Huffington Business Past Hit

Incumbent Democrat Dianne Feinstein released two new television commercials recently that are on the air statewide. Both attack the business credentials of Mike Huffington, her Republican opponent for U.S. Senate.

* THE ADS: The first commercial pictures newspaper clippings about claims that Huffington and his family’s former Texas oil and gas company did not properly pay California taxes. A narrator reads one charge, attributed to the Sacramento Bee, that a subsidiary of Huffco, as the company was known, owes $6.7 million in California taxes. As another story is pictured from the San Francisco Examiner, a narrator says Huffington avoided California taxes by falsely claiming he lived in Texas. The ad then notes that Huffington has declined to release his personal income tax returns as it pictures newspaper clippings on the issue from the San Francisco Chronicle and Los Angeles Times. Feinstein’s second ad refers to other allegations against Huffington contained in a Wall Street Journal profile. A narrator in the ad, referring to the Journal story, says Huffco was fined for violating export laws by selling “shock batons to foreign dictators.” In another business deal, the ad says, Huffington’s company defaulted on a $6-million loan to a bank that later failed at a cost to taxpayers. Both Feinstein commercials end with the line: “Congressman Huffington is a Texas oil millionaire who Californians just can’t trust.”

* THE ANALYSIS: The Feinstein ads are intended to raise suspicions about the Republican candidate, especially since polls show that voters still don’t know him well. They also seek to counter his claim of being a good businessman. The ads make four charges about the candidate and his family’s company. First, the charge that the company owes $6.7 million in California taxes stems from the 1984 bankruptcy of a Huffington subsidiary that operated a refinery near Bakersfield. The state Franchise Tax Board filed a claim for the taxes, but it was denied by a judge who said it was too late. Huffington says the company should not have owed the taxes because of the multimillion-dollar loss it suffered. Second, the charge that Huffington did not pay his California income taxes stems from the fact that the candidate and his wife claimed separate residences for several years. Huffington said he did not owe California taxes because he did not move to the state until 1991, a year after his family’s Houston oil and gas company was sold. His wife, Arianna, however, had been living in the couple’s Santa Barbara home since at least 1988. Newspaper reports note that the Houston residence offered a savings for Huffington because Texas does not have a state income tax and California has one of the nation’s highest. Third, the charge that Huffington’s company improperly sold “shock batons” to foreign dictators is based on a U.S. Commerce Department complaint in the mid-1980s. The agency fined Huffco $250,000 for violating trade restrictions on Indonesia and Singapore--which both have authoritarian governments--by shipping shock batons and other equipment to the countries. Huffington has said he knew of the fine, but not that part of the violation involved shock batons. Fourth, a Huffco subsidiary defaulted on a $6-million loan to a bank that later failed, leaving taxpayers to bail out depositors. Huffington’s campaign said that the bank executives bear responsibility for the failure and that Huffco also took a substantial loss on the deal.