Fellowship of the Drink: The Expensive Travels of the TABC

By Michael GrossmanApril 04, 2017Reading Time: 7 minutes

Recent audits of the Texas Alcoholic Beverage Commission (TABC), the state regulatory agency that monitors the distribution and service of alcohol in the Lone Star State, have shown that some of the agency's top brass have been boozing and schmoozing with the liquor industry, paid for by the very industry they are meant to oversee (along with a healthy contribution from taxpayers).

The Texas Tribune deserves a hat-tip for breaking this story. If you're interested in this topic, definitely be sure to read their story. A fair portion of the information that my story references comes from their reporting.

TABC and the NCSLA

Before I get too far into this, I'd like to share a piece of art made by a TABC employee, on the clock, using computers and software paid for by the government:

This one's going on the break-room fridge!
This one's going on the break-room fridge!

While we have this on loan from the Louvre, let's unpack its contents just a bit: What you see here is several TABC officials (left to right: TABC Director Sherry Cook, Licensing Director Amy Harrison, Analyst Jesse Valdez and then-TABC technology contractor Jim Harrison) downing Lone Star brews as they jet off to the National Conference of State Liquor Administrators (NCSLA), an annual industry event that brings liquor interests and government regulators together at expensive resorts around the country. "Woo Hoo!!!" indeed.

Their destination at the time was sunny San Diego, where the NCSLA was held in 2015. The purpose of these junkets is supposed to be a discussion between state officials about their respective governments' alcohol-regulation policies, to see where there might be room for adaptation or improvement. In addition, the TABC offers insight into the state's unique policies (more on that later) to representatives from other states. On the surface, this seems like an important endeavor; anyone who's had to attend a conference recognizes the value of networking and keeping abreast of best practices. The whole thing kind of falls apart when we realize this trip was billed to the state for at least $8,000. If that seems exorbitant, consider that the gang's 2013 trip to Honolulu rang up bills in excess of $10,000.

As a matter of fact, since the 2011 fiscal year, these oh-so-important conferences have racked up over $85,000 in out-of-state travel expenses according to records from the state comptroller's office. NCSLA registration and membership fees have also eaten up more than $17,000 during the same period. The majority of these expenses has been billed directly to taxpayers, though the liquor industry has also offered reimbursements to some members of the administration. Evidently these reimbursements are sometimes omitted by officials when filing personal financial statements within the organization; the Texas Ethics Commission is apparently working with Director Cook to rectify these "oversights." In the meantime, the NCSLA acknowledges that certain board members receive reimbursements, but cannot specify who or how much they receive.

TABC Regulators and Alcohol Industry Reps Partying Together?

While I believe the aim of the NCSLA is probably a positive one, the conference is also funded in large part--and therefore directly influenced--by the alcohol industry. The fact that it's so clearly treated as a vacation (do the people in that picture look like they're headed to a work function?) raises some troubling questions about exactly what kind of relationship is shared between government regulators and those whose businesses fall under their purview.

In a way I get it; if the only thing you could promise attendees was a thousand Powerpoint slides about industry regulations, nobody would pay to attend your event. To fill a guest list, there needs to be a proper balance of work and play, so the NCSLA typically features sponsored parties, a well-stocked bar, and several social events. The more I read about this conference, the more it appears to be a thinly-veiled attempt by "Big Booze" to keep its regulators--I won't say "bribed;" maybe "agreeable" is a better term. Away from other oversight, TABC employees go golfing and get hammered with industry reps and executives, giving them an opportunity to sway regulations to their advantage. The friendlier their relations with regulators, the more favors they can ask.

For example, during the 2015 trip to San Diego, Director Cook authorized expensive accommodations at the stylish Rancho Bernardo Inn to the tune of $215 per night per person; TABC employee regulations allow for a maximum lodging rate of $142. While enjoying their pricey stay, employees also indulged in some rounds of golf and a hospitality suite that remained open until 2 a.m. nightly. In Hawaii, organized events included a golf tournament at Pearl Country Club, a "luau under the stars," a networking event at the Bishop Museum (which boasts "the world's largest collection of Polynesian artifacts"), and more.

2014's NCSLA conference was held in San Antonio, which one might think would mean the TABC could spend more prudently on travel and accommodations. Instead, the organization tallied up a $28,000 bill by sending 17 employees to the event, where they were photographed rubbing elbows with liquor lobbyists over drinks and laughs. 2016 had its own gaffes in Austin as the TABC faced accusations of failure to obtain a permit to serve alcohol in its own hospitality suite. In a parody of accountability, the TABC turned to the agency responsible for investigating such allegations--itself. After examining the details of the situation, the agency determined no wrongdoing occurred.

Texas Needs a TABC that Is Above Reproach

While the TABC is meant to protect tax-paying consumers from corporate shenanigans, instead it often seems to help those same interests dominate the industry. In so doing, it often reaps the benefits of having powerful, affluent connections. Even now as the Texas legislature struggles with budget cuts and financial allocation, the TABC is gearing up to send its people to the NCSLA conference in Colorado. Hopefully they can find time to learn something between their time on the slopes and their time in whatever exorbitantly-priced hotel they're booked into.

In one of the strange ironies of government, we empower independent regulators like the TABC specifically to avoid the conflicts and lobbying that are necessary features of our elected branches of government. When stories like this emerge, it shows that lobbying, or at the very least, the appearance of lobbying, can happen more easily in an agency that is lower profile than it would in the legislature itself. After all, these junkets have been going on for 5 years and no one said a thing until the Texas Tribune ran their story. By contrast, reporters keep tabs on any piece of contentious legislation, giving information to the public as it happens.

This isn't to suggest that the TABC is a corrupt organization. In fact, we have a solid working relationship with employees of the commission who provide invaluable support in our ongoing work, holding bars accountable and getting justice for families. Having said that, as members of the public, we have to acknowledge that this story looks bad.

Part of working in any organization is not only conducting oneself in a professional manner, but avoiding even the appearance of impropriety. For instance, the law is a heavily regulated profession. There are numerous times where a potential defendant in a case reaches out to us for clarification of the law. We don't do defense work, but we're happy to answer legal inquiries from any concerned parties. We believe that in addition to helping victims who have been injured, or the families of those who have been killed, educating the public about the law is one of our primary callings.

In order to avoid even the appearance of impropriety, we document every time we are contacted by a potential defendant. Why do we do this? The answer is simple; it has happened more than once that the potential plaintiff of a case contacts us after the defendant and asks us to represent them. Most people might not see an issue with us signing up these clients, but if you were injured and found out that your attorney had a phone conversation with the person who injured you before you hired them, wouldn't you be suspicious that you might not be getting the best representation possible?

As professionals, our duty is clear. Even though we don't do defense work, it would be unfair to a prospective client to give them even the slightest reason to doubt the quality of their representation. For that reason, we refer these potential clients to other law firms, those who haven't even spoken to the defendant. I mention all this to illustrate that asking TABC officials not to fraternize with industry representatives isn't an outrageous request; it's the price of maintaining the public's confidence in the agency's professionalism and efficacy.

While it may strike some as an old-fashioned way of thinking, agencies like individuals develop a reputation for honesty and fair-dealing through years of doing things the right way and avoiding even the mere whiff of scandal. That reputation, though dearly purchased, is easily lost. When it is an individual who is tainted by impropriety, it only costs the individual and perhaps those closely associated with him. When it is a vital government agency, like the TABC, it is the Texans who depend on the job that they do who suffer as a result.

In response to the Texas Tribune story, TABC spokesperson Chris Porter said, "As long as we're a dues-paying member of NCSLA we'll continue to attend those conferences to meet with our counterparts from across the country and discuss issues that are of importance to the alcoholic beverage industry in Texas and nationwide." I think this attitude misunderstands the criticism being leveled against the TABC.

The TABC can attend these conferences in a way that shows their commitment to regulating the liquor industry, not serving it. They can attend in a way that respects the fact that taxpayers are paying for their trip. Southwest flies to where these conferences are, Motel 6's dot our country from sea to shining sea, and one can catch a cab nearly everywhere.

The appearance of impropriety is bad enough; doing it in a style that most of the taxpayers of Texas can't afford is inexcusable.

Update, July 10 2017

Since these revelations began to come to light, several top-ranking members of the TABC have resigned from their posts. Director Sherry Cook stepped down following a heavy grilling by Texas legislators about the TABC's loose purse strings, including the junkets mentioned above and questionable accounting related to the fleet of vehicles driven by the agency's upper ranks. Deputy Executive Director Ed Swedberg was briefly promoted as interim director, but recently resigned his post rather than participate in the termination of Licensing Director Amy Harrison (mentioned and pictured above), who has thus far not resigned or been terminated. In addition to Swedberg the TABC's general counsel, Chief of Enforcement and Head of Internal Affairs have all left the agency since the beginning of July.

At this time the agency is undergoing serious restructuring under the supervision of TABC chairman Kevin Lilly. Let's hope the new appointees serve with integrity and transparency.