Businesses Asked to Fund Governor’s Trip to China

To pay for a coming trade mission to China, Gov. Arnold Schwarzenegger’s political allies are raising tens of thousands of dollars from businesses whose names are largely being concealed.

In addition, at least two of the three public relations firms playing a role in the visit have political ties to Schwarzenegger. One has a West Coast affiliate co-owned by the governor’s chief fundraiser.

Those arranging the weeklong trip, which will follow the special election next month, are crafting an itinerary that potentially offers the traveling business delegation exclusive access to Chinese officials and a private reception with Schwarzenegger. The list of companies joining him is not yet complete.

Schwarzenegger and his supporters want donations to two tax-exempt groups that have championed his interests, and to a government fund meant to boost overseas trade. The money will help cover expenses for the governor’s tour of Beijing, Shanghai and Hong Kong.

The administration says the fundraising effort saves taxpayers money, but experts in public ethics question the governor’s practice and the access it affords private interests.

When private money finances government activity, elected officials can be compromised, they said. And voters cannot hold officials accountable if they can’t learn where all the money came from and what donors may receive in return, they added.

Some of the companies that have been approached are being asked to give $50,000 to a tax-exempt group called the California Protocol Foundation, according to people associated with the firms. The foundation’s board members include the president of the California Chamber of Commerce, the state’s leading business lobbyist.

The foundation’s purpose is to reduce government costs through private contributions, and it will be the main source of money for the China trip, according to a Schwarzenegger aide involved in the planning. The group does not release names of its donors, nor is it required by law to do so.

Officials of Chevron said the oil and gas company has given $75,000 to the foundation in the last two years and will join the governor in China. The company also has given $296,000 to Schwarzenegger’s campaign funds, state records show.

Jack Coffey, director of state government affairs for Chevron, said the corporation gave to the nonprofit group because “we think the state needs to be a player in Asian trade matters.”

Coffey said the company plans to make the trip because of its “significant business interests in China.” Chevron markets liquid natural gas there, company officials said.

More private money will be collected for another tax-exempt group launched by Schwarzenegger last year: the California Commission for Jobs and Economic Growth. It will pay for promotional events and advertising while the delegation is in China, possibly including a billboard featuring Schwarzenegger.

The jobs commission has staged splashy events showcasing the governor to lure employers to California. Executive Director Mark Mosher said he would ask companies for “as much as we can get” to pay for events in China touting California exports.

Administration officials also want agricultural firms and other businesses to help pay for the trip by donating up to $10,000 to a fund maintained by the state’s Business, Transportation & Housing agency.

Agency secretary Sunne Wright McPeak and A.G. Kawamura, secretary of the California Food and Agriculture Department, recently sent a joint letter to businesses asking for donations to the fund.

Records released by the Schwarzenegger administration show that in 2004, business interests and various industry groups representing agricultural products contributed nearly $90,000 to the fund. The money was used to help underwrite Schwarzenegger’s trade mission to Japan last November.

The Chamber of Commerce donated $10,000 to the fund at that time. In his recent actions on bills the Legislature sent him, Schwarzenegger vetoed seven of eight bills that the Chamber of Commerce had labeled “job killers.”

The California Tree Fruit Agreement, which represents plum, peach and nectarine growers, intends to donate to the fund and join the traveling delegation. Blair Richardson, president and chief executive of the group, said growers had been trying to get “open access” to the Chinese marketplace for 11 years. China represents up to $90 million in potential exports, he said.

“We see the governor has the ability to get people to look beyond the politics inherent in most of these things,” Richardson said. “We’d just like to hopefully draw more attention to the fact that it’s time to open this market for our fruit.”

Bob Williams, project director for the Center for Public Integrity, a Washington-based watchdog group, said that if Schwarzenegger deems the China trip important to California’s economy, he should ask taxpayers to foot the bill. Asking private business to pay exposes him to “every kind of conflict of interest,” Williams said.

“There’s no clearer conflict of interest,” he said, than “asking the people who have the most at stake to pay” for the trip.

Margita Thompson, a spokeswoman for the governor, said Schwarzenegger was easing taxpayers’ burden.

“As the three governors before him have done, he will rely on the Protocol Foundation to help alleviate any burden that would have been placed on government, so we can market California opportunities abroad while at the same time minimizing the impact on taxpayers,” Thompson said.

Former aides to then-Gov. Gray Davis said that in 1999, when Davis traveled to Europe and the Middle East with a business delegation, he released the names of contributors who helped pick up the tab.

“We just decided it wasn’t worth taking the heat to try to protect donors,” said Garry South, who is now aiding Controller Steve Westly, a Democratic candidate for governor.

To manage the business delegation traveling with the governor, the Protocol Foundation has hired the public relations firm Apco Worldwide. Two former members of Schwarzenegger’s staff, Cassandra Pye and Denise Davis, joined Apco’s Sacramento office this year. Both are going on the China trip, which begins Nov. 14.

Another public relations firm tapped to help with the visit is Manning Selvage & Lee. The firm retains as its West Coast branch a company co-owned by Martin Wilson, Schwarzenegger’s main fundraising aide.

That firm also won a state contract last year to help arrange the governor’s four-day trade mission to Tokyo.

United Air Lines is offering discounted fares to businesses accompanying the governor to China, according to an Oct. 7 invitation sent out by the Schwarzenegger administration.

United lobbied the governor’s office this year on pending legislation, according to records filed with the secretary of state’s office. And the airline’s in-flight magazine published an article praising Schwarzenegger’s handling of last year’s Japan trip.

“Schwarzenegger artfully steered reporters’ questions away from all things political or controversial and stuck with talking up California’s assets,” the article said.

Up to 50 people representing various business interests are expected to take the China trip, according to those arranging it. A few high-tech and agricultural firms plan to go, in hopes of boosting California exports to that market and drawing attention to piracy of software, music and movies.

Robert Holleyman, president and chief executive of the Business Software Alliance, based in Washington, D.C., said, “California is the home of the U.S. software industry, and the levels in piracy in China are enormous. Nine out of 10 software programs in use in China are pirated.”

One company planning to attend is UT Starcom, an Alameda company that makes wireless communications equipment. Hong Lu, the president and chief executive, is a member of the jobs commission.

China, he said, represents “a tremendous opportunity for California companies to sell their technology and equipment.”

A letter sent by Mosher, of the jobs commission, to various businesses to gauge interest in the trip included an itinerary that listed potential meetings with Chinese government officials in Beijing, a private reception with Schwarzenegger in Hong Kong and various receptions to which business participants could invite associates.

And a memo from Mosher to economic development groups in January lays out the types of deals the state is hoping to announce on the trip: “Please note that we are only interested in products or services that are not controversial.”