Special-Interest Contributions Aid Connell Campaign

By JEFFREY L. RABIN

March 9, 2001 12 AM PT

TIMES STAFF WRITER

Pressed to raise money for the Los Angeles mayor’s race and to rebuild her treasury after running for statewide office, state Controller Kathleen Connell has tapped companies with state and local interests and has laid the groundwork for using campaign solicitations to pay off personal debt.

Notwithstanding Connell’s insistence that she is a candidate “independent of special interests downtown,” an examination of Connell’s fund-raising record as a candidate for mayor and as state controller shows the two-term state official has availed herself of substantial special-interest campaign cash, locally and statewide.

While she speaks critically of the plans to build one of the biggest developments in the city’s history at Playa Vista, for instance, Connell has accepted substantial campaign contributions from the project’s developer in recent years.

Her campaign contribution reports show that representatives of the consulting firm Deloitte & Touche are among the biggest donors to her mayoral race. So are executives of Occidental Petroleum and officials of a Beverly Hills-based investment company, Colony Capital.

Other major interests, including real estate and development companies, banks, cable television, consulting companies, contractors, investment bankers, some law firms and venture capitalists, appear on her mayoral campaign finance reports. Many of those firms either do business with the city or have an interest in city policies, ranging from zoning decisions to the award of franchises.

Connell declined to be interviewed for this story. Instead, she referred questions about her fund-raising activities to John Shallman, her campaign consultant. “In order to win, you have to have money,” he said. “In order to win, you have to be aggressive in raising it.”

Fund-raising is an “unfortunate and unpleasant part of the job,” Shallman said, but “it is a political reality.”

Despite a $1,000 limit on the contributions that candidates can accept to run for citywide offices, Connell, who entered the race last fall, raised $1.1 million for the mayoral campaign by the end of the latest reporting period last month. In the first two months of this year, she raised more than any of the major candidates in the crowded field.

Beyond the mayor’s race, the campaign finance reports of the state controller’s political committee show the larger connection between Connell and her contributors. Although she will be forced by term limits to leave office next year, Connell continued to raise money for her state committee last year--with no contribution limits.

At the state level, Connell raised an additional $728,923. She wound up last year with $1.6 million in her state campaign coffers. Her campaign still owes Connell nearly $2.1 million for loans she made between November 1993 and May 1995 to advance her political career. As a result, the money she is raising for her controller’s account today in effect is money that can be used in the future to pay off her own loans to the campaign. To date, Connell’s campaign has not repaid any of those loans.

Shallman defends Connell’s fund-raising to repay loans to her controller’s campaign, saying it is no different than the practice of other officeholders who incur personal campaign debts. “It does not in any way compromise her as a candidate for mayor of Los Angeles,” he said.

As controller, Connell oversees state finances and serves on the board of state pension funds, tax agencies and the commission controlling state lands. That gives many kinds of companies a vested interest in seeing that she views them favorably.

In some cases, those companies or their executives have contributed to her campaigns. For instance, she has received $35,000 since 1998 from Playa Capital Co., the developer of the Playa Vista project. The project north of the Westchester Bluffs has been the source of controversy for more than a quarter-century.

‘What Did They Get? Nothing’

The state owns a piece of the land that it picked up in lieu of taxes from the estate of industrialist Howard Hughes, who once held the property. An option for the developer to buy back that parcel expired at the end of last year.

Since then, Connell held a public meeting in January to take testimony sharply critical of development and has called for an environmental review of the state land to determine if seismic issues and methane gas deposits make the property unsuitable for building.

Connell’s campaign consultant, Shallman, said her acceptance of contributions from Playa Vista and her refusal to support the project is “a refreshing departure from what you would expect.”

Richard Chivaro, chief counsel for the controller’s office, bluntly dismissed any suggestion that Playa Vista’s campaign contributions influenced Connell.

“What did they get?” he asked. “Nothing.”

But Playa Vista is hardly the only special interest that has given to her campaigns.

Occidental Petroleum appears often on Connell’s mayoral campaign statements. Connell received at least $16,000 in separate checks from Occidental, its executives, attorneys, officials or their spouses. The oil company also gave $25,000 in the last half of 2000 to her controller’s campaign.

In the latest reporting period, the largest single source of mayoral campaign donations came from almost three dozen members of the consulting firm Deloitte and Touche. Together, they gave more than $25,000 to Connell’s campaign.

Three years ago, the company had a major contract to conduct a performance audit for the state Franchise Tax Board, which Connell heads. The firm has no current contracts with the tax agency, a spokesman said.

Representatives of Deloitte and Touche do represent clients before the tax agency, according to minutes of board meetings.

Shallman did not rule out the possibility that some of Connell’s contributors may have business pending before her as an elected official. “You show me a candidate for public office today . . . who has not accepted contributions from individuals or interests that may have issues that come before them,” he said.

In general, Chivaro said Connell’s policy has been to abstain from voting on matters involving campaign contributors. “She is extremely cautious,” he said.

Bob Stern, president of the Center for Governmental Studies, a Los Angeles-based organization that promotes campaign finance reform, was not surprised by Connell’s fund-raising. “This is how the game is played,” he said. “You raise money from people who appear before you. She is no different from anybody else.”

Stern said it is the overall system of financing election campaigns that needs to be changed.

In the mayor’s race, Connell has received financial backing from the real estate industry, including such sources as Casden Properties, Irvine Co. Chairman Donald Bren, Donald Koll, Lincoln Property Co., Legacy Partners, C.J. Segerstrom and Sons, J.H. Snyder, Shappell Industries, James A. Thomas, Trammel Crow, William L. Tooley and Watt Group. New York real estate interests also have contributed.

Los Angeles developer and attorney Douglas R. Ring, whose wife, Cindy Miscikowski, is a member of the City Council, gave $1,000. Ring also has donated to Connell’s state campaign in previous years, as have numerous other developers.

An array of other construction interests have donated to her mayoral campaign, including Pardee Construction, Birtcher Construction, several concrete manufacturers and the land use planning firm, Psomas.

As mayor, Connell would have the power to approve or veto major city planning decisions, as well as influence over what major public projects will be undertaken. As a result, the mayor is an important figure to the real estate and development communities.

While some companies and individuals have supported Connell at the state or local level, others have helped her in both efforts.

For instance, Cisco Systems, its president and chief executive officer, John T. Chambers, other officials of the company and their spouses have given at least $10,000 to the mayoral effort. But the extent of Cisco’s financial largess to Connell is dramatically greater to her state campaign committee, which is not restricted by the local campaign finance rules. Chambers, the company, and other Cisco executives have donated at least $80,000 to the controller since 1998.

Another Silicon Valley firm, Intuit, a maker of financial software, ranks high on Connell’s donor list. Scott D. Cook, a founder of the company, gave $25,000 last year. The company donated an additional $20,000. Cook and other company officials and their spouses also have given to the mayoral campaign.

L. John Doerr, a partner in Kleiner Perkins, a Silicon Valley venture capital company, gave $35,000 to her state campaign last year.

Peter C. Wendell of Sierra Ventures, a San Francisco venture capital firm, gave $25,000 to the state committee, plus the maximum $1,000 contribution to the mayor’s race.

Telecommunications, utilities, oil and energy companies have also donated to her controller campaign and in some cases to her mayoral campaign as well.

Nuevo Energy Co. of Houston gave Connell a total of $32,000 during the last three years as controller. And in the mayor’s race, Connell received at least $7,000 from officials of the company. The company has oil drilling leases off the Southern California coast and is seeking to extend drilling into state waters off northern Santa Barbara County. That issue may come before before the State Lands Commission later this year. Connell is a member of that commission.

Shallman argued that Connell’s success at raising money from business interests should not be viewed with skepticism but rather as a validation of her effectiveness and vision.

“It behooves them,” he said, “to have someone in that position who can encourage business development and growth.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Raising Campaign Cash

State Controller Kathleen Connell has tapped major donors for campaign contributions locally and statewide. Among the most notable:

Large contributors to her mayoral campaign include:

Representatives of the consulting firm Deloitte & Touche: $25,000

Executives and officials of Occidental Petroleum: $16,000

Members of investment company, Colony Capital: $15,000

Executives, spouses and officials of Cisco Systems: $10,000

Officials of Nuevo Energy Co.: $7,000

Major contributors to her controller’s campaign in recent years include:

Executives, officials and spouses at Cisco Systems: $80,000