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Gov. Cancels Magazine Contract

The action comes amid complaints of a conflict of interest. An aide says Schwarzenegger won't return money already received under the deal.

July 16, 2005|Robert Salladay and Peter Nicholas | Times Staff Writers

SACRAMENTO — Gov. Arnold Schwarzenegger said Friday that he would cancel his multimillion-dollar consulting contract with a publisher of health and bodybuilding magazines, amid complaints of a conflict of interest.

The announcement came a day after his top aide dubbed the controversy "much ado about nothing" and rejected calls for Schwarzenegger to end his relationship with American Media Inc. The company publishes Muscle & Fitness and Flex magazines, as well as the tabloids National Enquirer and the Globe.

"When I became governor, I pledged to put the people of California front and center," Schwarzenegger said in a statement. "I don't want there to be any question or doubt that the people have my full devotion.

"Therefore, effective today I will relinquish my title as executive editor and forgo any compensation from the magazines. I will continue to promote weight resistance training, health and fitness for all through any avenue that is available to me, as I have done my entire life."

For The Record
Los Angeles Times Friday July 22, 2005 Home Edition Main News Part A Page 2 News Desk 1 inches; 51 words Type of Material: Correction
Disclosure requirement -- An article in Saturday's Section A about Gov. Arnold Schwarzenegger's decision to cancel a consulting contract with the publisher of two bodybuilding magazines incorrectly said that the public disclosure threshold for officials receiving outside income was $100,000. The governor must disclose income exceeding $10,000 from any one source.

Schwarzenegger's office said the governor would not return money he had already been paid for the contract, which took effect Jan. 1, 2004. The staff would not reveal that amount, but the contract called for a minimum of $1 million a year. The office said Schwarzenegger would continue to write monthly columns for Muscle & Fitness and Flex, without a paycheck.

Margita Thompson, the governor's spokeswoman, said he wouldn't return the money from American Media because the contract was legal and appropriate.

The pact, formalized two days before the governor was sworn into office in November 2003, guaranteed, over five years, a minimum of $5 million, though the company estimated that the figure probably would be more than $8 million.

He also received an equity stake in the publishing firm, granting him a 1% portion from any sale of the company, or about $5.2 million under an estimate in the contract.

The conflict-of-interest concerns arose because Schwarzenegger vetoed a bill last year that would have imposed regulations on the nutritional supplement industry.

Those companies buy the bulk of advertising in Muscle & Fitness and Flex -- and the contract called for Schwarzenegger to receive 1% of the ad revenue from the American Media subsidiary that publishes them.

The cancellation of the pact -- two days after the contract amounts were reported by the Los Angeles Times and the Sacramento Bee -- brought praise from lawmakers and other critics who saw a link between vetoing the nutritional supplement legislation and Schwarzenegger's American Media paycheck.

"It had to happen. I applaud the governor for doing the right thing," said state Sen. Jackie Speier (D-Hillsborough), author of the 2004 legislation and a critic of the nutritional supplement industry.

"I think it's what he should have done a year ago," said Denise Garibaldi, a Petaluma psychologist who testified at a hearing led by Speier last year. Garibaldi's 24-year old son, a USC baseball player, killed himself in 2002, and she blamed the suicide on his use of steroids, which have long been illegal.

Schwarzenegger has opposed taking steroids but has actively promoted the use of nutritional supplements.

An advocate for Speier's legislation to regulate supplement use among high school athletes, Garibaldi said she thought Schwarzenegger's financial ties to the fitness magazines prompted his veto last year.

"It just came across to my husband and I that he was totally ignorant and he was advocating for substances that he had no idea about," she said.

"He's a role model, and he needs to act like one," she added.

Assemblyman Keith Richman (R-Northridge), who had also criticized the Schwarzenegger contract, said Friday: "It's a good move on the part of the governor. I had confidence that when he recognized the perception was not what was best for the state that he would do the right thing."

Assemblyman Ray Haynes (R-Murrieta) said he didn't think Schwarzenegger's magazine deal constituted a conflict, but he understood why the governor extricated himself.

"I think it's a noble thing to do," Haynes said. "Noble but unnecessary. To remove any question is a good thing to do. It's a lot to do, but if anybody had any concerns, then it's settled."

Speier is still pursuing legislation that would regulate dietary supplements, many of which she said were dangerous. She is also pushing a bill that would address conflicts of interest among elected officials.

Schwarzenegger's second job with the magazine publisher was considered unprecedented for modern California governors.

"We have to be thoughtful about making sure this kind of situation doesn't occur again," Speier said. "Once it is exposed as being legal, as it technically is now, you can see how people could use it for their purposes."

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