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An Oracle’s Mistake

IN ANCIENT MYTH, AN ORACLE CAN FORESEE THE future. But this particular oracle obscures it, threatening to drag down Governor Gray Davis because of actions in the recent past.

It could have been a much better week for Davis. He could have listened to his environmental muses and touted his support for the most advanced renewable-energy policy in the country. Or he could have hopped off the fence and endorsed a historic measure on global warming -- the California Senate's passage of L.A. Assemblywoman Fran Pavley's bill to control automobiles' greenhouse-gas emissions.

Instead Davis is struggling to control a very different sort of emission, the distinctly un-Chanel-like odor of scandal emanating from his administration's controversial software deal with Oracle Corp. The state auditor says the administration's sole-source $95 million deal last year with Oracle would not only cost $41 million more than it's worth, it would provide database software to more than eight times as many state employees as are likely to use it. Davis received a $25,000 campaign contribution just days after the deal closed, delivered to his chief technology adviser. Two top state officials responsible for vetting the deal have lost their jobs, a third is on indefinite suspension, more are in jeopardy, and documents have been shredded.

The scent of scandal gets headier still. Oracle, at one time the world's leading provider of database software, is principally owned by California's richest person, Silicon Valley billionaire Larry Ellison. An Oracle spokesman told the Sacramento Bee that Davis and Ellison had met only once, but surely they have more of a relationship than that. Davis has become close to one of Ellison's friends, fellow billionaire and disgraced junk-bond-financier-turned-L.A.-philanthropist Michael Milken, who preferred Davis over his old business partner Richard Riordan. The Davis campaign says the two have "spoken on occasion," but Ellison has not contributed to the Davis campaign.

One of the main people pushing the deal last year was attorney Steve Nissen, the head of Davis' "Reinventing Government" program. Nissen left the administration last fall to join the powerhouse L.A. law firm Manatt, Phelps & Phillips. By an odd coincidence, the firm, headed by former Democratic national chairman Charles Manatt,
represents Oracle. But Nissen's ties to the Manatt firm are much older than that. He worked there 20 years ago, and was one of the bright young men Manatt placed in various campaign and Democratic Party posts.

Then there is the role of termed-out L.A. state Senator Richard Polanco, longtime head of the Legislative Latino Caucus. Polanco's son works for Oracle. Father and son pushed the Oracle deal, as did Polanco protégé Elias Cortez, the now-suspended head of the Department of Information Technology (DOIT). California Highway Patrol officers descended on his office late last week, at Davis' direction, to halt all document shredding.

Intriguingly, Oracle has given frequent contributions to Latino Democrats, including L.A. Assemblyman Marco Firebaugh, another champion of the Oracle deal. Democratic insiders say the only reason the suspended Cortez has not yet joined General Services Department chief Barry Keene, a former state Senate majority leader, and Davis technology adviser Arvn Baheti in the unemployment line is that Davis does not want to offend Latino leaders. The governor may simply be waiting for the inevitable. So derided is DOIT under Cortez's leadership that the Legislature is expected to abolish the department this year.

 

MONDAY'S HEARING ON THE DEBAcle went past midnight and saw plenty of finger pointing. Prominent Westside lawyer Aileen Adams, a member of Davis' inner circle and the Cabinet secretary overseeing the departments of General Services and Information Technology, called Cortez a liar. She said his analysis falsely claimed that Oracle's cost-savings estimates had been fully reviewed and that the contract contained an out clause. General Services lawyer Cynthia Curry testified that her concerns about the cobbled-together contract, which she only reviewed the day Oracle insisted it had to be signed, were such that she went over the head of her boss, the now-departed Barry Keene, to a lawyer at the parent agency headed by Adams, but was told it was very late in the day. She also said that Davis deputy chief of staff Susan Kennedy called Keene to praise his "can-do department," though Curry was not a party to the conversation.

All this looks and sounds terrible. But is it a corrupt conspiracy on the part of Davis? Or is it yet another example of this administration's distressing pattern of blindness to the appearance of impropriety coupled with the cozy insider culture of California's Capitol?

Sacramento is easily the most lobby-intensive state capital in America, with three times as much spent on lobbying as in the capital of New York. And many who are lobbyists -- lawyers and public-relations consultants -- don't have to register as lobbyists. So bizarre is the culture of "The Building," as the imposing Renaissance Restoration Capitol is known to its denizens, that the $25,000 Oracle check so fatefully delivered to Davis' former technology adviser came from the hand of a former chairman of the Fair Political Practices Commission, the very agency intended by Jerry Brown's Political Reform Act to be a steadfast watchdog.

And for such a capable political figure, Davis has time and again been blinded to the obvious appearance of conflicts of interest. There were the two former top Clinton-Gore advisers he installed in the Governor's Office as his communications directors -- who also worked at the same time for the state bailout­seeking Southern California Edison. One of them foolishly told the Weekly, "There is no conflict of interest. The governor and Edison have the same energy policy." Davis belatedly got rid of them shortly thereafter.

There was the Pete Wilson­appointed Energy Commission chairman, reappointed by Davis, who had presided over a preposterous forecast of the impact of energy deregulation and turned out to be an investor in companies regulated by the commission. There are many other examples.

What would it take for the Oracle scandal to bring down Gray Davis? Probably
evidence that he was aware that there were problems with the deal and pushed it forward anyway. And that he was influenced in this by Oracle's campaign contribution. The absurd contract finally gives Davis' Republican opponent, Bill Simon, something to talk about in a campaign that so far has failed to sound themes that resonate with voters.

The $25,000 is a large contribution. However, Davis has raised an astonishing $43.6 million for his re-election -- much of it in chunks far larger than $25,000 -- and this is Oracle's only contribution to him in at least five years. The firm's support amounts to only 0.05 percent of the governor's war chest. Nor has Oracle taken the predictable dodge of contributing to the state Democratic Party, at least not during the Davis governorship.

 

WITH DAVIS AND THE CALIFORNIA press -- though not The Wall Street Journal -- distracted by the Oracle debacle, a much larger issue is working its way to the governor's desk.

Assemblywoman Pavley's global-warming bill passed the state Senate last week, personally ramrodded through by Senate President John Burton with a big assist from L.A. Senator Sheila Kuehl. The bill passed on a party-line 22-13 vote. Now the bill goes back to the Assembly for concurrence with amendments.

Davis, who expressed misgivings about the bill with the Weekly in March, is still neutral. Backers hope to move it through the process to him in the next week, meaning the already intense lobbying around the governor will further intensify. But Burton is adamant that the bill become law. Unless the automobile lobby succeeds in manipulating the Assembly process, the bill, already amended to give the car companies more time to retool their production lines, makes 2009 the first year its vehicles must dramatically cut their emissions of carbon dioxide.

Will Davis want to oppose such a bill? It would not seem wise, especially since he already previously endorsed its basic provisions when he supported the Big Green initiative in 1990.