CONTRACTS BENEFITED GOVERNOR’S ALLY GM

San Jose Mercury News, (California)

SACRAMENTO, CA — A state senator asked Gov. Arnold Schwarzenegger‘s office Thursday to provide dozens of documents by next week that might reveal why changes were made to both state policy and state contract bids that ultimately benefited General Motors, a longtime and multi-million-dollar donor of the governor’s non-profit foundations and political campaigns.

The request was made the day after a three-hour Senate hearing during which Schwarzenegger officials were grilled about why they purchased a fleet of alternative-fuel vehicles that have been running on nothing but gasoline for more than two years. To meet their eco-friendly goals, the cars and trucks would need to run on high-grade ethanol.

At the hearing — called in response to a Mercury News investigation into the car purchases — state officials and auto manufacturers confirmed that the contract specifications for the alternative-fuel fleet could be met only by General Motors.

The state Department of General Services has purchased 1,138 “flex-fuel” Chevy Impala sedans and Silverado pickups since early 2006. Sen. Dean Florez, D-Bakersfield, believes that Schwarzenegger’s longstanding relationship with GM, which included a stint as a spokesman for the Hummer, should be explored to see if it had any influence over how the contract was structured.

“We don’t think we are barking up the wrong tree,” said Florez, who is chair of the Senate Select Committee on Air Quality. “We are asking the governor to prove that the accusations are baseless. We aren’t going to take his word for it. There is too much at stake.”

Officials in the governor’s office said they will review the request and provide all documents that are public. They strongly deny that Schwarzenegger had any involvement with how the bid specifications for the contract were structured.

The governor’s office also countered by pointing out that Schwarzenegger is taking a high-profile position against GM, which is fighting implementation of a law that would require lowering tailpipe emissions in the vehicles it manufactures and sells in California.

Specifically, Schwarzenegger has lobbied for a federal waiver that would force GM and other automakers to comply with the law. A few weeks ago, the governor told U.S. Environmental Protection Agency officials that California would sue the federal government if the waiver isn’t granted. Thirteen other states have now agreed to join in the suit.

“Governor Schwarzenegger is pushing legislation that is arguably the single most negative issue GM is facing,” said Schwarzenegger spokesman Aaron McLear.

Florez said he believes he’s filing a “common sense” request. He wants to review the underlying documents and memos that came out of discussions, dating back to 2005, that led to the state’s decision to kill a policy that once required the state to buy alternative-fuel cars only if the alternative fuel is available.

He believes full disclosure of all GM donations — including to Schwarzenegger’s past and current non-profit foundations — should be disclosed. Of particular concern, Florez said, is a $15 million donation made to his non-profit after-school youth program, called the After-School All-Stars. GM confirmed Thursday that they entered into a five-year contract in 2001 with Schwarzenegger to provide $11 million in donations and $4 million in products — specifically Hummers that were auctioned off for the charity.

The $15 million contract was renegotiated — cutting Schwarzenegger out as a named party — when he was elected, to avoid any conflict, GM spokesman Dave Barthmuss said. Funding went directly to the foundation over the past two years. Florez is concerned because it overlapped into the time that the flex-fuel vehicle purchase decisions were made.

“Everyone in my caucus (the Senate) wants to know more about this contract and the ties. Why did the policy change?” Florez said. “I’m trying to get answers to questions we all have.”

Florez said he would not ask for a state audit at this time because he is hoping the governor’s office will give the requested documentation directly to his committee. The Foundation for Taxpayers and Consumers Rights, a Santa Monica-based watchdog group, asked for an audit Thursday morning, saying they believed it was needed to determine why the contract requirements and policy changes took place.

“I hope that the governor’s office does respond in full to the senator’s public records act request,” said Carmen Balber, of the foundation. “I’m not necessarily hopeful that the governor’s office is going to be completely open since it deals with governor’s connections with the donor and the contracts awarded to the donor. I think the option of an audit has to remain on the table depending on the response.”
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Contact Kimberly Kindy at [email protected] or (916) 325-4314.