PACs Allow Companies to Bypass TINCUP Rules

It was a Tuesday in late 1989 when Van J. Stephens, one of the principals of a Costa Mesa company called FORMA Design Inc., helped launch a political action committee.

To get it rolling, records show that he donated $1,000 of his own money; two days later, one of his associates, Rick Hume, chipped in $250 more.

The same Thursday, FORMA PAC made its modest debut in Orange County politics, quietly joining dozens of other companies in a brand of campaign contributing that has fierce critics, some of whom contend that it undermines the county’s campaign reform law.

For its first contribution, FORMA PAC gave $500 to the reelection campaign of Supervisor Don R. Roth on Nov. 16. A few weeks after that, it handed over another $300 to Supervisor Thomas F. Riley.

But records show that Stephens was pressing for county approval of a development project at the time, representing Costain Homes before the Orange County Planning Commission. And as long as he was an advocate, county law required that Stephens not personally give more than $468 to all five supervisors combined unless he was willing to register as an “influence broker,” limit his future contributions for 12 months and disclose his clients.

No action was taken on the Costain Homes proposal, but Stephens continued lobbying for it at least through March, 1990, Planning Commission minutes show. The personal contribution limit applied during that time.

By giving his money through the company PAC, Stephens kept the contributions legal, but he also thrust his company into the center of what some critics view as the most dangerous threat to fair political campaigns in Orange County. Companies that form their own political action committees effectively skirt the local law, known as TINCUP, because it never mentions PACs and therefore leaves them effectively unregulated.

“That flies in the face of the principle of TINCUP,” Walter Zelman, former executive director of California Common Cause, said of company PAC contributions. “TINCUP said you shouldn’t do that.”

Stephens did not respond to several requests for an interview.

In most cases, company PACs are overseen by a committee of employees, not the company’s board of directors. But the company usually provides administrative support, and contributions to the PAC usually come exclusively from employees or their families.

Most company PACs stay below the threshold at which TINCUP requires supervisors to abstain from matters involving their corporate or individual contributors, but PAC contributing gives them a legal tool to circumvent the law if they choose.

In recent years, company PACs have been regular players in Orange County politics: A Times Orange County Edition investigation found 43 companies whose PACs have contributed to supervisors and board candidates. Together, they have contributed $97,008 to those politicians over the past 14 years. Many of those companies have brought projects or contract requests before the Board of Supervisors.

And yet, even in cases where the company PACs have exceeded the TINCUP threshold, supervisors have never been obliged to abstain from voting on matters that affect the companies sponsoring those PACs.

Among the PACs that participate in supervisors’ races, Southern California Edison emerges as one of the most active, ranking in the top dozen political action committee givers to supervisors during the past 14 years. The SCE employee group has given $26,580 to supervisors and supervisorial candidates, county records show. The company frequently has issues that require approval by the board, though most are routine.

Smaller firms have joined the company PAC network as well. The Keith Cos., a Costa Mesa engineering firm that has won recent contracts with the county for road work, formed its own PAC, though so far its only participation in a supervisor’s race has been to make a single $175 contribution to Supervisor Gaddi H. Vasquez.

Campaign Management Inc., a campaign consulting group headed by Newport Beach political analyst Harvey Englander, also has a PAC. It, too, has made just one supervisorial contribution, and its chances of running afoul of conflict of interest laws are remote, since neither the company nor Englander has requested county government contracts or business.

In the FORMA case, however, Stephens was acting as a lobbyist when FORMA PAC made the contributions and therefore could have been subject to TINCUP’s requirement that influence brokers register with the county clerk.

Stephens had reason to know that: In 1986, he had to register as an influence broker for a period lasting at least a year.

Recently, however, FORMA PAC has let Stephens and his associates keep on giving without violating that law. In 1990--with its coffers bolstered by contributions from other FORMA Design employees--FORMA PAC spent another $1,000 on the Riley campaign. And it has given to other PACs and political races as well.

Riley reviewed the paperwork involving the FORMA PAC contributions, and said they raised questions in his mind.

“This is the first time that I’ve heard of this,” he said in a March 4 interview. “If you’re circumventing the regulations, then you’re not only making it look bad for who you’re giving to, but you’re also setting up where more regulations will come in.”

At the request of The Times, Robert M. Stern, general counsel of the nonprofit California Commission on Campaign Financing, also reviewed the public records on the FORMA case.

“Clearly, that should not be permitted,” said Stern, who wrote California’s Political Reform Act.

Although contributions to supervisors and their campaigns are the focus of TINCUP, the first company PAC contribution to stir widespread concern in Orange County came during a 1988 congressional race.

On March 10, 1988, the Irvine Co. Employees Political Action Committee, known as ICEPAC, contributed $2,500 to Supervisor Harriett M. Wieder’s ultimately unsuccessful congressional campaign. In April, the Irvine Co.’s controversial Laguna Laurel project came before the board.

Wieder voted to approve that project. And though some critics objected, her vote was upheld by the county district attorney.

TINCUP, “as presently worded, does not set forth a sufficient basis to add the Irvine Co. to the list of major campaign contributors to Supervisor Wieder,” district attorney officials said in a statement. “In reaching this conclusion, the district attorney’s office considered the absence of language in TINCUP addressing the relationship between a federal PAC, such as ICEPAC, and its connected organization, the Irvine Co.”

That ended the legal tussle, but it did not satisfy everyone.

To this day, in fact, former Planning Commissioner Shirley L. Grindle argues that the ICEPAC contribution opened the eyes of other contributors, showing them that they could make substantial donations to supervisors and not force an abstention--provided they contributed through a PAC.

As a federal political action committee, ICEPAC has never contributed to a county supervisorial campaign, and company spokesman Michael Stockstill said the PAC has no intention of broadening its participation to include local races.

But others do give in supervisorial contests.

Last year, for instance, Wieder was locked in the toughest reelection campaign of her career--she faced a field of challengers at a time when public opinion polls across the country showed incumbents in trouble.

As Wieder raised money to head off that challenge, she got a boost from the William Lyon Co. PAC, which contributed $5,000 to her campaign. She won her election, and less than a month later, voted to award the William Lyon Co. a $1.4-million settlement to reimburse it for building sections of the Santa Margarita Parkway and Alicia Parkway.

The company had originally asked for more, but after negotiation with the county, the two parties agreed on that amount, and the supervisors ratified the agreement.

Wieder was joined by other board members, including Roth, who received $2,500 from the Lyon Co. PAC in 1990.

The supervisors also routinely approve items dealing with tract maps and other development details that are requested by the William Lyon Co.

If the company made contributions of $2,500 or $5,000 to Roth or Wieder, the two supervisors would be prevented from participating in any of those votes. But because they received contributions from the company PAC, they were not barred from taking action.

That satisfies the legal requirements, but still leaves some observers irritated.

“You have a PAC giving a contribution far in excess of the limit for a major contributor, and she (Wieder) votes on something where there clearly is a conflict of interest,” said Lisa Foster, executive director of California Common Cause. “It’s obvious to everyone that the PAC is the corporation.”

Supervisors vehemently disagree and stress that their actions have been legal and proper.

“If there’s a problem with the law, then change the law,” Roth said. “I obey the law.”

Rick Sherman, senior vice president of the William Lyon Co., echoes that sentiment almost verbatim.

“To the extent that we know what the rules are, we’ll play by the rules,” Sherman said. “If the will of the people of Orange County is to change TINCUP . . . then let’s amend it.”

Still, some of the supervisors concede that company PAC contributions can raise eyebrows.

Supervisor Roger R. Stanton, for instance, said he would not accept a $2,500 contribution from the William Lyon Co. PAC or from any other company PAC that wanted to give over the TINCUP threshold.

“I just don’t want to hassle with those kinds of things,” he said. “When it comes to contributions, you really have to err on the side of caution.”

That company PACs are controversial is evidenced by the fact that supervisors sometimes try to distance themselves from their contributions, even after accepting the money. Roth, for instance, emphasized that he makes no special effort to woo PACs, and Wieder, in an interview last year, insisted that the William Lyon Co. PAC contribution “wasn’t even solicited. . . . It came as a very pleasant surprise.”

Sherman, however, said: “We don’t make unsolicited PAC contributions. . . . We respond to a number of different requests from the candidates.”

Although company PAC contributions do not approach the size or frequency of some other special interest contributors--county employee unions, for instance--some reform advocates are especially concerned about them. No other kind of giving comes closer to violating the spirit and intent of TINCUP, according to Grindle, who helped draft that law and unofficially monitors compliance with it.

Without action to regulate the company PACs, Grindle says county politics will become increasingly tainted by suspect contributions, and developers who have been protected from being asked to give over and over again to supervisors will lose the shield that TINCUP gave them in 1978.

“These business-entity PACs will destroy TINCUP,” Grindle said. “That’s terrible for everyone, including the development industry. . . . They’re going to lose their level playing field if something isn’t done and done soon.”

Times staff writer Mark Landsbaum provided the computer research for this report, with clerical assistance from Darren Tass.

How a PAC Works: The William Lyon Co. PAC

Officers and employees of the William Lyon Co. are able to donate to their company political action committee if they choose to. The PAC, which is overseen by its own board of directors, then decides which candidates among those who request assistance should receive its contributions.

Employees of the William Lyon Co.

The William Lyon Co. PAC

Coming out the pipe:

Harriett M. Wieder:

June 4, 1990: $2,500

Aug. 25, 1990: $2,500

Don R. Roth:

Aug. 10, $2,500

Recent Board action:

Dec. 4, 1990: After winning reelection in 1990, Wieder and Roth join with rest of board in unanimously approving a 1.4 million settlement claim to the William Lyon Co.

Source: Campaign disclosure statements, Board of Supervisors’ minutes.

TRACKING THIS SERIES

* SUNDAY: The impact that unregulated political action committees have had on campaign contributions to the Board of Supervisors.

* MONDAY: County employee unions give thousands to the supervisors, who dole out millions in taxpayer-funded salaries.

* TUESDAY: The transfer technique lets money given to one politician find its way to another.

* WEDNESDAY: How a lobbyist uses a PAC to give thousands to supervisors, who then weigh the fate of his clients.

* TODAY: Companies with their own PACs give at will and still stay within the law.

* FRIDAY: Reformers and supervisors agree that the law is broken but disagree over how to fix it.