Lockyer returns Oracle's $50,000 contribution

Sacramento -- Attorney General Bill Lockyer returned $50,000 in campaign contributions from Oracle on Wednesday, saying he wanted to remove even the "slightest appearance" of a conflict of interest as he probes a state contracting scandal involving the software giant.

Lockyer, who has opened civil and criminal investigations into a $95 million software contract, had faced questions from Republicans about whether he could impartially investigate the no-bid deal that state officials signed with Oracle last year.

Lockyer, a Democrat, called such speculation "baseless" but said the questions had become a distraction as his office investigates "allegations of wrongdoing at the highest levels of government."

"Returning these funds will help us focus public attention and public policy on the procurement processes of state government that may require reform," Lockyer wrote to company officials.

Last week, Lockyer insisted that the donation would not prevent his attorneys from conducting a full and fair investigation and even joked with reporters that he wished the contribution -- which Oracle made before the contract was signed -- was more generous.

Gov. Gray Davis said Wednesday that he hadn't decided whether to return $45, 000 in Oracle contributions. Later in the day, Oracle issued a statement saying Davis had decided to return a $25,000 contribution, but a spokesman for the governor said that was wrong.

"He hasn't ruled it in, and he hasn't ruled it out," Davis campaign spokesman Roger Salazar said.

Davis' director of e-government, Arun Baheti, met with an Oracle lobbyist in a Sacramento bar two weeks after the contract was signed and accepted the $25,000 check on behalf of the governor's re-election campaign.

He said he "didn't have a clue" why top officials in his administration rushed the contract through legal review.

In addition to Baheti, Department of General Services director Barry Keene, who signed the contract, has resigned, and the governor's director of information technology, Elias Cortez, has been suspended with pay.

A state audit concluded that the contract could saddle California taxpayers with between $6 million and $41 million in extra costs.

Oracle, in the contract signed May 31, 2001, offered up to 10 years worth of database software and support services for virtually every department in the state, but after nearly a year not one state agency had asked to use the software, according to the state auditor.

Oracle said that the audit is flawed and maintains that the state could save up to $163 million in volume purchases if the contract is extended to 10 years. The company, however, said it is willing to rescind the contract, citing bad publicity.

The scandal has shaken the Capitol and created a major distraction for Davis as he seeks re-election. In addition to Lockyer's probe, the U.S. attorney has asked the FBI to explore whether a federal investigation is needed.

A legislative committee headed by Assemblyman Dean Florez, D-Shafter, is conducting hearings on the deal. When told by The Chronicle Wednesday that he had received a $1,000 Oracle donation in 2000, Florez said he would return the money.

Efforts to rescind the Oracle contract could hinge on a company controlled by two billionaire brothers who give generously to GOP causes -- including the effort to defeat Davis in the 1998 contest for governor.

Koch Financial Corp. played a key role in completing the contested Oracle contract and stands to profit in the deal.

"Koch is owed money under the terms of the contract, and we do have an obligation to pay them," said Sandy Harrison, spokesman for the state Department of Finance.

Oracle began face-to-face discussions Wednesday with state officials on how to cancel the contract. Although Oracle and business partner Logicon have pledged to work to rescind the contract, Koch Financial has yet to make any public statements on its involvement.

The company is a wholly owned subsidiary of Koch Industries, which is run by Charles and David H. Koch of Wichita, Kan. The brothers and their company have given more than $1 million in soft money to Republican causes.

In 1998, records show that David Koch gave $5,000 to then-Attorney General Dan Lungren, who was the GOP candidate against Davis.

Koch Financial paid $52.7 million to Oracle's partner, Logicon, on behalf of the state shortly after the deal was signed. Logicon in turn paid Oracle $36.5 million and kept the remainder.

Such financing agreements allow vendors to be paid once the contract is signed. Lenders pay out the money knowing the state will make installment payments as called for in the contract.

Davis administration officials have admitted rushing the contract as a negotiating tool -- because Oracle needed to post the new revenue on its books before the end of its 2001 fiscal year on May 31.

In September, the state is scheduled to make the first of five payments to Koch Financial totaling $63.2 million, which includes $10.9 million in interest.

If Koch decides not to help the state, Oracle and Logicon unwind the deal, it could create problems for Davis, who said he is determined to rescind the contract "so the taxpayers don't have to pay one additional penny."

Davis spokesman Steve Maviglio said state finance director Tim Gage has spoken with Koch officials but would not comment on the discussion.

Lockyer's critics weren't placated by the attorney general's decision to return his Oracle contributions.

"It's like unringing the bell," said state Sen. Dick Ackerman, Lockyer's GOP opponent in the fall election. "You can't do that."

Republicans, who are in the minority on the legislative committee looking into the Oracle deal, persuaded the chairman to reschedule forthcoming witnesses so they could better prepare for the hearing.

Next week's hearing is scheduled for Tuesday, and another hearing with key Davis aides, including Davis cabinet secretary Susan Kennedy, will be delayed until the following week.

"If you really want to see the excrement hit the fan, wait until the State of Mexifornia begins defaulting on their general obligation bonds..."

Get real, pal.
First off; the very term, "General Obligation" is a Prozac-like term!
OK?
So; if it comes to default -- which I've NO reason to believe it won't because the Sacramento thieves have already cleaned-out the coffers, for themselves -- then here's an idea of one potential way the scam could go down...

See what they're doing to ENRON??
Hmmmmmm???
They're *easily* going menuever CA's Socialist-utopian masses into believing the energy screw-up fiasco wasn't THEIR fault.
So; then they're able to hold ENRON responsible for contracts signed by the people ELECTED *or* chosen by the elected to represent CA's interests.
Surely you can see this in the making, huh?

Well then??
The slippery, greased eels are right now seeking * probing for the *weak* spot, somewhere along the contractual chain of events, that'll permit them to paint THEMSELVES as having been, "Taken" ~by those nasty buisness folks who seel *bonds*??
Of course...& naturally, that's not *fair*!!

By God; they're gonna morph *themselves* into helpless, hapless VICTIMS; &, once that's been successfully pulled off?
It's then easy-as-pie for 'em to welch on their OVERALL "OBLIGATION(S)"!!
HA!!

Out there, right now?
Some poor, stupid SOB who was neive enough to actually enter into an agreement with the scum with respect to these, "General Obligation Bonds" (whateverinthehell*that* "is") is being setup to take the fall.

I mean can'tcha just hear it, now?
"These were NOT MEANT to be 'General Obligation" bonds; but rather, of the 'Exceptional Obligation' variety.
Therefore, we're very sorry; but, we [CA] cannot honor these things.
...go sue *them*."
~gaffaw!! :o)

...ah yes; "stupid "is" as stupid does," huh?

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