What we just learned from a 14-month investigation by the state’s political ethics watchdog is that political insiders get to invest in companies over which they have influence, meddle in regulatory appointments, and manipulate policy to their own benefit. Then, this frack pack gets off scot free.
Earlier today, the Fair Political Practices Commission (FPPC) voted to wrist-slap Jerry Brown's top aide Nancy McFadden, and the State Democratic Party, for what they considered minor violations of the state's conflict of interest laws--some mislabelling of contribution checks and lapses in reporting of financial investments--instead of digging into our serious allegations of financial conflicts of interest and money laundering of big oil and energy industry money to Brown's 2014 re-election campaign.
In a letter delivered yesterday, we wrote Commissioners that they should reject recommended minor fines and interview witnesses that had repeatedly offered to talk about how McFadden had interceded in fracking legislation while holding a substantial stake in fracking company Linn Energy. FPPC investigators never contacted them.
We also produced complaints lodged with the Commission in 2012 showing that Steve Maviglio, former top communications aide to the former Assembly Speaker John Perez, also held up to $1 million in the same oil and gas company that McFadden invested in, Linn Energy, that benefited from weakened fracking legislation. McFadden and Maviglio are friends who vacation together at the latter’s castle in Italy.
If you are wondering why California has no fracking ban, while New York State, Vermont and Maryland do, you need look no further than the insiders that benefit from it. Brown and Perez consistently rejected a ban or moratorium on fracking at the same time that McFadden and Maviglio held stakes in Linn Energy. The wrist slaps proposed by FPPC investigators amounted to a whitewash. But we weren't expecting the bleach job that we got today.
In voting for wrist slaps, Commissioners didn't even have a conversation, raising the question of whether they are interested in conflicts of interest at all. (To be fair, one of the commissioners abstained—because he had invested in the same fracking company that McFadden had when she helped it and her own finances with favorable fracking legislation.)
The FPPC investigation began with a Consumer Watchdog complaint against McFadden for financial conflicts of interest. McFadden began working for Brown with up to $1 million in stock in her former employer, Pacific Gas & Electric, and a $1 million bonus she got on the way out the door.
McFadden also held a substantial stake in Linn Energy, the oil producer with wells in the state that was angling to acquire another fracking company, Berry Petroleum, with thousands more California wells. Berry Petroleum specializes in a method to extract oil and gas that could have come under a moratorium if fracking legislation had passed.
Over the ensuing months, Consumer Watchdog offered witnesses who could discuss McFadden’s involvement in blunting fracking legislation benefitting her stake in Linn Energy.
Our investigative report, Brown's DIrty Hands, was issued some months into the FPPC investigation and outlined millions of dollars in what appeared to be contributions from oil and energy companies to Governor Jerry Brown’s 2014 re-election campaign via some laundering by the California Democratic Party. A pattern of administrative or legislative favors preceding or following donations was identified.
We later supplied other documents to the FPPC enforcement staff showing that Brown’s wife, Ann Gust Brown, was fundraising for her husband’s 2014 re-election campaign together with California Democratic Party CFO Angie Tate, while separately a list of open Gubernatorial appointments appeared to be shopped around Sacramento. Were appointments for sale in exchange for donations? We offered the names of two dozen lobbying shops that received these guests and heard the fundraising pitches.
Repeatedly, Consumer Watchdog offered to hook FPPC enforcers up with sources inside and outside the legislature to shed light on how McFadden influenced fracking legislation to make it palatable to oil companies including Linn Energy, as attempts were made to pass numerous pieces of fracking legislation—all of which ultimately died save the one Brown signed that does nothing more than require companies to officially report their fracking to state regulators.
The FPPC refused to interview the witnesses, or an insider in the Democratic Party who could shed light on the pay to play there.
At least some good came out of our effort: the California Democratic Party had the sense to recognize the problem and swear off oil contributions. It may also have begun to purge itself of a frack pack of consultants that invest in or work for the oil industry. The party just hired as a spokesperson Steve Maviglio but insiders say he is about to be fired just as quickly.
Today's vote shows just how much we need independent ethics enforcers and new statutes with mandatory sentences for conflict of interest violations that can be enforced in court.
