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New ethics rule will limit Schwarzenegger's use of donations for trips

Unlimited contributions are still allowed, but gifts of more than $420 can't be earmarked for individuals.

May 05, 2010|By Jack Dolan, Los Angeles Times

Gov. Arnold Schwarzenegger's longstanding practice of relying on large charitable contributions from special interests to fund private jet charters and luxury hotel suites around the globe is being banned by regulators.

Unlimited donations are still permitted, however, as long as they are not directed to a specific public official.

A new regulation put in place by the state's ethics watchdog agency takes aim at such nonprofits as the California State Protocol Foundation. For years, the organization served as a conduit for the governor to collect unlimited sums from private donors — as much as $200,000 in one case — to fund luxury travel for him and his staff.

The foundation is run from the offices of the California Chamber of Commerce, and most of its donors are business interests. Advocates of campaign finance reform said the foundation has allowed donors seeking to influence the governor to circumvent the limits that state law placed on their generosity.

With the new regulation, the state has "closed a huge loophole," said Roman Porter, executive director of the Fair Political Practices Commission.

Beginning in coming weeks, contributions to nonprofits that are directed to a specific public official will be limited to $420, making it illegal to solicit large donations to pay for chartered jets to China, Europe and the Middle East, as Schwarzenegger has done in the past.

Nonprofits will still be able to make unlimited payments to officeholders for a variety of purposes, including international travel to meetings where public policy is discussed, as long as donors don't specify who can use the money.

The governor is not the only target of the new rule, Porter said. Soliciting gifts through nonprofits to pay for travel and other expenses has been done at "all levels of government throughout California," he said.

State legislators also frequently go abroad on trips paid for by nonprofits, and the new rules will apply to them too.

Schwarzenegger's office has long argued that using private donations for travel saves the state money and helps boost California's international image. Campaign finance reformers say any trips meant to benefit taxpayers should be publicly financed.

"The money we might save by having some private donor pay is easily overwhelmed by having some special interest with the kind of influence they get when they send the governor on a luxury vacation," said Doug Heller, executive director of the Santa Monica nonprofit Consumer Watchdog.

Schwarzenegger has no more trips scheduled this year that could be affected by the new regulation, said spokesman Matt David.

The next governor is not likely to be staked to the ground for lack of funds. But navigating the regulatory and political hurdles of gubernatorial travel might prove trickier than it has been for Schwarzenegger, who kept most of his donors' names secret until a 2008 rule change required their disclosure.

Billionaire GOP gubernatorial hopeful Meg Whitman would "not accept donations to travel on state business and will fly commercial," said spokeswoman Sarah Pompei. Her millionaire rival in the June 8 primary election, state Insurance Commissioner Steve Poizner, would fly Southwest Airlines as governor, according to his spokesman, Jarrod Agen.

Democrat Jerry Brown, the state attorney general, would fly commercially as well, said his spokesman, Sterling Clifford. Brown has no major competition in June's Democratic gubernatorial primary.

Although the new rules might not affect Schwarzenegger's travel plans, his lawyer says he will have to be mindful of the regulation as he raises money for a climate summit he has scheduled for late September in Los Angeles.

Donors to the Protocol Foundation contributed more than $1 million for a similar conference last fall, state records show, including $250,000 from the Aga Khan Development Network, a charity run by the spiritual leader of Shiite Muslims. That was the largest single gift to the foundation on Schwarzenegger's behalf in 2009, according to the records.

Under the new regulations, the Aga Khan could still pay for general production costs at the conference, but "he couldn't pay for someone's travel" or anything else that could be construed as a gift to an individual, said Schwarzenegger lawyer Dan Maguire.

The second biggest gift to the foundation on Schwarzenegger's behalf in 2009 was $220,667. It came from a Los Angeles entertainment mogul Haim Saban, who directed that the money be used "to sponsor airfare for foreign trips for the governor."

Such gifts will now be limited to $420.

jack.dolan@latimes.com

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