SACRAMENTO — Power. Jesse M. Unruh has become synonymous with the word, first as Democratic Assembly Speaker, the "Big Daddy" of the Legislature, and now as state treasurer cruising into his fourth term without major opposition in the fall election.
The 63-year-old son of a sharecropper, ridiculed as a boy because his family couldn't afford money for haircuts, has become a power among the pin-striped barons of Wall Street, courted and cultivated--some say even fawned over by those seeking lucrative contracts that Unruh as the state's chief banker can dispense or influence.
In an extensive examination of Unruh's dealings as treasurer, The Times has found wide praise for his mastery of the functions of his office, but concern by many about the way he has used his growing power to maintain himself in his post.
Officers of major investment houses, banks and other firms that do business with the treasurer have courted him with Rose Bowl and Super Bowl tickets, lavish meals, chauffeured limousines, flights in corporate jets, accommodations while traveling in Europe and political fund-raising receptions.
As state treasurer, Unruh can decide or influence which companies are chosen to sell billions of dollars in tax-exempt government bonds, which brokers will invest billions of idle government funds and which banks will handle billions more in state deposits.
Embroiled in the competition for a share of the state's burgeoning bond and investment business, officials of many of these firms believe that they have no choice but to make sizable contributions to Unruh's campaign committee.
That state business can mean millions of dollars in fees to the firms that are selected.
After scores of interviews and a detailed examination of public records, what emerges is a portrait of Unruh as a savvy, exacting, intimidating politician, someone who can, without public explanation, award contracts to some firms while disciplining others, barring them from state business for months at a time.
Unwilling to Comment
He has become so powerful that officials close to Republican Gov. George Deukmejian are unwilling to comment on the Democratic treasurer's performance. "There's no percentage in it," said one longtime Deukmejian adviser.
"I never like to pass judgment on sitting statewide elected officers with whom I do business," said Deukmejian's finance director, Jesse Huff.
The public records show a clear pattern: The firms that have done the largest share of the state's bond and investment business are generally those that have given the most to Unruh's campaign committee, which last reported $1.6 million in the bank. Unruh had no opponent in the June Democratic primary and, with no Republican running against him, he will face only minor party candidates in the November election.
In several instances, the timing of gifts and contributions has coincided with the awarding of contracts by the treasurer's office or by one of the 44 commissions, boards or authorities that Unruh serves on or chairs.
Links to Donations
While no one accuses Unruh of choosing incompetent firms to handle state business, some investment bankers complain that he has tilted toward those who contribute to his campaign or who are willing to spend money on him.
In some cases, according to documents filed by Unruh himself, he received gifts or income in excess of $250 from those that later benefited from decisions by the treasurer's office in apparent violation of the conflict-of-interest provisions of the California Political Reform Act. However, the statute specifically exempts elected state officials from the penalties it provides for all others who violate the conflict-of-interest provisions.
A few of those private interests have paid Unruh substantial speaking fees. In late 1984, for example, Dow Chemical Co. paid Unruh $2,000 for a speech. In early 1985, the company applied to an authority chaired by Unruh and won approval for $10.7 million in tax-exempt bonds for pollution-control equipment.
Dow spokesman Jack Jones denied any connection between the two matters, and said that Dow would have won approval for its bonds whether it had hired Unruh or not. "We had to jump through the hoops just like everybody else (to qualify)," he said.
A second example is USC, Unruh's alma mater, which has paid the treasurer a total of $26,848 in lecture and teaching fees since 1978. During that period, the university has benefited from a sizable share of the bonds issued by the California Educational Facilities Authority, which Unruh chairs. Over the last two years, when USC paid Unruh $6,750 in fees, records show that the authority sold $110.6 million in bonds for the university.
