Times Staff Writer

After allowing his staff to accept tens of thousands of dollars’ worth of gifts from business interests, Gov. Arnold Schwarzenegger is now worried about the appearance of a conflict of interest and has barred them from taking even a free cup of coffee.

But the policy, stricter than state law, hasn’t stopped the perks.

For the record:

12:00 a.m. Nov. 1, 2006 For The Record
Los Angeles Times Wednesday November 01, 2006 Home Edition Main News Part A Page 2 National Desk 1 inches; 44 words Type of Material: Correction
Conflicts of interest: An article in Tuesday’s Section A about Gov. Arnold Schwarzenegger’s rules concerning his staff members’ acceptance of gifts gave the wrong name for an environmental group. The group’s name is the Natural Resources Defense Council, not the National Resources Defense Council.

Schwarzenegger aides over the last year have been given free tickets to Disneyland and San Francisco Giants baseball games; to Rolling Stones concerts and Sacramento Kings basketball games.

Schwarzenegger’s chief of staff, Susan Kennedy, sent a memo to the governor’s aides in August explaining that by taking gifts, even if the law allows it, they could create a public perception that they have been compromised.


“When in doubt ... pay for the item yourself,” Kennedy wrote.

In a separate letter to Schwarzenegger’s staff, his legal counsel, Andrea Hoch, said aides could not attend any of the governor’s campaign fundraising events unless they paid for their food and drink.

But the Spartan ethic comes with loopholes. Kennedy is scheduled to join lawmakers and state officials on a 12-day trip to South America next month that is sponsored by a tax-exempt group financed partly by energy companies and other businesses that lobby in Sacramento.

The visitors plan to stay at a hotel in Buenos Aires that is rated by one travel guide as “the most exclusive” in the city. A spokesman for Schwarzenegger said the trip doesn’t violate the gift policy because Kennedy will deliver a speech as the governor’s representative.

“It is important that Susan, as chief of staff, work with members and important policy leaders to further the goals of the administration,” said Adam Mendelsohn, Schwarzenegger’s communications director.

The new rules are an about-face for the governor, who in past years has taken a permissive approach to freebies.

In 2004, after The Times reported that dozens of Schwarzenegger administration officials had accepted free meals and sports tickets, the governor said in an interview: “Those are things that I don’t think anyone has to worry about. There’s no one selling out in my administration.”

Gifts continued to flow. State lobbying reports show that:


* Ameriquest Capital Corp., parent of the mortgage-lending company, spent more than $5,600 on Rolling Stones concert tickets over the last year for nearly two dozen members of the governor’s staff and their spouses.

Ameriquest reported having lobbied Schwarzenegger’s office this year on lending issues and a legal settlement. In March, California officials reached a multimillion-dollar settlement with the company over allegations that it had misled borrowers, among other things.

* Walt Disney Co. has given Disneyland tickets, parking passes and other gifts valued at $1,189 to six Schwarzenegger aides since early last year. One recipient was Richard Costigan, a senior aide who pushes the governor’s agenda through the Legislature and advises him on which bills to sign or veto.

* AT&T; last year gave $1,264 worth of San Francisco Giants tickets to six Schwarzenegger aides who went to a game together. The telecommunications company also gave $385 worth of tickets and refreshments to two Schwarzenegger aides who attended an Eagles concert one year ago. One was Cynthia Bryant, who also works on the governor’s legislative agenda.


* The California Chamber of Commerce, the state’s most influential business lobbyist, spent more than $5,800 this year and last treating dozens of Schwarzenegger administration aides at receptions, lunches and dinners. A party for outgoing Chief of Staff Patricia Clarey was held at the chamber’s headquarters in Sacramento in January and was attended by more than 45 of the governor’s aides.

State law allows public officials to accept gifts worth up to $360 a year from any one source. Under Schwarzenegger’s new policy, aides are forbidden to accept tickets, meals, entertainment or loans from anyone doing business with the state, or any group lobbying for passage or defeat of legislation.

Kennedy’s memo on the matter said the public might “perceive acceptance of gifts as creating a conflict of interest.”

Asked what prompted the change, Mendelsohn said: “The administration has had new staff members come on recently. And often with new staff members, and new leadership, you’ll find changes and important additional steps taken that were not put in place originally.”


Kennedy’s trip is courtesy of a tax-exempt group in San Francisco called the California Foundation on the Environment and the Economy. Her domestic partner also will go, paying her own expenses.

The itinerary includes a stay at the Alvear Palace Hotel in Buenos Aires, where room prices range from $550 to $4,500 a night, according to a state official familiar with the trip.

A Frommer’s travel guide describes the hotel as a “a gilded, classical confection full of marble and bronze” with a guest list that has included “names like Antonio Banderas, Donatella Versace, the emperor of Japan and Robert Duvall.”

Other stops are to include Santiago, Chile; Rio de Janeiro; and Bariloche, a popular tourist spot in Argentina.


Assembly Speaker Fabian Nunez (D-Los Angeles) and his wife are expected to go. So are state Sen. George Runner (R-Lancaster) and his wife, Republican Assemblywoman Sharon Runner; and Assemblyman John Laird (D-Santa Cruz) and his domestic partner.

The trip’s purpose is to study technologies aimed at reducing global warming, said Patrick Mason, president of the foundation. He would not reveal who is going, citing security concerns.

He sent an e-mail to participants this week asking that they not speak to The Times about the trip. The e-mail, which was obtained by the newspaper, was sent to officials at Chevron, Southern California Edison, the environmental group the National Resources Defense Council, and to some Schwarzenegger administration officials, among others.

Two companies that said they were planning to attend maintain a lobbying presence in Sacramento: Sempra Energy and the cable giant Comcast. Sempra owns San Diego Gas & Electric Co. and Southern California Gas Co., both of which are regulated by the state Public Utilities Commission.


PUC Executive Director Steve Larson will be among the guests on the trip.

Sempra pays $30,000 a year in dues to the Foundation on the Environment and Economy. The firm is going because Sempra believes that it is important to “provide policymakers and elected officials some background that is helpful in making informed decisions,” said company spokesman Art Larson (no relation to Steve).

Watchdog groups said the South America trip gives lobbyists extraordinary access to government officials -- access that others don’t get. They also said that if state officials think the trip is important and justified, taxpayers should pay for it.

“We want state delegations going on fact-finding trips if warranted,” said Sheila Krumholz, acting executive director of the Center for Responsive Politics in Washington, D.C. “We just have to make sure they aren’t being unduly influenced by such lavish trips, and that policy is not being skewed as a result.”


The Schwarzenegger administration says that it also is revamping what have been loose practices when it comes to fundraising events. For much of the governor’s term, policy aides invited to such events mingled freely with donors.

Even after the policy was unveiled, though, the practice continued.

Bonnie Reiss, a longtime friend of Schwarzenegger and one of his top aides, attended a campaign fundraiser for the governor last month at the home of media mogul Haim Saban. The new policy does not rule out attending, but those who go must foot the bill themselves.

After The Times asked about Reiss’ attendance in light of the new rules, Mendelsohn said Reiss would reimburse the campaign for her meal.


There are no penalties for failing to comply with the new policies, he said.

“We will remain committed,” he said, “to continuing to enforce this policy and correct any oversights.”



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