June 12, 2002 5:30 PM PDT

Oracle e-mail targets cash contributions

As questions mounted about a controversial contract between California and Oracle, a lobbyist for the database giant encouraged the company to make cash contributions to win the support of key state politicians.

In an e-mail, Oracle lobbyist Ravi Mehta asked Robert Hoffman, director of legislative affairs at the company, to "make contributions to a number of individuals who are presently in office or running in safe seats and will be elected to the California legislature next year."


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The Jan. 5 memo, released Wednesday by the legislative audit committee investigating the $95 million contract, lists nine state politicians, summarizes why they are important to Oracle, and recommends how much money they should receive.

For example, the memo notes that one candidate for the assembly will "be an ardent supporter of Oracle when elected." At another point, Mehta asks whether Oracle would "consider making a charitable contribution [to] Stanford" and earmark it to support the son of a state senator who was a student at the university.

The e-mail is likely to add fuel to a controversy that has already ensnared top state politicians. Gov. Gray Davis and Attorney General Bill Lockyer have returned campaign contributions from Oracle in the wake of the scandal.

Additionally, because Mehta refers specifically to the California contract, the e-mail links the company's sales activities with its lobbying. Such ties have been probed extensively by the audit committee, headed by state Assemblyman Dean Florez, D-Shafter.

"People here are aware not to mix contributions and votes," Florez said. "Mehta tried to cross that bright line."

The Oracle contract was signed in May 2001, but questions began to surface early this year. In April, a critical state auditor's report found the contract gave the state more software licenses than it had employees. The audit said it would cost California $41 million more than the state's existing contracts, rather than save more than $100 million over six to 10 years, as Oracle maintains. The auditor's report also criticized the speed with which the deal was approved by the governor's office and other state agencies.

In response to the new memo, Oracle spokesman Jim Finn said Wednesday that Mehta "is a lobbyist and it's his job to make suggestions." But Finn stressed that "Oracle did not act on any one of those items," and he later added that the e-mail was "thrown in the trash."

Key figure a no-show
Mehta, who could not be reached for comment, was asked to testify before the committee Wednesday but he refused. As a result, the joint rules committee voted to issue two subpoenas.

One subpoena is for Mehta to testify Thursday at 1 p.m. and to be available Monday and Tuesday. The second requires him to produce all e-mail and other documents related to the contract by 5 p.m. Friday.

The nine politicians listed in the e-mail are: California State Assembly Speaker Herb Wesson Jr.; Assemblyman Marco Firebaugh, D-Cudahy; Assemblywoman Jenny Oropeza, D-Long Beach; Sen. Mike Machado, D-Linden; Sen. Steve Peace, D-El Cajon; Assemblyman Dave Cox, R-Fair Oaks; Assemblyman John Campbell, R-Irvine; Rudy Bermudez, vice mayor of Norwalk who is running in the November election for the assembly; and Greg Pettis, mayor pro tem of Cathedral City, a Democrat who lost in the March primary as candidate for assembly.

Specifically, the Mehta memo states:

• "Herb Wesson--While we have already made a contribution to Herb, I believe as speaker he will be very helpful to Oracle. I am planning a dinner meeting with Herb...on the 22nd of January. I'd like to give him a check for $10K at the dinner."

• "Marco Firebaugh--We should deliver the 10K check that you originally requested. I would like to do this at the dinner with Herb."

• "Jenny Oropeza--She is going to be the new assembly budget committee chair. We will need her to ensure that the Enterprise [License] Agreement continues to be funded. ($5K). Moreover she has been extremely good to Oracle in the past, particularly when the Enterprise License Agreement was discussed in the Tech. Committee in August."

• "Senator Mike Machado--He was very critical of the ELA during the Tech Committee hearing. He was being instigated by IBM. I have met with him and explained the deal and he feels he was misled by IBM. However, [he] cautioned that he wants to wait to see the audit report before making a final decision on whether it was a good deal for the state. He called me in December and asked for Oracle's support. I told him we would support him."

The e-mail lists a recommended contribution that appears to be $3,000. However, because the of the poor quality of a copy of the e-mail, the figure also could be $8,000.

• "Senator Steve Peace--He chairs the joint Legislative Audit Committee and was extremely critical about the way the ELA was negotiated...He also indicated that 'Logicon may have been involved in activity that could be potentially criminal.'

"Peace's chief of staff called in late October and indicated that Peace's son, who is a student at Stanford is working on a project and is looking for corporate sponsorship. He asked whether Oracle would consider making a charitable contribution [to] Stanford, earmarked for this project. I told him I would look into this.

"I believe Oracle should seriously consider making a contribution directly to Stanford and earmark it for this project. I assume Oracle generally makes such charitable gifts to higher education."

• Rudy Bermudez "is running [in a] Democratic district and is expected to win. $1K."

• "Greg Pettis--He too is running in a Demo district and is expected to win. I have been asked by leadership to get him $3K because he needs it. Greg will be an ardent supporter of Oracle when elected."

• "Dave Cox--Currently the assembly leader--he was helpful to us during the audit debate. His district also covers Oracle (Rocklin) $1K."

• "John Campbell--He will be the vice chair of either the Assm. Appropriations or budget committees. We do definitely need to support him (Newport Bch. Rep.) Very powerful on the [Republican] side and well respected on the [Democratic] side."

The memo concludes, "Robert, I'd appreciate expediting these contributions...If these contributions are acceptable...please let me know what campaign-related information you need from the various individuals."


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Oracle spokesman Finn emphasized Wednesday that "when it was received at the time it was rejected out of hand...and again speaks of Mr. Mehta's poor judgment." At the end of last month, Finn said Oracle "severed its relationship" with Mehta.

Money for nothing
The politicians listed in the e-mail had different reactions to their inclusion.

An aide for Machado denied that the senator's criticism of the Oracle contract was "instigated by IBM," as Mehta wrote in his e-mail. Rather, said Colin Grinnell, Machado thought that the 7-year contract term was too long for the technology industry, where software often becomes outdated within three years.

Grinnell acknowledged that Machado received $3,000 from Oracle earlier this year but said it had no influence on him.

"The senator subscribes to the theory that if you can't take their money and vote against them, you shouldn't take their money," Grinnell said. "He never got softer on Oracle--not at all."

In a statement, Wesson said, "It's not surprising that if someone were making a list of potential contributions, that list would include the speaker. I never received the donation suggested in the memo, and I have not accepted any contributions from Oracle since before the release of the audit."

Oropeza's chief of staff, Beverly Hunter, sharply dismissed the comments in the document and said Oropeza has not received any contributions from the company. According to Hunter, Oropeza was not present at the August committee meeting that specifically mentioned the licensing agreement with Oracle.

"We don't really know what Mr. Mehta was referring to," Hunter said. "I don't know what he's implying when he says 'good to Oracle.'...I don't know that she's not talked to people at Oracle, but I know she hasn't spearheaded previous contracts."

Cox, the assembly leader who is described as "helpful" in the e-mail, said, "I think e-mails go between lobbyists and their clients all the time on who to make contributions to." He said he received $1,000 from Oracle in 2000 but has not received anything since then.

In May, Lockyer returned $50,000 in campaign contributions made by Oracle to avoid the appearance of a conflict of interest.

Oracle also had made a $25,000 contribution to California Gov. Gray Davis that aides say was received just after the contract was signed. Oracle lobbyists gave the check to Arun Baheti, who resigned as director of e-government last week over his role in the Oracle contract negotiations.

At the time, Oracle defended the donations to Davis and Lockyer.

"Because Oracle is headquartered in California and is one of the largest employers in the state, we think it is important for us to participate in the political process," Oracle Chief Financial Officer Jeff Henley said in May.

Firewall breached?
By mentioning the enterprise licensing agreement alongside campaign contributions, the Mehta e-mail also could spark renewed interest on the audit committee about such ties. On Tuesday, an Oracle executive testified that there was a "firewall" between Oracle salespeople and its government affairs department, which handles campaign contributions.

"We think it's a bad idea that our salespeople would be involved in that," said Kevin Fitzgerald, Oracle's senior vice president for government, education and health. He said salespeople sometimes attend campaign fund-raisers and that some salespeople were in attendance at the fund-raiser in which Oracle pledged $25,000 to Davis. That contribution was later returned to the company.

The committee has made a point of asking each witness whether they knew of any ties between any campaign contributions and the Oracle contract and whether such contributions were discussed. All the witnesses have denied any discussion or knowledge of contributions at the time the contract was being negotiated.

In a conference call with the media late Wednesday, Oracle vice-president Ken Glueck acknowledged that Mehta was hired as an outside lobbyist for the government affairs department while he also was contracting his services as sales consultant for the company.

"We needed someone in Sacramento," said Glueck. "It seemed like it was a good use of leverage to ask Mr. Mehta to do some work for us. I think in hindsight it was probably a mistake."

Mehta had a contract with Oracle's sales department since 1998 and a contract with government affairs since 2000, said Glueck. Ravi resigned from all contracts with Oracle on May 31, exactly one year after the California contract was signed, Glueck added.

Flattered to be included
Not all politicians tried to distance themselves from the Mehta document. Bermudez said he was flattered to be included in a list of leading Democrats who held powerful positions on various committees and subcommittees.

The politician and parole agent is currently vice mayor of the southern California city of Norwalk, and he's the Democratic nominee for the 56th assembly district.

Mehta proclaimed in January that Bermudez "is running (in a) Democratic district and is expected to win" in the upcoming election. In a March election, he won with 55 percent of total votes.

"To be included in that group of Democratic leaders, I guess that's a good thing," Bermudez said Wednesday afternoon with a laugh. "They were looking at me hopefully as a future Democratic leader, and frankly they handicapped the race correctly."

Bermudez said that he has never received any contributions from Oracle, in particular the $1,000 that Mehta suggested. Bermudez also said that he has never had any contact with any Oracle officials to his knowledge, and he's never been involved in any Oracle bidding or contracts as a politician or previously as a board member of the Norwalk La Mirada Unified School District.

"Actually, I'm not even in a position to vote on any matters that would impact Oracle," Bermudez said. "So I take this listing as a compliment."

News.com's Scott Ard, Rachel Konrad and Alorie Gilbert contributed to this report.

 

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