Watson Solicited Lobbyist for $5,000 Personal Loan

Short on cash for the renovation of a rental home she owned, state Sen. Diane Watson (D-Los Angeles) solicited a $5,000 personal loan last year from a lobbyist who represents health-care clients potentially affected by bills sent to the Senate Health and Human Services Committee that she chairs.

Neither Watson nor the lobbyist, Willie Hausey, reported the loan until the transaction was included as evidence in a Sacramento Municipal Court case last week. In the court case, Watson tried to prove that the tenant in the home, a former legislative aide to Watson, owed her more than $3,000 in back rent.

The state’s Fair Political Practices Act prohibits lobbyists from doing “anything with the purpose of placing any elected state officers, legislative official, agency official or state candidate under personal obligation to the lobbyist, the lobbying firm or the lobbyist’s or the firm’s employer.”

FPPC spokeswoman Sandra Michioku on Tuesday declined to elaborate on whether the loan to Watson violated the provision but added that the agency “will be reviewing the matter.”

The court case produced not only the disclosure of the $5,000 loan, but a charge by the former Watson aide, Jeanette Burton, that the legislator allowed her to oversee the renovation of the rental property during working hours, when she was paid to do state business. Burton also told The Times in an interview that the senator assigned her to do political fund-raising and perform personal errands while working on state time.

Consulting Business

“I have made calls to lobbyists for (campaign) money for her on state time,” Burton said.

Watson countered Tuesday by branding the allegations a product of Burton’s “imagination.” Watson said she fired Burton last August when she discovered the former aide was operating a consulting business on state time.

The Los Angeles legislator also said she saw nothing improper in soliciting the $5,000 loan from Hausey, whom she described as a longtime friend.

Hausey is a lobbyist for health-care clients, such as the Watts Health Foundation, a health maintenance organization, and the Society for California Care Home Operators, a group that cares for the mentally and developmentally handicapped. The lobbyist said he has had several bills before Watson’s committee, including one last year that failed to pass the panel.

“The people who did the (renovation) work wanted the money,” Watson said. “I went to my friend. Forget who he was. He could be governor. He could be anybody. I went to my friend and I said, ‘I need some money.’ He said, ‘Here,’ OK?”

Wrote Check

Hausey said he wrote a check for the loan from his personal account on March 31, 1987, and was reimbursed--with $100 interest--by Watson on May 21, 1987. He said he checked with the state’s Fair Political Practices Commission to see if the transaction should be reported in his lobbying disclosure statement and was advised that personal loans were exempt.

Hausey could not recall who he talked to at the commission, but FPPC Executive Director Gregory Baugher said Tuesday that “the general rule is that personal loans are reportable.” Baugher said he could not say whether this rule applies in Watson’s case because “we’re just now looking into it.”

Both Hausey and Watson amended their financial disclosure statements on March 16, two days after the loan came up in the Municipal Court case.

The rental home, a two-story house with a brown shake exterior, was damaged by fire in June, 1986. Burton, who was Watson’s chief of staff at the time, said that almost immediately, Watson asked her to oversee the renovation, a job that she estimated in an interview took one day a week.

Watson even granted Burton power of attorney in July, 1986, to make decisions about expenditures and the renovation work to be done, court records show.

Burton said the work needed on the house soon mounted to thousands of dollars more than what was paid by the fire insurance company, and Watson approached Hausey for a short-term loan.

Watson said Tuesday that she repaid the lobbyist from an $8,000 insurance settlement she received last May for injuries suffered in a car accident. Burton said in the interview that she was assigned by Watson to work on the personal insurance settlement on state time.

Meanwhile, Burton said she spent more than $6,700 of her own money for additional work on the house. Eventually, Burton said, she moved into the home last March at Watson’s suggestion and agreed to pay $610 a month in rent.

Burton said she decided to stop paying the rent last fall when Watson allegedly declined to reimburse her for the $6,700 in renovation costs.

Watson sued the former aide in January for $3,000 in back rent, but the case was settled last week when the legislator agreed to drop all monetary demands if Burton vacates the house by April 30.

“The woman was in my house for months,” Watson said Tuesday about the settlement. “I want her out in the worst way.”

Burton said she was told by the court that she would have to sue Watson to collect the $6,700.