Arthur Tyler interview

INTERVIEW OF DR. ART TYLER (HCCS VICE-CHANCELLOR) MAY 14,2010 and JULY 8, 2010

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rnterview conducted by Larry Veselka (primary) and Tim Byrd. Purpose of investigation explained and Upjohn warnings given.

A.

Matters that lead to opening of investigation: 1.

Relationship between Trustee/former Trustee Abel Davila and HCC subcontractor and prime contractor J's Quality Construction.

During 2009, after Abel Davila was elected Chair of the Board of Trustees, Dr. Tyler had numerous dealings with Mr. Davila where Mr. Davila was actively pushing to obtain a role for 1's Quality as a mentee or subcontractor to Chevron on the Energy Services Performance Contract ("ESPC"); or to Alan Johnston on a discrete, separate cogeneration piece of that project; a part of the work on the Feliz Fraga Campus project; and a prime contract for maintenance painting services. When being interviewed, Dr. Tyler was trying to remember the sequence of events and specific timing off the top of his head. He subsequently ' went back and reviewed his calendar and various HCC Board records and correspondence in order to prepare a more detailed chronology. That chronology, including the backup documents on which he relied to prepare the chronology, is attached as Exhibit 19 to the Report.

Dr. Tyler recalls that Abel Davila first suggested to Dr. Spangler that HCC create a contract specifically for painting services as HISD, where Mr. Davila'sr served on the HISD Board, had done recently for J's Quality Construction.

Before that contract was authorized by the Board on June 25, 2009, those services could be pr~vided under anyone of the three Job Order Contractor ("JOC") contracts HCC had awarded for 2009. For example, Dr. Tyler did not know at the time that J's Quality had already been providing such service on HCC projects as a subcontractor to at least one of the HCC JOCs - Fort Bend Mechanical ("FBM").

After a meeting with Mr. Davila asking about the status of the project, Dr. Tyler instructed his staff on April 19, 2009 to prepare an RFP for a painting contract for services to be designated over three years. Mr. Davila continued to ask about the progress of the RFP . The HCC staff evaluation team recommended that the contract (Project #09-36) go to 1's Quality on or about June 16, 2009, but that recommendation was not done in time to be considered by the Committee of the Whole meeting on June 18, 2009. The award gets added to the agenda for the June 25, 2009 Board meeting. Dr. Tyler says that it is the Board Chair, i.e. Mr. Davila, who would have controlled getting t~t IT!..C!t!er added to the agenda Wi~l:lOut first going through --the' CoIillriitiee--of the Whole. The June 25, 2009 minutes reflect the Board voting to add that item and another to the Consent Agenda (which normally covers only those matters already approved at the

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Committee of the Whole meeting) with no discussion. It should be noted that the Board normally does not meet in July so consideration of the award would have been delayed until August, if not added to the June 25th Agenda.

Looking at J's bid package, Dr. Tyler agreed no Conflict-of-Interest ("COl") statement was submitted with proposal. No one pointed that out to Tyler; there was never any discussion regarding COL Usually John Carter would check that.

Dr. Tyler does not remember John Carter ever pointing that out.

HCC Legal Department initially prepared the contract for 1's Quality to run only through December 31, 2009, instead of for the three years as approved by the Board. Dr. Tyler and his staff had discussions about whether the contract was supposed to be $1.5 million per year or not to exceed $1.5 million over the threeyear term. Dr. Tyler remembers 1's Quality saying "1.5 million per year" but it was decided that that would require new Board action since the Board Action Item said "not to exceed $1.5 million." So the #09-36 contract was amended in October 2009 without further Board action.

Simultaneous with the developments leading to the Board's award of the prime painting contract on June 25, 2009, Mr. Davila had been dealing with the Administration over the proposal to award the Energy Services Performance Contract to Chevron (Project #09-32). In February and March 2009, there were a series of meetings between Mr. Davila, Dr. Spangler and/or Dr. Tyler, Board Counsel Jarvis Hollingsworth, and sometimes Chevron officials over the percentage of the contract to be required to be given to local subcontractors. Dr. Tyler understood that Mr. Davila had said that he would get the votes on the Board to approve the award to Chevron if Chevron agreed to use local subcontractors selected by certain members of the Board. On April 7, 2009, Dr. Tyler's assistant sent him an email regarding information provided by Trustee Chris Oliver that the contractors for Chevron would include 1's Quality for "concrete and demo, general construction and lighting" The award of the contract for Project #09-32 to Chevron occurred at the Special Meeting of the Board on May 21, 2009, after the RFP for the Painting Services Contract was posted on the HCC website on May 15, 2009.

Mr. Davila dealt personally with the Administration over what role 1's Quality might have on the Chevron contract. Back in March, during a day of meetings with Chevron, Mr. Davila called Dr. Spangler during a lunch to get the Administration to negotiate with Chevron for a higher percentage of the contract for the local subcontractor. Dr. Tyler also remembers Mr. Davila joining them at a dinner to negotiate on J's Quality's behalf. Dr. Tyler commented to Dr. Spangler at the time that he considered Mr. nayila~s-actions- to-insfnuate-liiffiseIt .- - into路the--subcontractc5f'S6usmessodd.

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In August 2009, Dr. Tyler met with Ms. Jocelyne Ramirez, owner of 1's Quality, to work out the specific role for 1's Quality in the Chevron ESP Contract. Mr. Davila had originally wanted J's Quality to be paid $500,000 of the contract price to be mentored by Chevron in how to perform program management services on the contract. The HCC Legal Department informed Dr. Tyler that a mentor/mentee component would not be appropriate. The Legal Department also said that the contract could not explicitly require a pass through of a portion to 1's Quality. Dr. Tyler was then involved in trying to get J's Quality to participate as a mentee to Johnston LLC's program management component. The Johnston LLC portion was then broken out into a separate contract for designing a cogeneration plant for the HCC headquarters building. However, it was ultimately decided that 1's Quality would not be part of Johnston's contract. Dr. Tyler discussed with Ms. Ramirez and Chevron the idea that J's Quality be a subcontractor for certain lighting retrofitting. That ran into a problem because J's Quality did not have a certified master electrician as required for those services.

When it was proposed to have J's Quality arrange a second-tier subcontractor with the required license, 1's Quality's subcontract ran into additional difficulty because J's Quality could not obtain bonding. Dr. Tyler inquired about having HCC arrange the bond but the HCC Legal Department said that HCC did not do that.

In September and October 2009, Dr. Tyler had a number of meetings with Board Counsel Hollingsworth discussing his concerns about Mr. Davila's pressure regarding J's Quality. On October 26, 2009, Mr. Davila asks Dr. Spangler, Dr. Tyler, and Chevron's Mr. Boerger to come to Mr. Davila's restaurant (Rico's) where Mr. Davila irately berated them for not resolving J's Quality's subcontract and threatened to have the Board cancel the Chevron contract. (Dr. Tyler had inconsistent memory about another attendee at this meeting - once saying it was a Chevron engineer and denying that Alan Johnston attended, but reflecting Alan Johnston's attendance in his chronology.

Alan Johnston was in a few meetings with Dr. Tyler, Jocelyne Ramirez and John Thomas from J's Quality on the Chevron deal. When they first had conversation of how the contract might work, these three showed up to meet with Dr. Tyler.

Dr. Tyler told Alan Johnston the only way for it to work was if Mr. Johnston was prime contractor and J's was a sub. Dr. Tyler then took it to legal, who shut it down because Alan Johnston was supposed to be a sub to Chevron as the engineering firm. Alan Johnston told Dr. Tyler that he wanted to be prime not sub; however, Board approved this as Chevron deal, not Alan Johnston as prime.

Dr. Tyler suggested a piece where Alan Johnston can be prime - on the cogeneration project (taken out of Chevron piece). Alan Johnston's argument was as designer he couldn't be sub for Chevron b~cause he-couldn' t sign offonoUie-rs' ___ 1iesigns.-- Chevron was-oKai witn this.Alan Johnston can design, Chevron will build.

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Alan Johnston also wrote a report that claimed that the Chevron project would not generate the savings projected. Mr. Johnston gave the report to Trustee Yolanda Navarro Flores. Dr. Tyler found out about it and called Mr. Johnston in on it. Dr. Tyler told him "you work for us, the Board approves your contract, but you report to us." Dr. Tyler told Alan Johnston that you don't understand this work. They had knock down/drag out discussions. Mr. Johnston didn't talk to Dr. Spangler, him or Hector Perez, Director of Facilities; he just gave Ms. Navarro Flores the report. This was before the meeting with Mr. Davila at Mr. Davila's restaurant.

Mr. Davila did not say at the restaurant that he wanted to cancel the Chevron contract because they weren't getting savings (as Abel Davila claims in his interview), but because J's Quality was not getting their piece. Dr. Tyler believes that it was absolutely retaliatory; there is no other explanation in Dr. Tyler's mind. Mr. Davila was thinking J's Quality was going to get $6M from the contract for lighting. Dr. Tyler said there is no way, maybe $lM - $l.lM for labor and costs.

Mr. Davila never disclosed to Dr. Tyler, or anyone else that Dr. Tyler knows of, that Ms. Ramirez is a former pharmacy tech student of Mr. Davila or that she had worked at one ofMr. Davila's pharmacies.

In mid-2009, Dr. Tyler began to think he needed to create an Office of Compliance, which he did with two lawyers fresh out of law school. This was done in August-October 2009. The Compliance Office reports to Dr. Tyler. In January 2010, after failed attempts by some Board Members in December 2009 to fire Dr. Spangler and after Mr. Davila goes off Board, one of the attorneys showed Dr. Tyler a document showing a connection with Mr. Davila and J's Quality. He was not sure if they found the information before or after Brad Boerger's March 26, 2010 email with Yahoo site showing a connection. Dr. Tyler shared the information with Dr. Spangler. They started the compliance people on "peeling back the onion." In April, new Board Chair Rev. Williams was informed, the full Board was informed, and then SKY was hired to do the investigation.

2.

Relationship between Trustee Yolanda Navarro Flores and HCC subcontractor Full Moon Builders/Services.

No knowledge

B.

Matters uncovered during investigation justifying further investigation of potential violations of state law:

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Dealings between Trustee Yolanda_N_~Y_a,fLQ Flores 路 ana--Trustee/forther Trustee Diane-Glmos-Guzman, ontfie 路one hand, and HCC contractor Yaffe Deutser, on the other.

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No knowledge 2.

Peter Nguyen's proposal to lease old Macy's space at Sharpstown Mall to HCC with implied potential financial benefit for Trustee Yolanda Navarro Flores and/or former Trustee Abel Davila.

CC Lee, an architect, went to see Dr. Tyler a year ago talking about potentially acquiring property behind HCC Headquarters building. CC Lee also mentioned the Macy's property in the old Sharpstown Mall. Trustees Neeta Sane and Abel Davila were involved or interested. Dr. Tyler told CC Lee that the Board had to decide. CC Lee came back several times to discuss the project. Mr. Davila brought together the HISD and HCC Board to discuss. Dr. Tyler said that 300,000 square feet was too much space. HISD then had a change in leadership and HISD was out of the picture. Abel Davila left the Board in December 2009. CC Lee emailed Dr. Tyler several times to ask if they are still going on with project. Dr. Tyler said "no because HISD is out of the picture." Around early April, Peter Nguyen called Dr. Tyler for a meeting. He said he now had the option on the Macy's property. He said that CC Lee's price was too high and that he could make a better offer. Hwy 59 and Sharpstown was the perfect location. But Dr. Tyler had to make a decision by that Friday (conversation was on a Wed.). Dr. Tyler said that since HISD was out, they were not interested. Mr. Nguyen had a female partner who stated that if they made the deal, she would make it "worth his while." They wanted to get confirmation that HCC would be interested in that property. They talked about having a relationship with the Trustees: Yolanda Navarro Flores and a former Board member that Dr. Tyler understood to be Abel Davila. They led him to believe that Mrs. Navarro Flores and Mr. Davila had a financial interest, i.e., that they would earn a commission if HCC took the space.

They felt that they could get the votes from the HCC Board and from HISD to participate, and if it wasn't this property, they would make it worth his while to tell them what property HCC was going to buy. Dr. Tyler explained the criteria for selecting a property. Peter Nguyen asked to meet for lunch and Dr. Tyler said "okay," but has avoided him. Peter Nguyen has called him about seven times.

Dr. Tyler talked with Peter Nguyen, but something wasn't quite right, he could not say specifically. Dr. Tyler has never taped a call or conversation since he has been out of the investigation business until this conference, but he taped this one.

(Tape provided poor quality for Peter Nguyen's portion). Peter Nguyen said he has option but needed to make decision within next week or in five days whether or not to renew the option. He wanted to know if HCC Board was going forward with the deal. Peter Nguyen was trying to get some commitment out of Dr. Tyler that would allow him to make another investment (six figure option). Dr. Tyler said he could not help him with that and could not ~~y_w.hen- the -Board-would-do . JD..es<:Uhings. - P-eter- Nguyel1'路spartner oWi1sSo~e fishing company - Ten Kha Lam. She said they will make it worth "your while." Peter Nguyen said tell us where you want property, they will buy it and lease it to System. It was clear to

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Dr. Tyler they were offering a bribe. They said they had ability to influence the Board. It was clear to Dr. Tyler that Abel Davila was connected to them and perhaps Trustee Navarro Flores.

C.

Matters uncovered during investigation: Dr. Tyler said that Dr. Spangler told him that Abel Davila had a conversation with her before he went off the Board where he said "I'm going to continue to control this Board" but did not say how. He gave her the impression he was going to control the Board and HCC. There are rumors floating around that Mr. Davila's goal is to come back as Chancellor after finishing his PhD, getting one of the College Presidents to help write his dissertation (Irene), and Mr. Davila would bring back Gloria Walker and fire Dr. Tyler.

Aramark

Dr. Tyler met earlier this year with Angel Herrera, Regional Vice-President with Aramark, who was complaining about a bill for $75,000 for generator work/repair that Aramark had to pay to Fort Bend Mechanical.

Mr. Herrera told Dr. Tyler that, when the original HCC/Aramark contract was done in 2005, the HCC Board pressured his predecessor into taking on HUB (Historically Underutilized Businesses) partners. Dr. Tyler asked who they are and what do they do.

Mr. Herrera said they pay four people ... Dr. Tyler asked for invoices, Mr. Herrera said there aren't any. Mr. Herrera said when Aramark was chosen in 2005, Board members told them they would select the HUBs and Aramark would pay them. Mr. Herrera showed Dr. Tyler some documents where there was an attorney selected. Dr. Tyler understood that Aramark was just paying these folks out of their profit margin. Dr. Tyler said he could not do anything about it. Mr. Herrera said they are paying them because people on the Board said that Aramark's only way to get the contract is to pay those folks. Mr. Herrera sent him copies of their agreements.

Gloria Walker and RHJ

A decision was made by the Board putting Dr. Tyler in charge of CIP instead of Gloria Walker. Dr. Tyler thumbed through the Alief project and found out it was $7M over budget, Board was unaware. Dr. Tyler prepared a memo to Dr. Spangler in December.

There was about $14-15M in things Dr. Tyler found questionable.

Dr. Tyler got propositioned by Eva Jackson, owner of RHJ, who told him "I will make it worth your while in any way you like," showing a lot of flesh (one of the more interesting conversations he has had since he left Vice in NJ). They have not had another conversation since. RHJ was drawing 10% in advanc~ Qn __ eyery-job;---They -wereIa:fe--- gettingjpbsJ:l.Qne,_1hey-were-suppo-seltf5 ]j-e The-principal player during Hurricane Ike but --- - aidn't -show up because they were busy at TSU. When he finally pieced through all the dollars/cents of what was going on, it was evident HCC paid premium for most of the

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work at Alief and other work being done by RHJ. It was clear with a 10% profit margin and 10% Administrative fce built into their contract, that RHJ was making 20% of very dollar that went into their pocket. They spent $36M on the Alief project.

Bobby Singh

Bobby Singh's company, GTI or Global Times, Inc., was a sub to another HCC vendor.

Dr. Tyler hired Bill Carter to join HCC as Vice Chancellor of Information Technology, who wanted to start making some changes. When Dr. Tyler got to HCC, he met with Bobby Singh to find out about his business. Mr. Singh told Bill Carter many times that he had connections with Trustees and that he could get the votes. Dr. Tyler went to Dr. Spangler about getting Mr. Singh out. He met with Dr. Spangler and Mr. Singh in this office. This effort started backlash with trustees. Neeta Sane became very concerned and "threatened" Dr. Spangler and Vice Chancellor that if some things didn't happen, they might be fired. There were some very difficult Board meetings but Mr. Singh got the contract anyway. Dr. Tyler raised serious concerns about it (the contract was added to the budget for $1.5M) and the issue almost got Dr. Spangler fired. But Dr. Tyler didn't care because "right is right" and "wrong is wrong." The type of service involved was business continuity and Dr. Tyler wrote the book on business continuity. Dr. Tyler knew that $1.5M was too much for the project. He briefed Dr. Spangler and she briefed the Board and "all hell broke loose." Jarvis Hollingsworth told him that the Board could contract with Mr. Singh legally. Dr. Tyler hired the chair from UT for $47K for the project. Neeta Sane and Yolanda Navarro Flores were not happy. They stopped talking to Dr. Spangler. When Abel Davila became Board Chair, Bobby Singh got another project. His name does not appear as a campaign contributor to Trustees. Dr. Tyler said, when HCC does any kind of presentation for IT, Bobby Singh shows up.

Bill Carter has done a great job, articles have been written about HCC and its webinars.

In his opinion, the Board's decision to give Mr. Singh the contract for $1.5M doesn't meet the legal test. But Mr. Hollingsworth blessed it.

Hector Perez

Gloria Walker and many of her staff left HCC in Spring 2008 and went to TSU. Ms. Walker was losing a little bit more of her power on daily basis with Dr. Tyler taking away some responsibilities and discussions with her about her leadership style (NovlDec or early 2008). Dr. Tyler got wind of Ms. Walker's plan to leave suddenly around lanlFeb 2008. On March 1, Ms. Walker advised Dr. Tyler her last day was March 31, but she failed to tell him she was taking several key people with her (Tim Rychlec among others). At that time, Dr. Spangler selected a new college President for the campus where Winston Dahse was serving as acting President. Mr. Dahse talked about retiring, Dr. Tyler asked him to come help run things. Mr. Dahse came on bยงffi.~ith- D-r.-- T-yler!s . staff in May/June. Mr.:. __ Dahse -- recommended-Hecrc)r-Perez-~ acting Director of MaintenancetOl.5f~- -Tyler. Dr. Tyler had no idea who Hector Perez was at that time.

There were two other project managers who applied for the job. Odd thing about

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recommendations was that at least one of the project managers recommended that I-lector Perez get the job during the interview. Dr. Tyler talked to Mr. Dahse about it, confirmed IIectorPerez worked with him and said he was a good manager, better than Mr. Rychlec with paperwork.

Trustees have called Mr. Perez and he always reported it to Dr. Tyler~s knowledge. On the face of it, Mr. Perez has been forthcoming. One of new trustees called him and wanted to see hirri, he told Dr. Tyler, who said "no, that's the Chancellor's job." There was one rumor that Hector Perez was getting money or large amount of money for new house. Dr. Tyler had Chief Investigator look into it and it was false. They looked into Hector Perez's father's church getting large donations in collection plate from people like Pete Medford. Not 100% positive Hector Perez is clean, but based on behavior he seems to be playing by the rules.

Mr. Perez put FBM on hold for a little while based on discussion Dr. Tyler had with him and Winston Dahse ... making sure there is balance of business with FBM and KBR. Towards the end of the year, KBR started getting lion's share of business. FBM still made $6M in one year, without Dr. Tyler knowing that they were getting a sizeable chuck out of Aramark and Chevron. They will probably make in an 18-month period $10-12M. At one point Mr. Perez said he was going to scale FBM back. They were discussing leveling the playing field. He didn't get the sense Mr. Perez had favorable opinions of Pete Medford, FBM's owner. Mr. Perez mentioned that he and Mr. Medford had words at one point. Mr. Perez thinks FBM wants him to lose his job because he may be impediment to them getting more work .

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