California Governor Arnold Schwarzenegger weighed in heavily to support giving a government contract to General Motors for an alternative fuels program in California.  The program is dubious on its merits and looks more like a favor to GM than sound public policy.  Why? GM has donated heavily to Arnold's campaigns and charities while wining and dining his chief of staff.  Money goes in, favors go out, and the people lose.  If that sounds familiar, it's because its the very same charge that Schwarzenegger leveled against Gray Davis during the recall.

The San Jose Mercury News has been breaking the story (see here.)

Various e-mails, memos and documents obtained by the Mercury News show that the meetings took place over five months and culminated with state officials signing a Memorandum of Understanding with GM for what was then a small pilot project of 50 to 100 vehicles. No other automaker was offered a chance at the deal.

Soon after, the state solicited bids to buy an entire fleet of flex-fuel vehicles designed to run on high-grade ethanol. General Motors dealerships won all of the contracts for what was ultimately 1,300 cars and trucks, or $17 million in sales, because GM was the only automaker that met the state's qualifications.

Legal experts said the sequence of events - and especially the pre-bid agreement for the pilot program - appear to run afoul of state contract laws, which are designed to ensure fairness and that taxpayers get the best deal for their money.

"The law is fairly clear in this area. Competitive bidding has to be in good faith. That means you don't have agreements like this arranged ahead of time," said Robert Fellmeth, director of the Center for Public Interest Law at the University of San Diego. 

 

Interestingly, a lawyer for the California Air Resources Board (CARB), raised a red flag about the GM deal as it was going through :

 In 2005, CARB's lawyer even wrote that two of Schwarzenegger's own officials were concerned it had the "appearance of this being a noncompetitive bid project." Also, in 2005 a spokesperson for California's General Services had concerns that GM's press release about the flex fuel pilot program "appears to create the impression that the outcome of a solicitation currently in process has been preordained."

Schwarzenegger at one point served as a spokesperson for The Hummer , a GM vehicle. The company donated $15 million worth of goods and cash to Arnold's lead charity, the Afterschool Allstars in 2001 (before Arnold ran for governor.)

General Motors and its political committees have made campaign contributions to political campaigns and charitable funds backed by Schwarzenegger.  For instance:

A $10,000 contribution to Arnold's California Recovery Team, which he used to push his controversial special election agenda in 2005. 

$22,300 in contributions to Schwarzenegger's 2006 re-election campaign. 

Another $3000 contribution to Schwarzenegger's 2006 re-election campaign (given after the campaign was over on March 2, 2007.).  

$17,500 in contributions to the California Republican Party

$15,000 to Schwarzenegger's 2007 inaugural fund.  

GM has hired California Strategies and Advocacy as a corporate lobbyist to represent its interests in California.  The firm employs the following lobbyists:

GM has previously hired the firm Goddard Claussen , whose principal Rich Claussen spearheaded Schwarzenegger's campaigns to pass various ballot measures.   

  State Senator Dean Florez is holding hearings today to see if there was anything inappropriate or illegal in granting these contracts.

When Schwarzenegger ran in the recall campaign to replace Gray Davis, he said he would put an end to a culture of corruption in Sacramento where "money goes in and favors go out."  One of the examples of such favors during the Davis administration was awarding a major contract to the computer company Oracle.  Dan Walters of the Sacramento Bee suggests that the GM contract is similar to the Oracle deal in many regards. Susan Kennedy, who worked for Davis at the time, is now the Chief of Staff for Scharzenegger.

The California Foundation for the Environment and Economy recently paid to send Susan Kennedy and other lawmakers on a trip to South America.   General Motors sprung for dinner one evening at the Copacabana Palace , which claims it caters to the rich and famous. During the trip, a GM executive briefed Kennedy and others on GM's Flexible Fuel Vehicles. 

GM has also provided Hummers for Schwarzenegger's use in California and on trips abroad.