Angelides' past tactic to tap corporate funds now under scrutiny

*Governor's race puts new spotlight on 1989 donations

By Carla Marinucchi, Chronicle Political Writer

State Treasurer Phil Angelides, a Democratic candidate for governor, recently slammed corporate donors to Gov. Arnold Schwarzenegger for bankrolling the Republican governor's trips -- a practice Angelides said had created an "all-you-can-eat special-interest buffet" in Sacramento.

But Angelides didn't mention that as a top Democratic Party fundraiser more than a decade ago, he was the maitre d' of such buffets himself. He solicited donations from big tobacco, oil and energy firms to bankroll his party's political junkets and defended the check-writing as "frankly, the kind of thing corporations in California ought to do.''

Angelides was a successful developer in 1989 when he created a nonprofit committee called the California Legislative Forum, which he stated in papers on file with the secretary of state was formed to "foster strong state and federal relations" between California legislators and Washington.

But political experts said the organization had a more creative purpose: to get around Proposition 73, a campaign-reform law passed by voters in 1988 designed to limit the size of political contributions while restricting transfers of money amongpolitical committees.

Angelides, at the time, said the group rounded up corporate backing to pay for at least 40 state legislators to travel to Washington -- trips that included business and lobbying, shopping, sightseeing and "looking at land use on golf courses,'' then-Assembly Speaker Willie Brown said.

Angelides now is in a campaign against state Controller Steve Westly for the Democratic nomination to face Schwarzenegger, and his past fundraising for his party -- and previous strong defense of corporate donations -- is expected to be scrutinized, particularly in light of his sharp criticism of similar techniques undertaken by supporters of the Republican governor.

But Angelides' supporters defend his record, saying the former developer raised money as a private citizen from corporations -- but as a public official since 1998 he has been an advocate for campaign transparency and has never relied on nonprofit committees for his funding.

As president of the California Legislative Forum, Angelides took a lead role in seeking corporate donations for his party. In a 1989 letter to the Tobacco Institute that is still posted on tobacco industry Web sites, Angelides advised corporate leaders how to file their $1,000 donations to his organization under the new state law and expressed thanks "for your participation as a benefactor.''

Listed among the dozens of corporate benefactors to the forum are major oil companies such as BP America, Arco, Texaco and Chevron; tobacco interests such as R.J. Reynolds and the Smokeless Tobacco Council; lobbying groups like the California Beer and Wine Wholesalers; energy firms including Southern California Edison and Pacific Gas & Electric; and a roster of other major corporations, including General Motors, AT&T and Bear Sterns.

Corporate donors were invited "to send a lobbyist'' on the legislators' trip to Washington to "dine, talk informally or go sightseeing with legislators,'' according to a 1989 report about the group in the Los Angeles Times.

Angelides defended the practice to the Times, saying that his foundation -- which had raised more than $100,000 -- was involved in "the kind of thing, frankly, corporations in California ought to do.''

"There's a surprising amount of serious work ... (but) even public officials are human, and they need to go to have a little fun,'' Angelides told the newspaper.

In November, preparing for his campaign for governor, the Democratic treasurer talked about his current view of corporate donations. Angelides called for tough disclosure rules on corporate donations after reports that business leaders and nonprofit committees were raising money to pay for Schwarzenegger's six-day trade mission to China.

Schwarzenegger didn't solicit funds for the trip, but benefited from the work of state business executives, including Alan Zaremberg of the California Chamber of Commerce, who raised money with the help of nonprofit committees set up to support the Republican governor and his causes.

One such group, the California Protocol Foundation, solicited $50,000 donations to underwrite the governor's trip to China, telling potential donors that their checks would not have to be reported under campaign-finance laws.

The governor has been criticized by political opponents and watchdog groups for using the nonprofit groups because such corporate donations are limited under campaign-finance laws.

Bob Mulholland, a strategist for Angelides' campaign, argued Monday that there is a major difference between past fundraising by Angelides as a private developer and Schwarzenegger's effort as the chief executive of the state.

"One was a business leader helping Sacramento (lawmakers) go to Washington to lobby -- and the other was the governor of the state, the highest elected official, going on trips with huge donations that are not disclosed,'' Mulholland said. "We're still waiting for others to join Angelides' call" for more campaign transparency, he said.

Bob Stern, who heads the Center for Governmental Studies -- and was a co-author of the landmark Political Reform Act of 1974 -- said the 1989 fundraising effort illustrates how "everybody's very creative in terms of getting around the (campaign finance) rules -- and Angelides was being as creative (then) as the governor is today.''

Stern noted that Angelides was not an elected official at the time of his activity, but seemed to be trying to sidestep the 1988 campaign reform measure because he was seeking donations from big corporations to be "received, not as campaign contributions, but to a private group, which then funded the trips.''

Mulholland said Angelides' creation of the nonprofit fundraising organization in 1989 was "the way to comply with the rules of the state -- if you want to make trips, do it according to the rules.''

"Treasurer Angelides is now saying if you're going to be a governor, making trips with a plane full of contributors -- you've got to disclose it, period,'' he said.

Under the reform measures that Angelides has called for, he added, "statewide officials should not be taking trips unless it's fully disclosed.''

A spokesman for Westly, Angelides' opponent in the primary argued that the work of the treasurer as a fundraiser was eerily similar to the chamber's work for Schwarzenegger.

"He poses as a battler against corporate America, and he solicited thousands from those same interests to underwrite legislative junkets,'' said Garry South, a strategist for Westly's bid for governor. "There's a simple word for all of this: hypocrisy.''

Jamie Court, who heads the Foundation for Taxpayer and Consumer Rights, said Angelides' past fundraising actions don't necessarily reflect on the treasurer's position today -- nor on how he would govern.

"If you're a soldier in the army, you can say you're following orders. If you're a general, you can change the culture,'' said Court, whose nonprofit organization also runs the Web site called Arnold Watch, which acts as the watchdog on the governor's political and fundraising activities.

"Phil Angelides needs to distance himself from this as governor -- and he needs to say that being a solider is far different from being a general,'' Court said. "As long as Angelides is ready to break the culture of secrecy and conflicts of interest as governor, that's what counts.''

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