Gifts Flow, as Does the Access
When Richard Costigan resigned as lobbyist for the Chamber of Commerce last November, the business group chipped in for a $589 farewell gift, a wood-and-glass model of the domed Capitol where Costigan went to work for Arnold Schwarzenegger.
It was the first of many gifts. Over the next few months, the chamber wined and dined Costigan, the governor’s chief liaison to the Legislature, along with his staff. Other corporate interests also lavished gifts on the aides, who shape the governor’s legislative agenda: $246 tickets to eat, drink and watch the Sacramento Kings’ NBA playoff game in BP’s corporate box; a $199 pass to Disneyland; $324 worth of tickets to Disney on Ice, courtesy of SBC; and dozens of meals and drinks at receptions sponsored by groups such as the California Bankers Assn., Miller Brewing, the California Farm Bureau and the California Building Assn.
Over 10 months, Costigan’s staff accepted more than $5,100 worth of gifts, and the chamber reported spending so much on Costigan that the amount raised a potential conflict of interest for the governor’s advisor.
Costigan’s team are among many key Schwarzenegger administration officials routinely enjoying corporate largess from special interests seeking to influence state decisions.
A Times review of thousands of lobbying reports filed since the recall election found that large corporations and business groups, many with strong ties to the administration, account for virtually all of the tickets to sporting events, dinners and receptions handed out to Schwarzenegger aides.
While the practice of taking tickets and meals has been common among legislators and their staffs for years, Gov. Gray Davis had a written policy directing his appointees not to accept gifts from groups lobbying the administration because of concern that gift-givers would expect something in return.
Peter Siggins, Schwarzenegger’s legal advisor, said he counsels staff to obey the law, which allows officials to accept up to $340 in gifts in a calendar year from any one special interest. The legal limits and public disclosure requirements are intended to ensure that officials’ decisions aren’t swayed by gifts.
The Times analysis of spending reports for the year that ended Sept. 30 found several instances where high-ranking officials skirted the gift limits.
Five of the governor’s senior aides and their families each used more than $340 worth of Kings tickets in a single night. In a town where passion for politics is exceeded only by passion for the local basketball team and tickets to sold-out games are a precious commodity, the governor’s confidantes, their spouses and children sat in luxury boxes courtesy of BP and SBC.
In May, Communications Director Rob Stutzman, his wife and young son watched the Kings triumph over the Minnesota Timberwolves in game six of the Western Conference semifinals, using $767 worth of tickets from SBC. In April, Deputy Chief of Staff Cassandra Pye’s husband and 15-year-old son used tickets valued at $431, courtesy of SBC; Cassandra Pye did not even attend.
SBC spokesman John Britton declined to explain how the firm distributed the $3,946 worth of tickets given to Schwarzenegger administration officials between November and June. Britton said SBC, the dominant phone company in California, was eager to press its case that it has been subsidizing rivals. “We take every opportunity to communicate with state policy makers, including the governor and his staff,” Britton said. “We’re just trying to maintain a good relationship.”
Delivered to Relatives
Stutzman, Pye and others were taking advantage of a legal loophole: Gifts to children or spouses count toward the $340 limit only if they are handed first to the state official, but do not count if they are delivered directly to the relatives. Tickets left in a child’s name at the will call window, for example, are exempt, under a regulation adopted by the Fair Political Practices Commission in 1986. The theory is that the official is not benefiting from the gift.
Margita Thompson, Schwarzenegger’s press secretary, defended the gifts with arguments that suggested the governor’s aides do benefit: Such family excursions provide needed relief for overworked state officials, she said, and bonds between children can translate into political alliances.
“I’ve certainly heard of instances where two little boys whose parents are in opposing parties end up hanging out and bonding as children can uniquely do. And suddenly, you have an even deeper tie,” Thompson said.
Daniel Lowenstein, a UCLA law professor who was the first chairman of the Fair Political Practices Commission, said tickets given to relatives in order to court a state official should be counted as gifts to the official. “As a matter of common sense, if someone takes you out, it’s one gift,” Lowenstein said.
Costigan’s gifts from the chamber, a group that solidified its position as a dominant lobbying force with a string of recent victories, also rely on careful parsing to meet legal muster.
The chamber joined with two other business associations to purchase the $589 farewell gift in part to get around the $340 cap, according to chamber President Allan Zaremberg.
In all, the chamber reported giving Costigan $438 between November and May; the law specifies that if an official accepts more than $340 in any 12-month period, he may have to disqualify himself from decisions affecting his patron. For Costigan, the governor’s principal negotiator with lawmakers and counselor on signing and vetoing bills, that could have meant recusing himself from significant issues during crucial months at the end of the legislative session.
Siggins said there was no need for Costigan to do that, pointing to provisions in the law that allow officials to exceed the legal limits. Siggins initially argued the Capitol model fell under an exemption for “personalized plaques,” although such tokens of appreciation are exempt only if they’re worth less than $250. Siggins later said he still didn’t believe Costigan exceeded the limit, but even if he did, there was another legal threshold: whether the chamber would be affected by pending legislation differently than “the public generally.” Siggins said he found it “very tenuous” to reach that conclusion.
The chamber successfully lobbied the governor to veto major bills this summer, including an increase in the minimum wage, and environmental and labor leaders have criticized the group’s influence in Schwarzenegger’s administration.
The companies offering hospitality as part of their lobbying efforts have varied ties to the Schwarzenegger administration. Most have given money to Schwarzenegger’s campaign committees and several formerly employed top aides to the governor: Chief of Staff Patricia Clarey was once a lobbyist for Chevron, and her deputy, Pye, worked for the Chamber of Commerce; Resources Secretary Mike Chrisman worked for Edison; and his assistant secretary, Melinda Terry, worked for the California Forest Assn. Costigan and his deputy, Yolanda Benson, both came directly from the chamber.
In April, Costigan spoke at a chamber luncheon, explaining, according to a release from the chamber, “how business advocates can most effectively make their positions known to the administration.” In the sell-out crowd were six members of Costigan’s staff, their $34.85 lunches paid for by the chamber.
Costigan and other officials who had received gifts declined repeated requests for interviews.
Patchwork of Practices
California’s laws fall somewhere in the middle of a patchwork of practices across the country. Some states bar gifts altogether; others have lower limits, like New York, where it is a misdemeanor to give or accept a gift of more than $75 but there is no requirement to detail gifts of lesser value.
Registered professional lobbyists in California may not give more than $10 in gifts, but the interest groups that hire them may spend up to the $340 limit, provided they detail the spending. Givers must report every three months; officials who receive gifts are required to list them in an annual filing each April.
The Fair Political Practices Commission enforces the law and can levy fines of up to $5,000 for a violation, but does not initiate investigations and responds only to complaints. They have fined officials seven times since 1996 for exceeding gift limits.
Since the recall election last year, Schwarzenegger has often vowed to end business as usual and blunt the power of special interests. “I think any of those kind of real powerful special interests, if you take money from them, you owe them something because like [economist] Milton Friedman said a long time ago, there’s no such thing as a free lunch,” Schwarzenegger said during the campaign.
Appearances aside, the governor’s press secretary said, accepting gifts from major corporations that lobby state government is part of the Schwarzenegger revolution.
“One of the things the governor came into Sacramento to do is change the culture,” Thompson said. “And one of the things that has to happen to change the culture and create a more bipartisan atmosphere is that people have to talk to each other.”
To that end, Thompson said, key aides watched Lakers and Kings games in coveted corporate seats alongside officials from SBC, IBM, PG&E; and BP. They attended intimate dinners as guests of Edison, Chevron/Texaco and Duke Energy, firms bound by decisions of state regulators. Intel Corp., for example, spent $142 per person at a private dinner at Morton’s steakhouse with Mike Genest, now the governor’s top finance aide; his deputies, H.D. Palmer and Dave Harper; and Cabinet secretary Fred Aguiar, who runs the State and Consumer Services Agency.
Schwarzenegger aides also attended receptions throughout the legislative session, such as the Trash Bash, a $20,000 gala sponsored by the Refuse Councils of Northern and Southern California ($83.98 per person); PG&E;'s celebration of the premiere of “Spinning Boris,” a film about one of the governor’s political advisors ($10 per person); and the Farm Bureau’s annual reception ($49 per person).
A New York Party
At the Republican National Convention in New York City in August, several companies also took advantage of a large Schwarzenegger cheering squad who turned out for the governor’s prime-time speech. Twenty-five aides, including more than a dozen of the governor’s senior advisors and Cabinet members, celebrated that night courtesy of the chamber at a $122-per-person reception at Central Park’s Boat House. Chevron/Texaco, 3M and several other companies threw a $171-per-person party at Avery Fisher Hall the same day. The next night, Pfizer entertained Charlene Zettel, chief of the Consumer Affairs Department, to the tune of $326 at the Rainbow Room. And SBC sent Stutzman and his wife to a Broadway show with tickets worth $199.
“It affords you an opportunity in an informal setting to develop a rapport and to build on a relationship that can therefore be built upon again,” said Thompson, who attended the Central Park reception. Thompson also accepted $307 worth of tickets to Disneyland, meals and a discounted hotel stay at the park in July.
Former Gov. Davis, who himself faced criticism for raising campaign funds from special interests, said he saw potential conflicts in accepting the many invitations that come to governor’s appointees. “Over time, you’ll feel the need to reciprocate. It’s human nature,” he said. “The way to avoid any misimpression on the part of either party is to say ‘I’d prefer to pay my own way.’ ”
Thompson said that would impose an unfair burden. “We work 24 hours a day, seven days a week and do it because it’s a call to public service,” she said. “To ask people on those salaries to underwrite doing their job, that would be kind of hard.” (Many of the governor’s top aides draw six-figure salaries; Thompson, for example, earns $118,015 and Costigan $123,284.)
The bulk of the gifts reported to state agency and department heads revolved around environmental and land-use issues. The guests most in demand were Resources Secretary Chrisman, EPA Secretary Terry Tamminen, Agriculture Secretary A.G. Kawamura, and appointees in their agencies.
Edison, for example, took Chrisman to three meals at the Esquire Grill, one of the governor’s favorite haunts. The Tejon Ranch Co., which has several major projects that will require state approval, took Chrisman and his deputy on a tour of the 270,000-acre property and gave them dinner and souvenir books worth $194 per person.
“It just makes good sense, since we’re the largest private land holding in California, for them to know who we are and what we’re all about,” said Barry Zoeller, vice president and director of corporate communications for Tejon, describing the sessions as get-to-know-you meetings in which officers explained the ranch’s vision of future development.
Company spokesmen say gifts are a worthwhile investment because they help a firm stand out. “There’s a lot of people who clamor for attention from various government officials, and having a relationship allows you to be higher on their calendar,” said Jack Coffey, manager of California state relations for Chevron/Texaco, who played host at dinners for Clarey, Energy Commission Chairman William Keese and Air Resources Board Chairman Alan Lloyd.
Coffey said discussions with Keese, whose commission oversees energy planning, included the company’s potential interest in building a liquefied natural gas facility off the California coast.
The California Assn. of Winegrape Growers usually holds a reception every other year when a new Legislature takes office. This year, it threw a dinner in February, a cocktail reception in early March, and a breakfast at the end of the month, specifically to meet the Schwarzenegger administration. “They had to hit the ground running,” said the group’s president, Karen Ross.
The association also sent cases of wine to Chrisman, Tamminen and Kawamura last December. “Very suddenly, there were new people in town,” Ross said. “It was a ‘congrats, we look forward to working with you, we’re proud of the grapes we grow and we hope you will share this with your staff.’ ” (Tamminen and Kawamura did, aides said.)
Ron Low, a spokesman for PG&E;, which invites state officials to share its Sacramento Kings season tickets, describes the games as “an opportunity to have a broad discussion on important issues that are facing the company and our customers in a relaxed environment.”
Until this year, BP, the largest oil and natural gas producer in the country, handed out thousands of dollars in sports tickets to legislators and their staffs. But in January, the game changed. During the first half of the year, the company gave $3,580 in tickets to Lakers and Kings games to aides who work closely with Schwarzenegger in a range of ways: arranging his schedule, doing advance work, overseeing appointments, running the L.A. office, dealing with the press and chairing the California Energy Commission.
BP spokesman Dan Cummings said the games offered a chance to build relationships, and it was company policy not to talk business: “It allows us to have, in a relaxed setting, the ability to meet those people who are involved in ... all the government decisions that affect our business.”
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By the numbers
A look at gifts reported given by special interests from Oct. 7, 2003, to Sept. 30 to Schwarzenegger administration officials. For details and a searchable database, see latimes.com/lobbygifts.
102: Gifts reported by the Chamber of Commerce to state officials.
42: Number of times companies gave Kings tickets to state officials and their family members.
$7,818: Value of the Kings tickets.
$326: Most expensive reception per person, at the Rainbow Room during the Republican National Convention in New York City. Pfizer played host to Consumer Affairs Department Director Charlene Zettel and gubernatorial aide Jen McDaniel.
$322.17: Most expensive object, an iPod. William Gausewitz, director of the office of administrative law, received it as a farewell gift from the American Insurance Assn., his ex-employer.
$270.89: Most expensive ticket, to see the Lakers play the Pistons in game two of the NBA finals. BP paid for the governor’s appointments secretary, Randal Hernandez; his deputy, Tod Burnett; and the director of the governor’s L.A. office, Billie Greer.
24: Gifts to Legislative Secretary Richard Costigan and his family, the most received by one individual.
16: Number of special interests that gave gifts to Costigan.
$1,681: Value of Costigan gifts.
16: Top Schwarzenegger administration officials receiving 10 or more gifts. In addition to Costigan, they are his deputies, Dennis Albiani and Yolanda Benson; Agriculture Secretary A.G. Kawamura and his deputy, David Nunenkamp; Resources Secretary Mike Chrisman and his deputy, Melinda Terry; Cal-EPA Undersecretary James Branham; Chief of Staff Patricia Clarey and her deputies, Cassandra Pye and Donna Lucas; deputy Cabinet secretaries Paul Miner and Dan Skopec; Appointments Secretary Hernandez; Communications Director Rob Stutzman; and Water Resources Control Board Chairman Arthur Baggett.
3: Most free meals in a single day -- one breakfast and two lunches, all courtesy of rice industry interests -- eaten by Agriculture Secretary Kawamura and his deputy, Nunenkamp.
9: Types of tickets handed out -- to Sea World, Disneyland, California Adventure, Ringling Bros. and Barnum & Bailey circus, Disney on Ice, a Prince concert, a Broadway show, the Lakers and the Kings.
$1,298: Worth of tickets to Kings games, a Broadway show and the circus given by SBC to Communications Director Stutzman and his family.
10: Most groups reporting gifts in a single week, Feb. 21-27. The California Bankers Assn., the California Assn. of Winegrape Growers, the California Farm Bureau, and Walt Disney sponsored receptions; BP, SBC and Miller Brewing gave Kings tickets; and Edison, Chevron/Texaco and the Chamber of Commerce took officials out to eat.
$44,105: Total value of gifts reported.
152: Free lunches.
Source: Lobbyist employer reports filed with the California secretary of state