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Associated Press
Jul 14, 2005 - 01:00 AM

by TOM CHORNEAU, Associated Press Writer

Schwarzenegger faulted for lucrative deal with fitness magazines

SACRAMENTO, CA -- Gov. Arnold Schwarzenegger has styled himself as the slayer of special-interest politics in California since making the jump from movie stardom to the governor's office in 2003.

He has vowed to reform a political system that he says returns favors for money, promising that his governorship would be marked by openness and full disclosure. He now finds himself on the receiving end of the same criticism he has leveled at the capital's more entrenched interests.

On Thursday, he came under fire after a Securities and Exchange Commission filing showed he has a multimillion dollar deal with several fitness magazines that promote nutritional supplements. Schwarzenegger last year vetoed legislation that could have harmed the industry, a bill that sought to crack down on the use of performance-enhancing substances in high school sports.

"To start, Schwarzenegger has to sever his contracts and return the money or he should resign," said Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights in Santa Monica, a frequent critic of the governor. "He has to choose between his public obligations and private business deals."

One lawmaker said the arrangement presents a conflict of interest and asked the governor to cut ties with the magazines.

"The governor of the state of California makes some important decisions everyday. Today, he has to make a decision about a conflict of interest - his own," said the bill's sponsor, state Sen. Jackie Speier, D-Hillsborough. "It's time for him to step up and show some leadership."

The disclosure showed Schwarzenegger is being paid at least $5 million over five years to act as a consultant for several magazines published by American Media Inc., including Flex and Muscle & Fitness. The publications derive much of their profit from firms advertising nutritional supplements.

A spokesman for the governor defended the arrangement, saying Schwarzenegger has had dealings with the magazines' publisher for more than three decades.

"There is no technical conflict," spokesman Rob Stutzman said during an afternoon news conference.

He said the arrangement was fully disclosed last spring when Schwarzenegger announced he would become executive editor of the two magazines. The governor also filed a financial report with the state saying he was being paid, although the filing did not specify the amount.

Stutzman said the business relationship did not create a conflict because Schwarzenegger had no contact with the magazines' advertisers.

"There's not a direct link to the governor's activities and supplements," he said in an interview. "There may be an indirect one that can be suggested, but the governor is not out there selling advertising for the supplement industry."

He added that Schwarzenegger has been a proponent of dietary supplements since his days as a bodybuilder and questioned the current interest in the contract.

"It's the lemming attitude of the press," he said. "I don't think anyone else cares about this but you."

The governor does not accept his $175,000 annual salary from the state, and California law allows elected officials to keep outside jobs.

The contract between Weider Publications, a subsidiary of American Media, and Schwarzenegger's production company, Oak Productions Inc., states that Schwarzenegger will receive 1 percent of the magazines' advertising revenue each year for five years. The payment will be no less than $1 million a year but could reach much higher, according to the contract.

Experts and lawmakers differed about whether Schwarzenegger's contract with the magazines and his veto of the Speier bill represented a conflict.

One government expert said Schwarzenegger's veto was acceptable because Speier's bill had the potential to affect an industry rather than an individual or specific entity.

"There's considered to be an exemption from disqualification on industry bills," said Bob Stern of the Center for Governmental Studies in Los Angeles.

"But the larger question is - should he be receiving the income? And the answer is no. I just don't know of a modern day governor receiving outside earned income, of any sort," Stern said. "... Outside income from someone who wants something from the state, that's crossing over the line."

Schwarzenegger's lone public event Thursday was a brief appearance before a federal commission charged with recommending a list of military base closures.

The governor arrived at the noontime hearing at a high school in west Los Angeles, driving past a phalanx of reporters shouting questions and responding with a wave. Schwarzenegger made his remarks to the commission and left much the same way, giving a wave and a thumbs up sign as he passed.

The governor's financial disclosure filings with the state show only that he received an undisclosed amount from American Media, which also publishes The National Enquirer, Star and other celebrity tabloids.

Schwarzenegger writes monthly columns for Muscle & Fitness and Flex, and last year announced that he had agreed to serve as executive editor for both.

At the time of the announcement, Schwarzenegger said he would take a salary that was "petty compared to the movies." The magazines also agreed to donate $250,000 a year to the California Governor's Council on Physical Fitness.

The SEC filing, which refers to Schwarzenegger as "Mr. S," also shows that American Media is paying $100,000 a year for five years to the Arnold Classic, an annual bodybuilding competition in Ohio.
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Associated Press Writers Beth Fouhy in San Francisco, and Michael Blood and Alex Veiga in Los Angeles contributed to this report.




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