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Thursday, February 13, 1997

GTECH, Barnes terminate contract

By CHIP BROWN / Associated Press

AUSTIN (AP) - Agreeing that former Texas lieutenant governor Ben Barnes had become a lightning rod for questions involving the Texas Lottery, GTECH Corp. announced Wednesday that it was cutting all business ties with Barnes.

GTECH, the lottery's main contractor, had relieved Barnes of duties as its top Texas lobbyist in January and said he would work in other states and countries.

But on Wednesday officials said the company paid him a settlement to terminate a lucrative contract.

Since the Texas Lottery began in 1992, Barnes had been receiving 4 percent of GTECH's gross revenue from its operation of the Texas Lottery, at times totaling more than $3 million per year for Barnes.

"It was a negotiated buyout and the terms weren't disclosed," said a GTECH official, who declined to be identified.

On Wednesday, Barnes took credit for going to GTECH to say that he was tired of the negative media attention focusing on the lottery and GTECH.

Lisa LeMaster, a spokeswoman for Barnes, said, "Ben went to them. I think he wants to get off the front page. If it bettered the company and the lottery, that's what he wanted to do. It's hard to be on the front page every day."

In a statement, GTECH Executive Vice President Michael Chambrello said, "The company and Ben Barnes have mutually decided to end our business relationship. ... Mr. Barnes has made significant contributions to our business in Texas, as well as in other states and countries."

Barnes said in a statement, "We are proud to have helped launch the largest and most successful lottery in the nation. I have committed my career to serving Texas and Texans and I am pleased to have been part of an effort that has contributed $4 billion to the General Revenue Fund of Texas."

The move comes after a series of shakeups at the lottery, including the firing of executive director Nora Linares on Jan. 7.

Ms. Linares had been dogged by questions about a contract involving a close friend, Mike Moeller, and GTECH.

Published reports have said a federal grand jury is investigating GTECH's business relationships in Texas.

In January, Barnes was accused in a federal prosecutors' report in New Jersey of engaging in a kickback scheme similar to one that led to the conviction of a lottery company official in New Jersey.

The allegation was in a pre-sentencing report filed in Newark federal court in the criminal case of J. David Smith, former national sales manager for GTECH Holdings Corp.

No charges have been filed against Barnes, who denies any improprieties in his dealings with GTECH.

Smith was accused in New Jersey of hiring GTECH consultants who would give him a portion of what they earned from the firm. He was convicted in October of defrauding GTECH of $169,500.

In its pre-sentencing report, the U.S. attorney's office in New Jersey asked that federal Judge Nicholas Politan consider Smith's Texas dealings with Barnes and other GTECH consultants.

In Texas, prosecutors alleged, more than $500,000 was paid to Smith through a Barnes bank account.

"The Texas monies are kickbacks and should be considered as relevant conduct for the purpose of calculating" the sentence against Smith, prosecutors said in the 53-page report.

Ms. LeMaster has repeatedly said that the prosecutors' allegations are riddled with mistakes and false assumptions. She said Wednesday's actions had nothing to do with those reports.

"That kind of speculation around this announcement is not true and not fair," she said. Send a Letter to the Editor about This Story | Start or Join A Discussion about This Story
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