There was apparently nothing illegal about the fact that Arnold
Schwarzenegger signed a $5 million contract effective Jan. 1,
2004
– almost two months after he became governor of California – to
promote magazines that depend heavily on advertisements for dietary
supplements.
There was apparently nothing illegal about the fact that Arnold Schwarzenegger signed a $5 million contract effective Jan. 1, 2004 – almost two months after he became governor of California – to promote magazines that depend heavily on advertisements for dietary supplements.
But because of that contract and the money Schwarzenegger was paid last year, there is now disagreement over the legality of the governor’s 2004 veto of a bill seeking to crack down on high school athletes’ use of anabolic steroids and other supplements, some advertised in the magazines Flex and Muscle & Fitness.
For certain, when he signed his contract with American Media Inc. – also the publisher of the National Enquirer and other supermarket tabloids – Schwarzenegger was putting out a contract on his own credibility.
Plainly, he didn’t realize this until after the contract became public knowledge. Within a day after that, he then sought to unring the bell by severing the pact, piously saying “I don’t want there to be any question or doubt that the people have my full devotion.”
There were such questions because Schwarzenegger’s contract demanded that he not only serve as executive editor of the magazines, but also “further the business objectives” of the publications.
If he had signed the supplement-regulations bill, which called for state officials to develop a list of performance-enhancing dietary supplements based on information from the U.S. Anti-Doping Agency, it could have cut into the market for the products advertised in the magazines, depriving their makers of revenue used to buy the ads. That would likely have been a violation of his contractual obligation to “further the (magazines’) business objectives.”
In short, while there is no law against Schwarzenegger having outside income, his contract assured a bias whenever he considered regulation of anything advertised in the magazines. Even the governor has admitted “there’s (a) perception, and perception is very powerful.”
What’s the law on cases like this? In a statement to newspapers the day they disclosed the contract – which Schwarzenegger did not list on his required annual statement of investments, income and assets – the state Fair Political Practices Commission said neither the governor nor any public official may make or influence any decision that will have a foreseeable material financial effect on a source of his income.
Schwarzenegger’s veto appears as obvious and egregious a violation of that rule as California has seen in modern memory.
That’s where his credibility comes in, regardless how he tries to back and fill. If the terms of a contract dictated one of his vetoes, how can anyone know which other of his decisions are determined by financial motives? How can voters know he won’t feel similarly obligated to big businesses that finance his array of campaign committees? Or to other businesses that hire his advisers?
One example of the latter category: Schwarzenegger’s chief political advisor, Mike Murphy, heads a Washington, D.C. political consulting and public relations firm called Navigators. Navigators has a large contract with BHP Billiton, the Australian energy giant that wants to build a liquefied natural gas receiving facility 14 miles off the coast of southern Ventura County and Malibu.
Was Schwarzenegger’s announced preference for building there over other proposed sites influenced by the money paid his chief adviser? Despite any denials, how can anyone be sure there is no connection, both between Murphy’s deal and the location the governor favors and his endorsement of the very idea of bringing in LNG?
No one but Schwarzenegger really knows the answers to these questions, but voters now have the duty to be highly skeptical of any decisions, bill signings and vetoes the governor makes in the future.
For the fact that one of his vetoes was demanded by a private contract raises doubts about all others. It’s a situation that brings to mind the standard admonition of judges to juries: If you determine that a witness has lied about one thing, you can assume he or she lies about everything else, no matter what new assurances the witness may give.
Before Schwarzenegger gave up his contract, his employees, notably his communications director Rob Stutzman, had maintained “there was no technical conflict” of interest in the magazine agreement. But Stutzman said nothing about the veto, instead noting that Schwarzenegger regularly refuses to accept his $175,000 state salary. Of course, his one veto could be worth far more than $175,000 to his other employer, which has already paid him far more than the state salary he could take over a four-year term.
The bottom line is that while Schwarzenegger may still recover from his recent precipitous decline in popularity and while he could change his ways and stop insulting political opponents by calling them “girlie men” and “losers,” he can never erase the stain his contract has made on his credibility. Was it worth the price?
(To read the contract between the governor’s production company and American Media, go to: http://www.sec.gov/Archives/edgar/data/853927/000119312505141645/dex101.htm)
