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Associated Press
Oct 21, 2004 - 01:00 AM

by TOM CHORNEAU, Associated Press Writer

Governor's job commission fights conflict of interest disclosure

SACRAMENTO -- Gov. Arnold Schwarzenegger's jobs commission, which he announced to great fanfare in March and which has arranged details for two of his foreign trips, is fighting state conflict of interest and financial disclosure policies.

Although Schwarzenegger campaigned last year for more openness in government and has referred to the California Commission on Jobs and Economic Growth as "my team," the commission has told the state's Fair Political Practices Commission that it is a private group with little connection to the governor or public policy. Therefore, according to a letter from the commission's attorney, it is exempt from adopting conflict of interest policies or requiring its members to file investment disclosures.

"Although the governor and some other state officials have been invited to serve in an honorary role in order to foster a synergy between the private and public sector, these officials have no authority to direct the commission's activities," attorney Kathryn Donovan wrote in a September letter to the FPPC.

While no FPPC officials would comment on why they believe Schwarzenegger is behind the commission, the governor and his staff have given that impression often. For example:

- A March 10 press release from the governor's office headlined, "Gov. Schwarzenegger names job promotion team," announced the members of the commission.

- During the event introducing the commission in Long Beach, Schwarzenegger called the new organization "my team." Virtually every news account from the press conference referred to Schwarzenegger as appointing the commission members.

- The organization, led by Los Angeles attorney Ron Olson and San Francisco financier Warren Hellman, helped organize meetings with Israeli business executives during the governor's trip to the Middle East in May. The group is also involved in setting up similar meetings with Japanese businesses for trade mission Schwarzenegger is taking to Tokyo next month.

- Among the 24-members of the commission are some of Schwarzenegger's biggest campaign supporters, a longtime business associate and three members of his staff.

But even if a legal review proves otherwise, the aggressiveness with which the jobs commission is fighting conflict of interest requirements seems to contradict campaign promises Schwarzenegger made and has repeated since taking office to open up government activities to public review and break down the influence of big special interests.

"In spite of his promise for a government that is open to the people of California, Schwarzenegger is essentially creating a shadow government that is behind the curtain and operating without accountability," Doug Heller of the Foundation for Taxpayer and Consumer Rights, a Santa Monica-based interest group.

This isn't the first time Schwarzenegger's activities have been shielded from scrutiny.

So far, he's funneled almost $250,000 to another private nonprofit corporation aimed at promoting his political interests without disclosing how the money is being spent or where it came from, campaign finance records show.

A spokeswoman from the governor's office declined comment Thursday.

The FPPC is reviewing the jobs commission issue, and a spokeswoman said she did not know when it would be resolved.

At issue is the role the governor and his staff had in creating the commission and directing its activities.

While the governor and the commission co-chairmen said in March that the new organization would receive no public money and operate as a private nonprofit corporation, the FPPC wrote the group in July saying some private nonprofits are still considered government entities because of how they are formed and who controls membership.

Mark Mosher, the commission's executive director, said the organization is private and Schwarzenegger has only an honorary role.

"We are not doing state business," he said. "We don't pass laws, we don't influence government service. We exist to promote the state as a place to locate business."

Olson and Hellman created the group, Mosher said, and Schwarzenegger was just the inspiration.

"He (Schwarzenegger) said, 'Hey, I think we ought to do something because I promised to do that during the campaign,"' Mosher said. "He said to Warren and to Ron, 'Could you guys do something?"

All of the commissioners were recruited by Olson, Hellman or himself, Mosher said.

Calls to other members of the board were not returned, including Rachel Berliner, co-founder of a $100 million frozen food company; Paul Folino, chairman and CEO of Emulex Corp.; and John Wilhelm, president of the Hotel Employees and Restaurant Employees Union.

While Mosher called the group's activities completely independent of the state and the governor's office, he acknowledged visiting Tokyo earlier this month to prepare for the governor's trade mission.

Mosher said his job was to set up meetings for members of his commission with Japanese businesses who might be interested in making investments in California. He said he has no knowledge of whether the governor or members of his staff would attend any of those meetings.

Schwarzenegger's press secretary Margita Thompson said Tuesday the governor would have at least two business-related events in Tokyo during the Nov. 10-13 trip as well as private meetings.

Although not required under IRS guidelines, Mosher released the commission's income to date of $380,000 from its members so far and promised a more detailed disclosure of contributions in the near future. But he said, the group did not believe it should comply with state conflict of interest codes.

Besides ongoing promotion of California, the commission is paying for a $600,000 national billboard campaign that feature the governor calling for businesses to come to California. The group also paid the cost of relocating a small printing company from Las Vegas to Los Angeles last month that the governor used as a press conference.

On the Net:

California Commission on Jobs and Economic Growth - http://www.4cajobs.com/

Fair Political Practices Commission - http://www.fppc.ca.gov/




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