State panels a trove for Davis

His appointees raise funds for the governor, sometimes from
those who are being regulated.

By Gary Delsohn and Emily Bazar
Sacramento Bee Staff Writers
Published 2:15 a.m. PDT Sunday, August 11, 2002

Gov. Gray Davis' record-breaking effort to secure campaign cash has been aided by a network of people he has appointed to state boards and commissions, some of whom raise money from businesses and individuals they regulate.

A Bee analysis of campaign contributions and the activities of about 100 Davis appointees to state panels found more than a dozen who have sponsored or organized campaign fund-raisers for the Democratic governor.

At one 90-minute lunch, the chairman of the board that sets wage regulations solicited a total of $100,000 for Davis' campaign from 10 retail giants affected by those rules. A California transportation commissioner has raised hundreds of thousands of dollars on Davis' behalf. North state landowners say a regional water board has been stacked against them because a Davis fund-raiser has ties to timber interests.

Some Davis fund-raisers sit on boards ranging from the prestigious University of California Board of Regents to the obscure Governor's Council on Bioscience. Others are members of the Contractors State License Board, the California State World Trade Commission, the Fish and Game Commission and the state Commission on Building for the 21st Century. Most serve virtually as volunteers, making in most cases $100 a day for monthly meetings, plus expenses.

They make decisions on such issues as whether developments can go forward, how federal and state transportation money is spent, and the amount of debris an industrial concern can put into a state waterway.

But they also scan lists of potential Davis donors, organize breakfasts, luncheons, dinners or golf outings, and send personalized solicitations that ask for as much as $40,000 for Davis' campaign account.

While the activity is not prohibited by law, outside experts say it raises questions about the objectivity of the boards.

"The voters have a right to question where a fund-raiser who was appointed to such a position is coming from, and whether they have the interests of themselves or the governor more in mind than the interests of the public," said Steven Weiss, a spokesman for the Center for Responsive Politics in Washington.

"The message is clear to those appointed and those who eventually get hit up for money: The fund-raiser is being appointed because, at least in part, of his or her position as a fund-raiser or as a close adviser to Davis in general," Weiss added.

In particular, critics say board members shouldn't solicit from those they regulate.

"Members of boards and commissions shouldn't be fund raising from anybody affected by their decisions," said Bob Stern, president of the nonpartisan Center for Government Studies in Santa Monica. "If they are, that's troubling. To the poor contributor, the perception is, 'If I don't give, I will be hurt.' It's the fear factor. Politicians like to play off that, but that shouldn't be an issue."

Fund raising by board members occurs even as Davis aides insist that salaried, full-time administration employees are not permitted to attend fund-raisers -- let alone host an event.

Davis aides defend the practice, saying board members should not be subject to the same standard and have a right to participate in the campaign process.

Garry South, Davis' chief political strategist, says the governor has a strict policy forbidding paid state employees -- from Cabinet department heads to secretaries -- from attending fund-raisers or contributing to Davis' re-election campaign.

Earlier this year, when Davis learned that one of his top technology aides, Arun Baheti, had accepted a $25,000 campaign check from a lobbyist for Oracle Corp., Baheti was fired.

But the administration makes a distinction, South said, between salaried state employees and volunteers who sit on boards and commissions.

"The distinction is obvious," South said. "A full-time state employee who's paid by the taxpayers of this state is in a much different category than a pro bono volunteer who agreed to be on a board or commission. You can't exclude those people from participating."

State employees -- including Cabinet secretaries, South said -- cannot attend a Davis fund-raiser because the governor "believes very strongly" that state workers shouldn't be involved in raising money for him, even if they want to.

"I believe that's a far more strict policy than any governor in the past can tell you he's employed," South added.

The administration's written policy, however, is not as strict as South outlined. A Jan. 29 memo from Davis' legal office says his appointees as well as his regular employees can attend events and contribute as long as state resources or time aren't involved.

Steve Maviglio, the governor's press secretary, explained that the written policy is not as steadfast as what South described because state employees do have a legal right to make political contributions to Davis or anyone else if they choose.

"There's this thing called civil liberties," he said. "We can't stop them, but everyone knows our policy is that we don't want state employees to participate."

Nevertheless, the distinction of whether a fund-raiser is a salaried employee or a board member is lost on Stern, who is also co-author of the Political Reform Act of 1974.

The salient issue, Stern said, is whether the fund-raiser has regulatory power over the people he or she is soliciting money from.

Davis has become the most prolific fund-raiser in American gubernatorial politics, raising a record $50 million so far in his bid for a second term. By contrast, Pete Wilson raised and spent $27.6 million when he ran for re-election in 1994. George Deukmejian spent $13.4 million to win a second term in 1986.

To a far greater degree than the Republicans who held the governor's job for 16 years before him, Davis is willing to let his appointees fill the dual role of public servant and political rainmaker.

"I don't think this was a practice which was allowed in previous administrations," said Jim Knox, executive director of California Common Cause and a Sacramento lobbyist for 13 years. "The situation ... does represent a departure from past practices."

Two men who raised money for Republican Wilson continued to do so for Davis, and now are serving on a board or commission at the behest of Davis.

William Dombrowski, president of the California Retailers Association since 1994, invited executives of 10 large retail chains to an April 11 lunch with Davis at the Sterling Hotel in Sacramento.

Davis and officials from such corporations as Longs Drugs, Target, Safeway and Sears discussed the economy, California politics and a variety of business-related issues.

At $10,000 to get in, the 90-minute lunch netted Davis $100,000. Most of the business leaders attending refused to be interviewed. Those who were said lunch was worth the price because they had the governor's ear.

Dombrowski, who did not serve on a board under Wilson, had arranged similar events for Davis' predecessor.

But in 1999, at the suggestion of Department of Industrial Relations Director Steve Smith, Davis appointed Dombrowski to the Industrial Welfare Commission. The retailers who showed up April 11 and wrote checks to Davis are affected by IWC rulings on such issues as the minimum wage, overtime and how long an employee can work each day before getting a meal break.

Dombrowski, who now serves as chairman, said he sees no conflict. But he concedes he was sufficiently concerned about his votes on issues affecting his California Retailers Association members that he asked the attorney general's office about it shortly after Davis appointed him.

On the commission's agenda at the time was a hotly debated measure that determined when employers had to pay overtime.

He said he was told informally by a lawyer on the attorney general's staff that since members of the IWC are appointed to represent both employers and labor, the issue "balanced itself out."

"I don't think it's realistic to think that because I'm on a board, I can't fund-raise from my members," he said. "That is what we do. This is how the political process works."

Central Valley rancher John Harris has hosted fund-raising events at his Coalinga ranch for Wilson and Dan Lungren, Davis' Republican opponent in 1998.

Five months after Davis' inauguration in 1999, Harris did for the Democratic governor what he had done for Davis' GOP predecessors: brought together traditionally Republican farmers in the Central Valley to raise campaign cash on Davis' behalf.

Harris, whom Davis named to the California Horse Racing Board in November 2000, said he has organized "a few" fund-raisers for Davis. They were mostly small events that raised about $50,000 from farmers and ranchers, Harris said, and he organized an event in June in Fresno that was attended by representatives of the California Thoroughbred Breeders Association, of which he's a past president.

"They don't have any business before the racing board," Harris said, "and the racetracks have a pretty structured way of contributing no matter who's governor, so I don't mess with them."

He said he raised money for Wilson but never was asked to be on a board or commission. Davis asked him to be on the board, he said, because the governor's "pretty aggressive about asking people to be on these boards and commissions who know the industry."

It's impossible to be precise about how many Davis appointees also host or organize fund-raisers, since his campaign refuses to release details of his fund-raising schedule, and many people who raise and give money to the governor refused to be interviewed.

But a review of campaign finance records and a roster of state boards and commissions shows a dozen Davis appointees, in addition to Dombrowski and Harris, who've organized big-ticket fund-raisers and solicited campaign contributions on Davis' behalf.

Among them are:

* Jeremiah Hallisey, a San Francisco lawyer and Davis appointee to the California Transportation Commission who is one of his most successful fund-raisers. One major road builder says his firm is often invited to Davis events by Hallisey. Hallisey said he's planning a big Davis fund-raiser for San Francisco in September.

* Doug Bosco, a member of Congress from 1982 to 1990. Like Dombrowski, he is a Davis appointee to the Industrial Welfare Commission. He said he has held "about 10" fund-raisers for Davis.

In an example some Davis critics say illustrates how the governor's appointees guard the interests of big campaign contributors, Bosco's former law partner and a former congressional aide were appointed by Davis to the North Coast Regional Water Quality Control Board, where they helped block timber cleanup regulations opposed by Pacific Lumber.

* Movie star Clint Eastwood, who hosted a fund-raising reception with Davis after the ninth annual Gray Davis Golf Classic at Eastwood's Tehama Golf Club on May 9-10. The golf tournament was sponsored by PORAC, the 50,000-member Police Officers Research Association of California. For $40,000, a party of four could buy a private dinner with Davis, according to the event invitation. Davis named the actor to the state Parks and Recreation Commission in November 2001.

Longtime Sacramento insiders say Davis' fund-raising tactics are far more aggressive than those of his predecessors.

Deukmejian, a Republican who served from 1983 to 1991, had a specific written policy forbidding his appointees from participating in fund raising in any way, said Steven Merksamer, a Sacramento lawyer who served as Deukmejian's chief of staff.

"To the best of my recollection, we never had appointees on those boards specifically going out and trying to raise money," Deukmejian said in an interview. He added: "I can't tell you a thousand percent that it was never done."

When Wilson was governor from 1991 to 1999, administration fund-raising rules were not as strict.

There were times when board members were involved in fund raising. Most notable was a 1993 event where a number of waste-hauling firms vying for a contract to collect trash on Southern California railroad lines paid $5,000 each to attend a fund-raiser with Wilson and four members of his California Integrated Waste Management Board, the state agency that regulates the garbage industry.

Yet Wilson aides were clearly dismayed when connections between boards and fund raising became public.

"This kind of thing was the exception, and now it's become the rule," said Dan Schnur, a former Wilson aide.

When the event was reported in the news media at the time, Schnur said it was "clearly a mistake" and that it wouldn't happen again.

Davis, on the other hand, has been known to encourage those who raise money for him to serve on boards and commissions.

Dr. William S. Breall, who co-sponsored a Feb. 11 event for Davis in San Francisco's Chinatown with Pius Lee, a Davis appointee to the California State World Trade Commission, said Davis was so appreciative that he asked Breall whether there was any board or commission Davis could appoint him to.

"I told him there was nothing," Breall, a cardiologist, said in May. "I've been on boards with the city, and I don't want to do that. I grew up as a poor boy, and this (fund raising) is my way of giving something back."

Breall eventually relented about accepting an appointment, however. On July 24, Davis' office announced that the governor named Breall to the Medical Board of California.

Breall, who along with his wife has given Davis $27,500 since February 2000, said "a couple hundred people showed up" at his Davis fund-raiser.

"My wife and I have known Governor Davis for many years, since the Jerry Brown days," the 72-year-old doctor said. "We've watched his progress. He has a tremendous wealth of experience and knowledge about state government. He's one of the most knowledgeable people in politics I've ever run into."

None of Davis' appointed commissioners or board members is a more accomplished fund-raiser than Hallisey, the California Transportation Commission member.

Hallisey, whose law clients have included Calpine, AT&T and Pacific Lumber, said he's been raising money for Democratic politicians since Charles A. O'Brien was edged out in the race for attorney general by Republican Evelle J. Younger in 1970.

"I've built up a lot of relationships over 32 years with Democratic contributors and these are the people I primarily work with in trying to raise money for Democratic candidates," Hallisey said.

When he's organizing a fund-raising event -- such as his Davis reception at the Round Hill Country Club in Alamo on June 17 -- he puts together his invitation list based on people in the area who've given before.

Davis appointees, he said, "probably should try to avoid raising money from people who appear before their boards."

"There's a fairly large universe of people you can raise money from, and you shouldn't raise it from people who come before your board or commission," Hallisey said.

The California Transportation Commission spends the lion's share of its time reviewing and ultimately approving regional transportation plans put forward by local communities, Hallisey said. The commission rarely deals with individual road builders or property owners.

"Most of my interactions are with people from various regional planning agencies. I don't call those types of people when I'm raising money, so it's an easy one," he said. "Have I ever sent someone a form letter who does business before the CTC? I don't think so, but maybe I have."

In fact, Michael Lawson, a spokesman for Granite Construction Inc. in Watsonville, said he attended a Davis fund-raiser last summer after being invited by Hallisey. Hallisey said he didn't recall any invitations going to Granite.

"When we're invited to them, Hallisey is my point of contact," Lawson said. "It's usually a phone call. He's inviting us to these."

Friends of Gov. Davis

A look at people appointed to state boards and commissions by Gov. Gray Davis who also
have raised money for his re-election campaign:

Dr. Ernest Bates, San Francisco hospital executive
High Speed Rail Authority, January 2002

Charles A. Bertucio, Lafayette insurance executive
Governor's Workforce Investment Act Board, December 1999; Contractors State License
Board, March 2001

Doug Bosco, Santa Rosa lawyer and former congressman
Industrial Welfare Commission, January 2000

Dr. William Breall, San Francisco cardiologist
California Medical Board, July 2002

Clint Eastwood, Carmel movie star and director
State Parks and Recreation Commission, November 2001

Jim Ghielmetti, San Francisco homebuilder
Commission on Building for the 21st Century, March 1999

Jeremiah Hallisey, San Francisco lawyer
California Transportation Commission, July 1999

John Harris, Fresno County cattle rancher and developer
California Horse Racing Board, November 2000

James Kellogg, Concord union leader
Fish and Game Commission, January 2002; former chairman, California Transportation

Pius Lee, San Francisco businessman
California State World Trade Commission, January 2000

George Marcus, San Francisco real estate broker
University of California Board of Regents, December 2000

Dianne McKenna, former Santa Clara County supervisor
California Transportation Commission, November 2000

Regis McKenna, Silicon Valley public relations executive
Governor's Council on Bioscience, October 1999

John K. Smith, Hayward lawyer
Hastings College of Law board of directors, March 1999

- Bee Capitol Bureau

About the Writer

The Bee's Gary Delsohn can be reached at (916) 326-5545 or