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Battle over funding pits research groups against each other

Monday, September 29, 2003

SAN ANTONIO (AP) - The Central Texas research institute where space shuttle accident investigators conducted tests that replicated damage to Columbia from foam insulation is locked in a legal battle with a sibling science organization over millions of dollars in cash.

Six decades after their founding and 41 years after their founder's death in a Montana plane crash, Southwest Research Institute and the Southwest Foundation for Biomedical Research headed for court late last week in a squabble over their parent's final wishes.

In the fight over the institute's cash reserves, foundation officials contend they are entitled to substantial cash payments from the institute, now that the research enterprise is pulling in $339 million worth of contracts a year from government agencies, Fortune 500 companies and garage-based entrepreneurs with ideas they want to test or develop into products.

The groups' beginnings date to just before the United States entered World War II when oilman, inventor, author and adventurer Tom Slick founded what is now the biomedical foundation, dedicated to basic biological research and known for its large colony of research baboons.

Slick several years later established the sister organization, SRI, with a vision of putting a phalanx of scientists to work on profitable contract research for private industry and the government. Both organizations, next door to each other near Loop 410, have grown financially, attracting major research grants and industrial contracts.

Documents unearthed from a shed near the foundation's baboon corral last year suggest that Slick wanted the institute to support the foundation because he believed that little money would be made in unraveling the mysteries of life.

Institute officials say they've made payments to the foundation, a minimum of $50,000 a year and $100,000 last year. But foundation trustees are focusing on what they say is a $55 million cash reserve that the research institute has accumulated over a number of successful years. They contend the foundation is obligated to share in that prosperity.

The institute's executive vice president, Walter D. Downing, said it has $70 million in obligations, including a $7 million biweekly payroll for 2,800 employees. An additional $14 million is advance payments from clients for work not yet performed, he said.

"Just because you have money in the bank doesn't mean you don't have to pay a mortgage or car loan or buy groceries," Downing told the San Antonio Express-News in Monday's editions. "Is it prudent for me to give that money to a charitable organization knowing I have all these obligations to fulfill?"

The foundation's 33-member board of trustees initiated the lawsuit. It includes car dealer B.J. "Red" McCombs, SBC Chairman and Chief Executive Officer Edward E. Whitacre Jr., Valero Chairman Bill Greehey, car dealer Robert M. Cavender, Tower Life Insurance President James P. Zachry, Holt Companies Chairman B.D. Holt, and Clear Channel President and CEO Mark Mays.

The institute's board of 15 members also lists prominent names, including Ultramar Diamond Shamrock Chairman Emeritus Roger R. Hemminghaus and Zachry Group CEO H. Bartell Zachry Jr.

According to papers filed in the lawsuit Wednesday at Bexar County Probate Court, the foundation's board of directors contended that the institute "has willfully dishonored Mr. Slick's philanthropic vision and plan by denying its obligation to provide financial support to the foundation."

It has a long connection to many of San Antonio's most prominent and affluent families. The Argyle, a private club housed in an Alamo Heights mansion, is dedicated to philanthropic support of the foundation, which also subsists on federal grants.

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