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The Independent (London)
Jan 28, 2004 - 01:00 AM

by ANDREW GUMBEL IN LOS ANGELES

SCHWARZENEGGER CAMPAIGN BROKE LAWS ON FINANCE

Governor broke California's campaign finance laws by attempting to conceal identity of his political donors from voters who elected him
Arnold Schwarzenegger broke California's campaign finance laws by attempting to conceal the identity of his political donors from voters who elected him governor in October, a state judge has ruled.

The ruling, by Loren McMaster, a Sacramento County Superior Court Judge, was a slap in the face to the actor-turned-politician, not least because he came to office promising to end the corrupt system whereby special interest groups buy off elected officials and advance their agenda ahead of the public's.

The bone of contention was a $4.5m (pounds 2.46m) bank loan to Mr Schwarzenegger's campaign, representing almost half of the $10.6m he spent during the unprecedented push to remove California's unpopular sitting governor, Gray Davis, from office.

Mr. Schwarzenegger's plan was to repay the loan with campaign contributions received after he took office - a plan that Judge McMaster denounced for its lack of transparency with the voters and for being the sort of tactic only a candidate of independent financial means such as Mr Schwarzenegger would have access to.

The judge found that Mr Schwarzenegger violated a state campaign finance law introduced three years ago by popular initiative intended to prevent wealthy candidates from borrowing more than $ 100,000 to boost their own campaigns.

Mr. Schwarzenegger's team of lawyers argued that, because the $ 4.5m came from a bank loan, not from Mr Schwarzenegger's accounts, they had remained within the law.

But following Judge McMaster's ruling, his lawyers backed off and said they would abide with the court's findings, which will probably oblige Mr. Schwarzenegger to return any campaign money received to cover the loan and pay the $4.5m out of his own pocket.

Lowell Finley, for the prosecution, who represents labour unions and the Democratic Party, said outside the court: "It is a pretty complete victory."

Jamie Court of the Foundation for Taxpayer and Consumer Rights, a consumer advocate group, said of Mr Schwarzenegger: "He ran to clean up Sacramento and did it basically by violating campaign finance."

But the issue is not likely to do more than superficial political damage to Mr Schwarzenegger's standing. He has a much bigger problem in attempting to persuade the electorate to approve $15bn bond that forms the centrepiece of his solution to California's crippling budget crisis.

Californians will vote on the bond on 2 March, the same day as the presidential primary, and early opinion polls suggest it is headed for defeat.






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