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CBS-TV Evening News
Jul 14, 2005 - 01:00 AM

by ANCHOR: BOB SCHIEFFER - REPORTER: SANDRA HUGHES

Critics claim multimillion-dollar consulting deal between CA Gov. Arnold Schwarzenegger & publisher of fitness magazines produces conflict of interest

BOB SCHIEFFER, anchor: There is a new political controversy today surrounding California Governor Arnold Schwarzenegger. He says he has done nothing wrong. But it turns out that he signed a multimillion-dollar consulting deal with some fitness magazines just before he took office, and now charges are flying that that has produced a conflict of interest. Here's Sandra Hughes.

SANDRA HUGHES reporting: California's governor will need all the muscle he can muster to fight his latest political battle. No one's accusing him of anything illegal, but critics are accusing him of a conflict on interest involving the big money he's paid by major muscle magazines.

Mr. DOUG HELLER (Foundation for Taxpayer & Consumer Rights): Governor Schwarzenegger failed to disclose a contract with these muscle magazines, and as a result, he has violated his trust with the public of California.

HUGHES: According to just released documents, the one-time Mr. Universe is paid to consult with American Media Operations, which owns Muscle & Fitness and Flex magazines, among others. The deal nets him up to 1 percent of their annual advertising revenue, or at least $5 million. Critics point out that these magazines depend heavily on the hundreds of ads in them that promote dietary supplements.

Just last year, the governor vetoed a bill that would have more closely regulated the supplement industry, the same industry that pays for all those magazine ads.

State Senator Jackie Speier sponsored that bill vetoed by Schwarzenegger.

State Senator JACKIE SPEIER (Democrat, California): People are suggesting he has a conflict of interest. Whether he does or not, the right thing to do is to sever his relationship with those magazines.

HUGHES: In the documents filed by American Media, the governor is referred to as 'Mr. S.' The company agrees to contribute $100,000 to the Arnold Classic, a bodybuilding competition, and pay a quarter million to the Governor's Council on Physical Fitness. Schwarzenegger signed the contract just days before being sworn in. Today his office said the governor had done nothing wrong. Mr. ROB STUTZMAN (Governor Schwarzenegger's Spokesman): There is no technical conflict. No one can bring us a theory that suggests that there is. HUGHES: But it's one more hit from a governor already suffering from his worst approval ratings ever. Sandra Hughes, CBS News, Los Angeles.




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