Watson Fined $2,000 Over Loan by Lobbyist

State Sen. Diane Watson (D-Los Angeles) has agreed to pay a $2,000 fine for failing to disclose a $5,000 loan she received from a health care industry lobbyist, according to documents released Monday by the Fair Political Practices Commission.

Meanwhile, the attorney general’s office said it is reviewing allegations that Watson improperly used campaign funds and her legislative staff to prepare the final manuscript for her doctoral degree.

In the case before the commission, the FPPC’s review concluded that Watson’s failure to reveal the 1987 personal loan from lobbyist Willie R. Hausey on her annual income disclosure statement “violates the public trust and impugns the integrity of government.” Watson chairs the Senate Health and Human Services Committee.

However, the staff report also said “there is no evidence that Sen. Watson acted on or participated in any legislative action involving Mr. Hausey’s clients, either immediately prior to or following the $5,000 loan.”

The $2,000 fine represents the maximum allowed under the law for a single violation of the Political Reform Act, passed by voters in the wake of the Watergate scandal. The law allows legislators to arrange personal loans from anyone as long as the transactions are reported with the FPPC.

‘Personal Matter’

Reached by phone in Atlanta where she is attending the Democratic National Convention, Watson said that she initially failed to report the loan because she regarded it as a “personal matter” between herself and Hausey, a longtime family friend. She submitted an amended disclosure statement after a former member of her legislative staff revealed the loan in testimony in a civil court case.

“I did report the loan,” Watson said. “The only issue with the commission was that I reported it late.”

The veteran lawmaker said she paid the fine, not with personal funds, but with a check from her political campaign committee while awaiting an opinion from the attorney general’s office on whether she can legally do so.

She may have to pay the fine with her own personal funds. In reply to Watson, Richard D. Martland, chief assistant attorney general, pointed to an earlier legal opinion, which suggests that only fines for campaign-related or governmental activities can be paid out of campaign funds.

The attorney general’s review centers on separate allegations that the senator improperly used campaign funds to pay a professional typist to prepare the final draft of her doctoral dissertation and that legislative staff working in Watson’s Capitol office also helped to type the manuscript during working hours.

“We have initiated a review of the allegations about the use of staff and resources,” said Alan B. Ashby, a spokesman for state Atty. Gen. John K. Van de Kamp. “It’s in the preliminary stages.”

Watson’s problems with the FPPC began in March, 1987, when she turned to lobbyist Hausey for a short-term loan of $5,000 to refurbish a house she owns in Sacramento, which was damaged by an arsonist.

The check was made payable to Jeanette Burton, an aide to Watson who was also supervising the repairs to the senator’s house, according to the commission’s report. Watson repaid the loan in May, plus $100 interest.

Loan Not Reported

Although state law requires that legislators report all loans in excess of $250, Watson failed to include the loan on her yearly economic disclosure statement, filed March 1, 1988. Burton revealed the loan in a court case on March 14 and the next day Watson amended the disclosure statement.

Hausey, who also failed to report the loan on his economic statements, said he did not understand the law and simply regarded the loan as an act of friendship, not an attempt to influence a legislator.

“I’ve eaten meals at her house and her mother’s house before I was a lobbyist,” Hausey said. “Now I’m supposed to report how many biscuits I had and how many pieces of sausage.”

The lobbyist said he regularly attends meetings of the committee Watson chairs and testified before it recently. But he said that this year his clients have not supported any legislation. Among his clients are the Society for California Care Home Operators, Amerimed, a health maintenance organization, and the Greater Los Angeles Council on Deafness.