Political Wars Heat Up in CA Over Energy Consultants

Controversy, fueled by increasing political tensions, heated up last week about a group of private sector consultants brought on the state payroll by Gov. Gray Davis in the past six months to help California wrestle with its electricity problems, including the state's role in buying bulk wholesale power.

Secretary of State Bill Jones, an announced candidate for the Republican nomination in next year's campaign for governor, on Monday asked the state attorney general, a Democrat loyal to Davis, to look into possible conflicts of interest among consultants who either haven't made financial disclosure, or have and indicated they owned blocks of stock in energy companies with which the state is now doing business.

The governor's spokespeople say that if any improprieties are found, they will be dealt with, and they attribute the flap to partisan politics and the fact that in the Davis administration's haste to address the energy crisis, it brought on what it considered some of the "best and the brightest" from the energy sector to address the problem.

At the request of Jones, a statewide elected constitutional officer, both the attorney general's office and the state Fair Political Practices Commission (FPPC) said they are "taking a look" at the allegations and the situation surrounding 45 consultants, only 24 of which have made personal financial disclosures, and many only since the issue was raised last week. A state Department of Water Resources (DWR) spokesperson said that all of the consultants who were required by the state to file financial disclosure forms have now done so.

DWR is in the process of looking into some of the concerns raised by the secretary of state, the department spokesperson, Oscar Hidalgo, said Tuesday. "It is a pretty big process, so there is not much more we can say at this point." He noted that if the department finds any violations, it will deal with them on a case-by-case basis.

Spokespeople for the governor said the state's political watchdog agency, FPPC, advised the Davis administration that only consultants serving in staff capacities or participating in decisions are required to file the disclosure forms.

"There is compelling evidence they need to check this out," said a Sacramento-based spokesperson for Jones. "If the governor wants to exempt some of these people from the legal requirement to fill out the form (for personal financial disclosure), then he needs to have a letter on file for each of those people."

The highest profile consultant to come under scrutiny is former Edison International senior executive Vikram Budhraja, whose Pasadena, CA-based consulting firm signed a $6.2 million, 23-month contract with the state and who personally was the No.2 negotiator of the state's long-term power contracts. Budhraja supposedly bought and sold Dynegy Corp. stock between Jan. 10 and Jan. 29, in the middle of which he became a consultant to the state.

In an eleventh-hour disclosure form, Budhraja also indicated that he had received more than $100,000 from Edison International as a consultant up to the third quarter of 2000. Jones said Budhraja "pocketed significant profit" between the time he signed a contract with the state Jan. 17, and Jan. 29 when he sold his financial interest in Dynegy.

Davis spokesperson Steve Maviglio said the formal contract date was Jan. 17, but that Budhraja did not meet with the governor until Jan. 25, and he didn't begin his consulting assignment until Jan. 29, the same day he divested the stock ownership.

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