Backers of Ads Skirt Rules on Disclosure

A television ad campaign portrayed as an independent effort to help Gov. Arnold Schwarzenegger has been bankrolled partly by a group with deep ties to his political operation.

An official with the New Majority, a Southern California Republican group at the core of Schwarzenegger’s fundraising apparatus, said its members have given about $1 million to the Washington, D.C., business group that is the public face of the ads: the U.S. Chamber of Commerce.

By pumping the ad money through the chamber, well-heeled New Majority members have bypassed requirements that their donations be publicly disclosed. And they skirted the strict contribution limits -- $22,300 each for the June 6 primary and again for the November general election -- that would apply if they had donated directly to Schwarzenegger.

The chamber, which has put out the commercials in what it calls an “independent issue advocacy program,” is not required to report where the funding comes from or adhere to donation limits.

Disclosure would be required after April 22, within 45 days of the primary. The ads stopped running late last week, and it is unclear whether more are planned.

The latest spot that ran statewide featured reminders of Gray Davis’ governorship and the exhortation “Remember?,” coupled with upbeat images of Schwarzenegger.

Chamber officials would not say how much the ads cost. But Andy Gharakhani, executive director of the New Majority’s Los Angeles chapter, characterized the group’s contribution as “significant.”

The New Majority includes wealthy businesspeople, Schwarzenegger campaign aides and gubernatorial appointees.

The group’s membership director is Renee Croce, who is also finance director of one of Schwarzenegger’s main fundraising committees. She works out of a Santa Monica building that Schwarzenegger owns and where he keeps an office.

Croce’s office referred calls to the governor’s campaign staff, which declined to comment publicly.

In membership materials obtained by The Times, the New Majority, which supports centrist Republicans, says its top political goal this year is Schwarzenegger’s reelection.

The group’s promotional literature quotes Schwarzenegger as saying, “I can always count on the New Majority.... They are a large part of my political success, and I am deeply grateful to them.”

Government watchdog groups denounced the chamber ads, depicting them as a ploy for concealing who is behind them and for flouting the will of voters, who approved fundraising caps in 2000 under Proposition 34.

“The public should be able to trace where the support is coming from,” said Susan Lerner, executive director of the California Clean Money Campaign, “and draw their own conclusions as to whether this is an effort that is influenced -- directly or indirectly -- by the governor or his supporters.”

California law allows independent groups and individuals to engage in political activity that may help or disparage a candidate.

Disclosure requirements and fundraising caps depend on such variables as timing, message and whether the group acts independently or coordinates with a candidate.

The chamber ads have not explicitly called for Schwarzenegger’s reelection -- an important distinction under the law. If they had, they would no longer be considered “issue” ads, and the chamber would be required to publicly report the donations.

The chamber faced heavy criticism for its actions in a 2004 attorney general’s race in Washington state. It spent $1.5 million on ads criticizing one of the candidates, routing the money through a Seattle group that declined to reveal the source of the funds.

A county judge ultimately ruled that the spending violated state laws holding that campaign contributions must be reported. The case is on appeal.

Gharakhani said the New Majority has donated about $10 million overall to the governor’s campaign causes, beginning with his push for after-school programs when he was a private citizen in 2002.

One New Majority founder, Gary Hunt, is Schwarzenegger’s campaign finance chairman. Hunt, in an interview, said he knew nothing about the chamber’s ad campaign.

Paul Folino, chairman and chief executive of Emulex, a high-tech company, chairs the New Majority’s Orange County chapter. He has donated $1.3 million to Schwarzenegger’s political funds over the last four years, state records show. Folino did not return calls for comment.

Another New Majority founder is billionaire Donald Bren. Bren is chairman of the Irvine Co., an Orange County real estate firm that has put $410,000 toward Schwarzenegger’s political goals in the last two years.

The Irvine Co. has sought a donation to the TV ad campaign from Chevron Corp., according to a Chevron official. Chevron decided not to make a donation because of other campaign spending priorities, according to the official, who asked not to be named because, he said, the overture from Irvine was “preliminary.”

Irvine Co. spokesman Larry Thomas did not return calls for comment.

For help with the ad project, the chamber has hired consultant Robert C. Lapsley of Sacramento. In the last few months, Lapsley has met with the governor and First Lady Maria Shriver as he was being considered for senior positions in Schwarzenegger’s administration and in his reelection campaign. Lapsley, who declined to comment, has not taken a job.

Lapsley is a former aide to George Argyros, an Orange County developer and former U.S. ambassador to Spain. Argyros too is a founder of the New Majority and a member of the U.S. chamber’s board of directors. He co-sponsored a luncheon for Schwarzenegger donors in Newport Beach in January.

The New Majority’s promotional material contains a list of appointments that members have received. It includes A.G. Kawamura, whom Schwarzenegger appointed secretary of Food and Agriculture, and Folino, who was named to a Schwarzenegger jobs commission.

Ned Wigglesworth, an analyst with TheRestofUs.org, a government watchdog group in Sacramento, called the chamber campaign a “sham.”

“We have limits so that wealthy interests don’t gain a disproportionate say in the election process,” he said. “These sham issue ads are a way to enable wealthy interests to have a disproportionate say.”

Both the chamber and the Schwarzenegger campaign say they have not consulted each other on the 30-second spots.

“The U.S. chamber’s ad was not run in coordination with the governor’s campaign for reelection,” said Julie Soderlund, a spokeswoman for the Schwarzenegger campaign.

The first ad appeared March 8 and focused on Schwarzenegger’s proposed public works construction project. When that foundered in the Legislature, the ad was replaced.

In the most recent commercial, the announcer reminds viewers of multibillion-dollar budget shortfalls, rolling blackouts and a hike in the vehicle license fee under Gov. Davis. The screen then fills with pictures of Schwarzenegger taking the oath of office, holding a child’s face in his hands, mixing with enthusiastic crowds.

“Arnold Schwarzenegger delivered,” the announcer says.

As the ad fades out, a message at the bottom of the screen says it was paid for by the U.S. Chamber of Commerce. There is no mention of other donors.

The chamber would not discuss how the ads have been financed, except to say the money came from unnamed members. Spokesman Eric Wohlschlegel said the purpose of the commercials was to “highlight a lot of issues that the chamber finds important to the business community.”

Gharakhani said the New Majority had contributed to the chamber effort because it wanted to help showcase Schwarzenegger and his record.

“Our members feel these commercials are important because they stress the governor’s vision for California and investing in California,” he said, “but are also important to remind Californians what has been accomplished since the governor took office after the recall” of Davis.

*

(BEGIN TEXT OF INFOBOX)

Behind the ads

Television ads lauding Gov. Arnold Schwarzenegger have been aired by the U.S. Chamber of Commerce as an independent effort to help the governor, who is running for reelection. The chamber is not required to disclose that the ads have been partly paid for by members of the New Majority, a Southern California Republican group tied to the governor’s political operation. New Majority members include:

* Renee Croce, the group’s membership director and finance director of one of Schwarzenegger’s main fundraising committees.

* Gary Hunt, a founder of the group and Schwarzenegger’s campaign finance chairman.

* Paul Folino, chairman of the group’s Orange County chapter and a major donor to Schwarzenegger.

* Donald Bren, a founder of the group and chairman of the Irvine Co. real estate concern. Irvine Co. sought a donation to the ad campaign from Chevron Corp., according to a Chevron official, who said no donation was made.

* George Argyros, a founder of the group and a member of the U.S. Chamber of Commerce board of directors. He co-sponsored a luncheon for Schwarzenegger donors in January.

*

Source: Times staff

Los Angeles Times