and win the undecideds, too. The 1998 election confirmed that the Democrats will live or die by the Hispanic vote. Two years ago, only about 26% of the state's 1.7 million registered Latino voters cast ballots, and the rest stayed home -- and all six statewide Democratic candidates fizzled out on election night. Moreover, Republicans received a larger percentage of the Hispanic vote than they had in the past, in part because the Bush campaign spent more on the Hispanic vote than Mauro spent on his entire campaign. "If you say a million, I want you to spend two million. If you say two million, I want you to spend four million on the media," Bush told San Antonio political consultant Lionel Sosa.

Absent Bush, it's unlikely that Republicans will invest that much money on Hispanic voters in the next election, and with Sanchez on the ticket in 2002, Democrats would have a great shot at avenging their '98 humiliation. "I think he's going to do it," says former state comptroller John Sharp, who narrowly lost the lieutenant governor's race to Rick Perry two years ago. "I think Tony will appeal to a whole bunch of different types of voters, and he would obviously appeal to Hispanics." That broad appeal would benefit Sharp, who is himself itching to get back into state government. The most likely scenario has Sharp running again for lieutenant governor. As a popular Democrat who has served in the House, Senate, and as comptroller, he would be a formidable candidate against any GOP opponent. Sharp, currently an executive at the Austin office of Ryan & Co., a Dallas-based accounting firm, is expected to send out his first fundraising letter this month. (Republican Senators Bill Ratliff and David Sibley are possibilities, as is current Comptroller Carole Keeton Rylander -- or even Land Commissioner David Dewhurst.). As Sharp sees it, Sanchez's broad appeal to voters, the enthusiasm he would generate among the Hispanic base, and the money he would bring and attract to a race would make it much more difficult for right-wing millionaire James Leininger to write a huge check and turn an election at the last minute. It is widely believed that the $1.1 million loan Leininger provided Rick Perry in the closing days of the 1998 election defeated Sharp and made Perry lieutenant governor.

Among Democrats, Sanchez's appeal extends beyond Sharp. For years, Democratic candidates ran behind the money of another well-funded candidate from the border -- former senator Lloyd Bentsen, whose long coattails and big bank account helped Jim Mattox, Ann Richards, Garry Mauro, and Jim Hightower win statewide elections before Richards ran for governor. For a party out of power and low on money, Sanchez is the best top-of-the-ticket candidate available and ready to run.

Getting Personal

While the Texas Democratic Party has a lot riding on the 2002 election and is eager to draw Sanchez into the race, no one really knows who he is. Sanchez himself -- who refuses to talk to reporters about a possible political campaign -- has said that his No. 1 passion is education, especially higher education. He genuinely believes, his supporters say, that the more educational opportunities people have, the greater their quality of life. He routinely espouses his equal-opportunity beliefs at UT regents meetings and in other public forums. "If you're an educated person," he told the Laredo Daily News before his induction last month into the Texas Business Hall of Fame, "you will respect the environment, the laws of the country and state, take care of your health and the health of others. You will have a good job and keep it, and you're more likely to create employment opportunities for others." While Bush stands firmly against affirmative action -- or, as he defines it, "quotas" -- Sanchez would like to see the university doors open to everyone.

Health care is another critically important issue for Sanchez. Having lost his father to leukemia and his younger sister to ovarian cancer, Sanchez would very likely be an advocate of increased funding for medical services and research. He also has an interest in health care issues on the border, where many are uninsured and underserved. And despite the fact that he is in the oil and gas business and sits on the board of directors of Conoco, Sanchez is said to fancy himself an environmentalist. The environmental component may be a hard sell for Sanchez the oil man, as his record thus far doesn't reflect a strong green background. And Sanchez's public positions are for the most little more than public support for issues -- improved health care, better education, a cleaner environment -- that most politicians would support.

If it is difficult to define the public Tony Sanchez, an intimate portrait of Sanchez is even more obscure. Alan Jackson, president of one of Laredo's oldest independent insurance companies and a close friend of Sanchez since childhood, says it sometimes takes a few moments for people to warm up to Sanchez, and vice versa. "Your first impression of Tony is that he's shy, yet very tough. But really he's the fairest guy I've ever met in my life." He is also very private, at least judging from the wall that surrounds his 11,000-square-foot home in one of Laredo's newer neighborhoods, the well-to-do Regency Park subdivision, where homes in the million-dollar-plus range are still going up at a pretty good clip. His wife is Maria Josefina "Tani" Guajardo, a former schoolteacher who hails from one of Laredo's prominent families. Friends say Maria and Tony are tirelessly devoted to their four grown children -- three sons and a daughter, all college-educated.

"Tony has a great big heart, and I think that's one of the things he's protecting," says Jackson. If Sanchez runs, he added, "he needs to prepare himself for what's coming. ... He has to start getting used to people knowing things about him." Just how Sanchez's preference for privacy will square with what has become an increasingly public campaign process remains to be seen. "This is something he did not seek," state Sen. Judith Zaffirini, a Laredo Democrat, says of the "Run, Tony, Run" campaign undertaken by Democratic Party consultants and Sanchez's friends. "If you were to have suggested to him a year ago that he should run for governor, he would have died laughing," she says. "But Tony has just been bombarded with phone calls from people urging him to run. And I want him to run."

Sanchez, 58, declined to be interviewed for this article, but he has told others that he won't breathe a word about his decision until after the upcoming Legislative session, which ends in May. His friends say he doesn't want his candidacy to become an issue during the session, so he's decided to wait things out in deference to the governor -- as well as to his own public position as a UT regent. To some political observers, this recalls the position George W. Bush took during the last Legislative session, when the governor refused to talk about his presidential candidacy until the Legislature had adjourned -- because, he said, his responsibility was to the people of the state of Texas. (Bush, however, used the time to get home-schooled on public policy, and, of course, to build and fund a campaign.)

Sanchez's 2002 GOP opponent remains uncertain, although potential candidates have been watching the Bush-Gore campaign while quietly maneuvering into position. A likely Sanchez rival would be Lt. Gov. Rick Perry, which would bring Perry's far-right constituency and its big funder, Leininger, into the race. On the other hand, U.S. Sen. Kay Bailey Hutchison, considered a pro-choice moderate, could win the Republican nomination. Hutchison has been quietly discussing running for governor, and her success at winning funding for border colonias -- substandard housing developments lacking utilities -- would guarantee her at least some support among Hispanics. Party power brokers would like to avoid a bruising primary battle between their two stars, so it's possible some kind of deal will be worked out before things turn ugly.

As for Sanchez, his cash-heavy support for Bush is not expected to impact negatively his relationship with Texas Democrats, given all the other prominent Dems who supported Bush. "He and Gov. Bush are old friends -- it's no mystery," says longtime Democratic strategist and former Sharp campaign spokesman Kelly Fero, who intends to work with Sanchez if he becomes a candidate. Similarly, Austin resident Paul Begala, a former adviser to President Clinton and a Sanchez friend, is expected to lend his assistance to what already appears to be a sophisticated campaign operation in the making. Begala, who until recently worked with Public Strategies, a top-dollar Austin-based consulting firm, is one of the most prominent Democratic consultants in the country, best known for his work in Bill Clinton's first presidential campaign. That Sanchez has already sought his counsel indicates just how seriously the Laredo businessman is weighing the odds of this particular investment.

Risk Taker

By most accounts, Sanchez has developed the ability to move effortlessly between the two worlds of business and politics. He is an assiduous networker, as opposed to a glib gladhander, and his connections have served him well. Not long after Sanchez obtained business administration and law degrees from St. Mary's University in San Antonio, he took a job as an aide to former lieutenant governor Ben Barnes, whom he served until 1972 when Barnes, after getting caught up in the Sharpstown scandal, lost his re-election bid. "Tony was a young man of about 21 when he came to work for me," Barnes recalled the other day. "And he was a very loyal, dedicated, and sincere employee." Sanchez, he adds, has since evolved into someone with real star potential, even though he is more familiar with the behind-the-scenes of Texas politics. "Because Tony grew up in South Texas, where his family was involved in politics and he's been involved in politics, I think he would be make a very good candidate for governor," Barnes says. Barnes also suggested that the political work Sanchez has done provides him with certain perspective that candidates who move from the private sector to politics often lack. "He wouldn't have that naïve business syndrome that a lot of businessmen and -women have when they move into politics ... Bill Clements and [onetime gubernatorial candidate] Claytie Williams come to mind," Barnes says.

After leaving Barnes' office and returning home to Laredo some 30 years ago, Sanchez continued building on the relationships he had formed in Austin. Years later, Gov. Mark White appointed Sanchez to the Texas Parks and Wildlife Commission, where he served until 1993. In addition to his regent's position (his term ends in February of 2003), last year Sanchez was named to the board of the powerful -- and largely secretive -- UT Investment Management Co., a nonprofit corporation that Bush and the Legislature created in 1995 to manage and invest the university's public money. The nonprofit UTIMCO has come under fire in the past year, after the Houston Chronicle and Harper's connected the dots between big Bush donors, former UTIMCO board chair Tom Hicks, and the firms who were awarded contracts to invest UT money. According to reports, some $250 million had been steered to private investment management firms with connections to Hicks, owner of the Texas Rangers and a Dallas investment firm. Sanchez, however, was never called into question in the investigative pieces about UTIMCO.

Sanchez spends his work days at his office north of downtown Laredo, in an unpretentious Spanish Colonial-styled building with a red-tiled roof -- the home of Sanchez Oil & Gas Corp., where he is the chairman and CEO. As the story goes, the company got its start this way: In the Sixties, Sanchez's father, who ran an office equipment store, started looking around for ways to supplement his family income. He began buying up oil and gas leases and reselling them to drilling companies. By the time Sanchez returned to Laredo after leaving Barnes' office, he was ready to roll the dice on something new. Sanchez convinced his father to hang on to those leases so the family could try its hand at drilling for oil themselves. It was a lucky call. The wildcatting father and son immediately hit pay dirt, and they continued buying mineral rights and drilling their own wells. Today, Sanchez's privately held company explores for oil and gas throughout Texas and Louisiana, and is the 18th-largest natural gas producer in Texas. "The oil and gas business is the most exciting business I've ever been involved in," Sanchez told a Laredo reporter. "The ups and downs, the excitement and potential combined with facing high risks ... it's incredible."

But minerals extraction is often a dirty business, opposed by environmentalists -- or citizens who quickly become environmentalists when confronted with the prospect of a drilling rig in their back yard. Over the past decade, Sanchez's company has twice run into opposition that was vocal enough to attract the attention of he press: once when the Parks and Wildlife Commission (after Sanchez left its board) granted the company special permission to drill in Falcon State Park, which sits on the Rio Grande downriver from Laredo, and earlier this year when the company secured approval to explore for oil in Burnet Bay, in the coastal city of Baytown (see "Greasing the Wheels?" p.40). Of course, these two instances raise legitimate concerns about Sanchez as governor. Would he be the oil industry's go-to guy at the Capitol? Or would he stand up to lobbyists in defense of the environment?

The Sanchez family is also involved in the banking industry, which, while generally less controversial and public than oil exploration, is no less profitable. The family entered the banking business as it had entered the oil and gas business -- by the elder Sanchez's uncanny shrewdness. In the mid-Sixties, Tony Sr. had started acquiring shares, a few here and there, in a small Laredo bank. By the mid-Seventies the bank held $30 million in assets and from there continued its march toward unprecedented growth. Now, Sanchez and his family are majority owners of the $5.6 billion International Bancshares Corp., the largest minority-owned bank holding company in the country and the leading "after-NAFTA" bank in South Texas. IBC and its International Bank of Commerce subsidiaries operate in about 100 cities in Texas and Mexico, where it serves the U.S.-owned maquiladora industry of northern Mexico. Hugo Berlanga, an Austin lobbyist and former Democratic state representative from Corpus Christi, believes Sanchez's ties to Mexican business officials and state governors would be a boon to Texas. "There's nothing like a common language to eliminate barriers and forge relationships with other countries," says Berlanga, whose own relationship with Sanchez goes back 25 years. And like Sanchez, Berlanga is a Democrat who has learned to swing both ways. He was recently criticized by his former House colleagues for his public support of the Bush presidential campaign -- including serving as a Bush visual aid in the debate audience in St. Louis last month.

Like his father, Tony Sanchez Jr. is an inveterate risk taker. He was one of the first investors in Blockbuster Entertainment and today is investing in young high tech companies through Sanchez Venture Capital Investment -- an Austin-based outfit he founded in 1999, before turning management operations over to Gene Lowenthal and Trey Treviesa, who are also partners in the business. There's also a real estate arm of the family empire, run by Sanchez's brother-in-law, M. Richard Stewart.

Not all that Sanchez touches turns to gold. One of his biggest business failings was his Tesoro Savings and Loan, a small player in the nation's S&L's, which collectively left taxpayers a $500 billion tab for a federal bailout. When it was evident that Tesoro was going into the tank with many other S&Ls across the country, Sanchez, according to friends, began feeding several million dollars out of his own pocket into the company so that depositors wouldn't be left completely empty-handed. Tesoro hobbled along until 1988, when it was shut down by the feds. But Tesoro investors and other Laredoans say they still recall Sanchez's last-minute check-writing on behalf of his depositors. That said, Tesoro in the end cost taxpayers $160.8 million.

Big Man on Campus

Despite all his business success, Sanchez might have remained in relative obscurity had Gov. Bush not appointed him to the UT Board of Regents, where Sanchez got more press in three years than most regents get in a lifetime. Since 1997, he has: sought the firing of UT law professor Lino Graglia for arguing that minorities are academically inferior to whites; snubbed a famed Swiss architectural firm hired to design UT's Blanton Museum in 1999; and questioned the paucity of minority representation on a search committee created to appoint a new president to the UT Health and Science Center in San Antonio. In a widely publicized letter to Don Evans, chair of the Board of Regents (and Gov. Bush's longtime friend and current finance chairman), Sanchez questioned why Evans appointed only two minority members to the 15-member committee -- although San Antonio's population is more than 50% Hispanic, and the area served by the system is about 80-90% Hispanic. Sanchez, with characteristic bluntness, blamed the oversight on institutional racism. Evans, in turn, acquiesced to Sanchez and added a few more minority members to the committee.

Sanchez's criticism of the search committee grew more intense after the committee's Anglo faction opposed his nominee, Dr. Ricardo Cigarroa, a respected Harvard- and Yale-educated Laredo physician. Sanchez, who was on the search committee himself, didn't bother to check his anger at the door during the discussions, which dragged on for weeks. "There was a lot of blood spilled over that one," said one familiar with the struggle. In the end, Sanchez emerged the victor, with Cigarroa winning the committee's approval for the president's post. Hispanic public officials applauded Sanchez for his mettle, as did other high-profile Democrats, including Sharp. "That's Tony," said Sharp of the fight over Cigarroa's nomination. "There ain't nothing there that you don't see. And I think that's something the public likes in a candidate."

Make no mistake: The Republican Party is taking notes on Sanchez and his outspokenness. And Sanchez's backers are already spinning the would-be candidate's brutal frankness to counter what they expect will be the GOP portrayal of Sanchez: as a hothead who is quick to play the race card.

Does it seem like things are coming together too fast here? At least the Dems are thinking ahead, but there are a lot of things yet to learn about the man who would be governor. Sanchez is a devout Catholic who attends Mass every day: where, for example, would he stand on reproductive rights or on the inclusion of gays and lesbians in hate crimes legislation? Democratic strategist Fero says that Sanchez first must decide whether he's going to run before he delves into formulating stances for public consumption. "But I don't think people who support him would be disappointed with how he stands on the issues," Fero adds, "when and if that time comes."

Bridging the Gap

Because Sanchez is a highly competitive, straight-talking -- some would say brash -- businessman who doesn't back down from a fight, some have taken to comparing him to another blunt-talking, self-made oil man: former governor Clements, who had never served in public office until he was first elected in 1978 (he was elected a second time in 1986, defeating incumbent Democrat Mark White). Zaffirini objects to any comparison drawn between Sanchez and Clements. "He didn't do much of anything for Laredo," she says of the former governor. "He hardly ever came down here." In fact, Zaffirini argues, Clements saddled the city with a third international bridge, 10 years before it was needed. "He struck a deal with the governor of Nuevo Leon," she says. It was a deal, she adds, in which the opinions at the local level in Laredo, and its sister city of Nuevo Laredo, didn't count. The bridge was built outside Laredo's city limits and the city was forced to spend time and money annexing the site. "We were opposed to the whole thing because it was not consistent with our master plan or with our transportation system," Zaffirini said.

The Laredo Bridge was one of several border fiascoes involving Clements. When the Ixtoc oil rig he had leased to the Mexican government blew out in the Bay of Campeche and poured millions of gallons of crude oil into the gulf and fouled the beaches of both countries, Clements suggested that residents of the coast "pray for a hurricane," and that the protests of environmentalists in both countries was "much ado about nothing." He also once referred to prominent Mexican scholar Jorge Bustamante as "just another Mexican with an opinion."

Had Clements spent more time in Laredo, he may have learned some very valuable lessons. "A place like this has so many polarities," says Meg Guerra, who publishes LareDOS, the alternative monthly newspaper that never suffers a shortage of tales about the Laredo "Seedy Council." "Here," she says, "you have plenty ... and nothing. What we become as adults has everything to do with what we see and learn here as children." Guerra believes Sanchez is a good example of that. Kids who grow up in the borderlands witness firsthand the stark contrast between wealth and poverty in its barest, street-level form. One of two things happens as a result of this early indoctrination, Guerra says. You either grow up with genuine compassion for the have-nots -- or you don't. Fortunately, Guerra says, Sanchez is one of those who does.

Sanchez will never lose sight of that perspective, says longtime friend Hugo Berlanga. "Tony came from very meager beginnings," he says. "And now he's very wealthy." In fact, according to Berlanga, Ben Barnes once joked that if he knew Tony was going to make so much money, he would have been nicer to him. "But," Berlanga said, "Tony is the same person he was before he had money. He has the same set of friends, he still hunts and fishes, he's just ... Tony."

As the Democrats see it, Sanchez is the complete candidate. He is a big draw for the biggest and fastest growing political demographic in the state, a rags to riches story, a conservative who can be compassionate, a straight talker. But the unqualified support of friends -- and a good backstory -- does not a candidate make.

"There ain't nothing there that you don't see," Sharp said. In truth, there's a lot about Tony Sanchez that the public doesn't know. end story

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