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Press Release
Sep 25, 2007 - 01:00 PM


CONTACT: Carmen Balber, (310) 392-0522 ext. 324

Governor's Office Ducks Testimony About $17 Million Deal With Schwarzenegger Donor General Motors;

State Audit, Subpoenas Called For If Gov Won't Come Clean
Santa Monica, CA -- Governor Schwarzenegger must immediately disclose all contacts between himself, his staff and General Motors about an exclusive government contract and free advertising on state vehicles given to the long-standing Schwarzenegger donor, said the Foundation for Taxpayer and Consumer Rights (FTCR) today.

The administration refused to testify at a Senate hearing this morning investigating the $17 million contract and the governor's relationship with the automaker. The governor's office also denied a request for documents including discussions of the deal, but emails published yesterday suggest he directly promoted it.

"Governor Schwarzenegger seems determined to hide the truth, but a $17 million contract awarded to one of his oldest supporters can't be ignored. Taxpayers have a right to know if strings were pulled for the governor's donors. A state audit and Senate subpoenas are the only remaining options if he refuses to come clean about the extent of their relationship," said Carmen Balber with FTCR.

General Motors' long financial history with the governor includes:

- $47,000 in campaign contributions the company made to the governor's ballot measure committee, re-election, and 2007 inaugural committee;

- The use of six General Motors vehicles and drivers during a trip to Japan just a few months before California purchased the flex-fuel cars from the automaker;

- $15 million in cash and goods (Hummers) given to Schwarzenegger's nonprofit, Inner City Games, also known as After School All-Stars and Arnold's All-Stars;

- Schwarzenegger had the first military Hummer converted for civilian use and acted as the monster car's first spokesman;

- The loan of a Hummer that can run on hydrogen as a prop for a press conference on Schwarzenegger's "hydrogen highway" plans.

Senator Dean Florez disclosed in today's hearing that one of the state-owned vehicles was wrapped in General Motors' national ad campaign, "live green, go yellow," and driven to the GM booth at a private conference by a state employee on state time.

"Helping General Motors hawk its wares may come naturally to Arnold Schwarzenegger, but it is completely inappropriate for state employees on state time," said Balber.

Under the GM contract, the state purchased more than one thousand "flex-fuel" vehicles that can run on E85, an ethanol blend, but alternative fuels were not used in the vehicles because the fuel was not available. The program was promoted as an example of the administration's commitment to environmental protection but the cars actually produced more air pollution than those they replaced. The administration made an abrupt change in state policy that allowed the purchase of flex-fuel vehicles after they had been banned just the year before, and the flex-fuel contract was designed in such a way that GM was the only company that could meet its requirements.

The San Jose Mercury News published documents revealing that state officials held several months of private meetings with General Motors and had agreed to a pilot project including flex-fuel cars one month before the deal was even officially put out to bid. The contract was then designed with requirements that only General Motors could meet.

Schwarzenegger refused to allow his aides to testify in July at another hearing concerning his administration's interference in California's environmental programs. Chief of staff Susan Kennedy and cabinet secretary Dan Dunmoyer failed to appear before a committee hearing in July to answer charges that they put pressure on the Air Resources Board to weaken greenhouse gas regulations.

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The Foundation for Taxpayer and Consumer Rights (FTCR) is California's leading nonpartisan consumer advocacy organization. For more information, visit us on the web at: www.ConsumerWatchdog.org.




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