NewsChannel 5 Investigates: Friends in High Places
Memo Says 'Relationships' Key to Business
(Story created: 10/10/02)
In January 2001, Gov. Don Sundquist unveiled what was, by all accounts, a noble plan. He asked state lawmakers to approve a $100 million statewide reading initiative.
"If we do that, there's no reason why a single child should leave third grade unable to read, and the citizens of our state should hold us accountable for doing so," Sundquist declared, receiving applause from state legislators.
But what lawmakers did not know was that a company controlled by two longtime friends of the governor -- John Stamps and Al Ganier -- stood to gain more $40 million off Sundquist's reading initiative -- an initiative they had helped write.
"Had we been privy to this information, we would have raised some eyebrows," says House Majority Leader Gene Davidson, one of the legislature's top education experts.
"I think this would have sent up red flags -- I know it would have."
As NewsChannel 5 first reported, Education Networks of America's predecessor company received an exclusive, no-bid contract in 1996 to connect Tennessee schools to the Internet.
Then, when the state put the schools' Internet service out to bids two years later, ENA used that experience to win the contract, even though it wasn't the lowest bidder.
Those contracts are now subjects of an FBI-TBI investigation, as well as a review by the state comptroller's office.
But internal ENA e-mails obtained by NewsChannel 5 show the governor's reading initiative would have taken that contract to a whole new level.
For example: an e-mail written 10 days before the governor unveiled his reading initiative. The message -- from company president Al Ganier to ENA staff and its board of directors -- is labeled "extremely confidential and not to be discussed outside of ENA."
The secret: "After a five-month process, ENA has signed a contract with the State of Tennessee to provide a 400 percent increase in service for K-12 public schools."
That contract -- signed before the governor had even presented his reading initiative to lawmakers -- added $12.5 million in state funds to ENA's contract -- along with $28 million dollars in federal matching funds.
All totaled: a $40 million increase -- in just one year.
Sundquist administration officials argue it only made sense to use the schools' Internet connections for the reading program. In addition, they say they had to get the contract signed early to qualify for federal matching funds.
"My reaction would be that someone thought it was a done deal," Davidson says.
Ganier served on the state Board of Education's literacy council, which helped draft the governor's reading initiative. A top ENA official also worked on the council's staff.
The board's executive director, Dr. Douglas E. Wood, says it was his decision alone to put Ganier on the literacy council. He cited Ganier's experience that he anticipated would be needed.
ENA also helped the administration by drawing up presentations to demonstrate how its computer network could be used to train both teachers and students.
Ganier's e-mail boasts that his company's role in "formulating a vision that touches every teacher and student" was instrumental in landing the new contract.
Says Davidson, "I think that's a real conflict of interest -- I think it's a major conflict of interest."
The contract was contingent upon funding being approved by the General Assembly. Lawmakers approved the reading initiative, but not the money to pay for it.
Ganier did not return telephone calls, but his e-mails also describe an orchestrated effort to secure government contracts -- then to squeeze out more and more tax dollars.
"Our sales efforts," he writes in an e-mail to ENA employees, "are built on the concept that all of us are involved in relationship building for improvements in existing contracts." (An ENA spokesperson says the company has fully followed all laws regarding contracts.
But Davidson says it may change how state lawmakers watch your tax dollars.
"I think from this point forward we will always be very suspect of any legislation that comes through that may deal with contracts."