Donor to Pay for Governor’s Trade Mission to Asia

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A gap in the new contributions law allows him to use a $550,000 donation.

SACRAMENTO, CA — Gov. Arnold Schwarzenegger isn’t letting a new rule limiting gifts to public officials put a crimp in his globetrotting ways.

Instead, administration officials are availing themselves of a gap in state regulations to use a $550,000 gift from a Chinese company to pay for an upcoming trade mission to Asia.

On Thursday, the state Fair Political Practices Commission implemented a $420 limit on private contributions to nonprofits like the one the governor has used for years to pay for private jets and luxury hotel rooms on trips to Asia, Europe and the Middle East. Any such contribution earmarked to benefit a particular public official is subject to the new cap.

But the rule can easily be circumvented with a small tweak in the fundraising process: If the person or group giving to the nonprofit doesn’t identify the public official the check is meant to benefit, the $420 cap does not apply.

Schwarzenegger’s Asia trip will be paid for by the California State Protocol Foundation, a nonprofit run from the offices of the Chamber of Commerce in Sacramento, using "general donations," said Schwarzenegger spokesman Aaron McLear.

The $550,000 gift to the foundation by the Alibaba Group, one of Asia’s leading e-commerce companies, will help cover the September trip to China, South Korea and Japan, McLear said.

"I think it’s a real slap in the face to the FPPC that set out to correct a problem," said Doug Heller, executive director of the Santa Monica nonprofit Consumer Watchdog, adding that it didn’t take the governor long to find "a loophole wide enough to fly a charter jet through."

Robert Stern, president of the Los Angeles-based Center for Governmental Studies, said, "It seems obvious that [Schwarzenegger] is trying to get around the intent of the regulation, but I’m sure he’s doing it legally."

The governor can also use any contributions received by the Protocol Foundation before the new gift ban went into effect on Thursday — the Alibaba check arrived June 8 — but the money is also fair game for the trade mission because the donors didn’t mention that they’re giving directly to the governor. "As long as it’s a general contribution, it’s not an issue," said Larry Dicke, chief financial officer for the foundation.

The new regulation says that a contribution to a nonprofit violates the limit if the giver knows that the "sole or primary purpose of the payment" is for the organization to make a gift to a public official, even if the intended recipient is not specifically named.

"If we come upon information suggesting this new rule is not being followed, that will become an issue for our enforcement unit to address," said FPPC Executive Director Roman Porter.

Schwarzenegger announced late last week that he would also like to lead a trade mission to Europe before he leaves office at the end of the year. Administration officials have not yet determined how they will pay for that.

For most of his term, Schwarzenegger has financed international travel with large donations made by wealthy friends to the Protocol Foundation, raising the ire of campaign finance reform advocates who say the process allows donors seeking to influence the governor to circumvent limits that state law places on their generosity.

The names of donors remained secret until a series of Los Angeles Times reports prompted regulators to require their disclosure in 2008.

Contributions to the foundation routinely exceed the $52,600 limit an individual can contribute to a gubernatorial candidate.

Last year, Los Angeles entertainment mogul Haim Saban gave the foundation $220,667 to "sponsor airfare for foreign trips for the governor," according to state records.

Such a disclosure would make the donation impermissible under the new $420 gift limit, but a donor could avoid that regulation by simply not mentioning that the money was meant for the governor.

The purpose of the gift from the Alibaba Group is listed as "2010 Asia Trade Mission," according to a disclosure form released by the governor’s office Monday.

The generosity of private donors has allowed Schwarzenegger and members of his staff to fly to China, Europe and the Middle East on private jets — his preferred method of travel — without spending taxpayer money.

The journeys, often with California business leaders in tow, benefit the state’s economy without burdening the budget, McLear said.

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Consumer Watchdog
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