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Posts Tagged ‘The Power of Many’



Meg vs Meg on Those Goldman Sachs Stock Deals

Thursday, April 29th, 2010

In her autobiography, “The Power of Many,” Meg Whitman discusses the charges against her for “spinning” initial public offerings that Goldman Sachs made available for her personal portfolio when she was CEO of eBay. It’s in a chapter titled “Results matter. Be accountable.”

Comparing what she wrote about her entanglement with Goldman Sachs  and what she told the Associated Press on Tuesday, however, we wonder what exactly eMeg means – if anything — by accountability.

Since this has become a big deal both nationally and in the California governor’s race, we’re reprinting some extended quotations from Whitman’s account of the affair, to see how they stack up against her more recent statements. We pick up her narrative on Page 148 (emphasis, ours):

After we [eBay] went public and Griff [her husband] and I needed professional help handling our investment portfolio, we decided to invest some of our personal funds with a completely separate group at Goldman Sachs, the Private Wealth Management group. As a wealth management client, I was indeed given access to IPO shares of other companies, which my private broker bought and sold for my account . . . However, the implication that there was a connection between eBay using Goldman Sachs as its banker on an ongoing basis and any benefit to my personal account investments was totally false;

I had never let my personal financial benefit influence my input on eBay’s banking choices. There was nothing illegal about IPO transactions my wealth manager made on my behalf. Such investment opportunities were common at the time, and I had never seen anyone in government, the media, or anywhere else raise the idea that this practice was a conflict of interest. . . .

When I learned I was on a list under scrutiny, I was surprised. The IPO investments made by Goldman Sachs on my behalf were a very small fraction of my personal investment portfolio. Given that I was a major individual eBay shareholder, I had far more to gain by working to make sure eBay used the most competent investment banking we could find. Anything that benefited eBay shareholders benefited me. . . .

Despite the inflammatory language of the investigation, these transactions were legal. No one ever suggested that they were not. . . . My board stood behind me and urged me to fight these [law]suits because they knew I had done nothing wrong and was deeply upset at the assault on my personal reputation and aghast at having eBay dragged into these stories about corporate greed. . . .

There was no conflict of interest, but when I look back I can see why the [congressional] committee pounced on the appearance of one. As I said earlier, [where she described how Goldman CEO Hank Paulson ran board meetings] I was not a good fit for the Goldman board which was the primary reason I resigned from it in December 2002.

In an interview Tuesday with the AP, Whitman repeated her statement that she resigned from the Goldman Sachs board of directors because it “wasn’t a good fit.”

“There was no link between accepting these IPO shares and funneling business to Goldman,” she insisted.

“The lesson learned about it is you have to be extra vigilant about seeing any actual or perceived conflict of interest. I missed the signposts here,” she said. “As I look back on it, would I do it again? No.”

There you have it: eMeg says she would not do the same thing over again — not because it was so unethical that it was later made illegal — but because she would want to avoid the appearance of a conflict of interest. In other words, she seems to be saying, “spinning” may have been outlawed later, but “It was legal when I did it, so what’s the problem?”

The only reason she acknowledges settling the lawsuit against her and other eBay board members for $3 million – including her share of $1.78 million – appears, at least in her book, to have been  because it was an annoyance:

The lawsuit remained a distraction and there was so much to do to run eBay and keep it growing that eventually I huddled with our lawyers and with Pierre [Omidyar] and Jeff [Skoll], who were also named in the suits, and we three decided to personally settle the suit with our own funds.

As Lance Williams noted, Whitman in the AP interview “didn’t address her service on Goldman’s compensation committee, where in two annual pay cycles she signed off on $79 million in bonuses for five top Goldman executives, including then-vice chairman Lloyd Blankfein, now the CEO.” (SEE BELOW)

In her book, Whitman said she put the story of Goldman Sachs in the chapter about accountability because, “.  . . the fact is, there was the appearance of a conflict and it bloodied our noses – mine in particular. . . . Those of us fortunate to hold any kind of leadership position in business must reject any appearance of a conflict even when we know that one does not exist . . . we have to be willing to be held to a higher standard.”

Um, how about just the standard we demand of our children, friends and mates: admit that you did something wrong and apologize. Whitman’s responses don’t even come close.

As Sterling Clifford, spokesman for Attorney General Jerry Brown put it, “Does she regret it because it was wrong or because it’s become an issue in her race for governor?”

Said Jarrod Agen, communications director for Whitman’s Republican rival, Insurance Commissioner Steve Poizner: “I’m sure there are several convicts that regret their crimes, but it doesn’t make them any less guilty.”

It’s worth noting that it was AP’s Juliet Williams who actually used the word “regret.” If Whitman said it, there was no quote to that effect. And let’s be clear what it was that got settled.

“In effect, the plaintiff shareholders allege that Goldman Sachs bribed certain eBay insiders, using the currency of highly profitable investment opportunities,”  wrote Delaware Judge William Chandler, who presided over the case

As Lance Williams reported, the executives “were able to flip these investments into instant profit,” the judge also wrote. “Whitman sold these equities in the open market and reaped millions of dollars in profit.”

But Whitman’s take on the whole affair is quite different. As she said in her book: her board knew she had done nothing wrong. That’s her story and she’s sticking to it.

This correction was later posted on Lance Williams story: (UPDATE: Whitman served on Goldman’s compensation committee, where in two annual pay cycles she signed off on $79 million in bonuses for five top Goldman executives, including then-vice chairman Lloyd Blankfein, now the CEO. The bonuses were based on competitive industry norms and the firm’s performance, the AP quoted her as saying.)

I, Jerry: How Brown Campaign Will Be Run

Wednesday, January 27th, 2010

It’s been an open secret* for weeks that Jerry Brown planned to hire longtime aide and Brown family retainer Steve Glazer to run his campaign for governor.

With the MSM now trumpeting this “news” to the skies, it seems like a good time to explain what it actually means.

Brown’s political operation quietly moved out of Jerry’s Oakland loft a couple of months ago, into about 5,000 square feet of  warehouse space about a mile and a half away. That relocation, coupled with the confirmation of Glazers’ status, means his  campaign is finally, if fitfully, under way.

Characteristically, it will not be a typical campaign operation: while Meg Whitman has hired hordes of strategic consultants, Brown will have none.

Glazer, an Orinda city council member and former mayor, organized the student vote for Brown back in 1978; was deputy campaign manager for his 1982 Senate race; press secretary and consultant for Assemblyman Gray Davis (he created Davis’s famous missing-children  milk carton campaign); did policy and press for Kathleen Brown’s 1994 general election campaign and has managed several statewide ballot measures. He’s also been a pilot fish for developers on half a dozen land-use projects.

All of which means Brown’s got a smart, experienced and trusted hand in place as his day-to-day manager — but doesn’t change the fact that Crusty and his very savvy wife, Anne Gust Brown, will function as their own general consultants.

Ads will likely be made by Joe Trippi and David Doak, two former media partners who have since gone their own ways. Trippi, whose clients have included John Edwards and Howard Dean, worked for Brown’s presidential campaigns and also did his media for the 2006 Attorney General’s race.

Doak, who did California media for the late Sen. Alan Cranston and for former Gov. Gray Davis, is essentially retired from the business, playing golf and poker, but eager to help Brown as a volunteer in collaboration with Trippi. We’ll know for sure when spending reports come out, but Calbuzz expects Trippi and Doak will get a fixed fee WAY below market rate for their media work — or no fee at all.

Sterling Clifford, who last worked as communications director for Baltimore Mayor Shiela Dixon before she was indicted on fraud charges, the Baltimore Police Department, looks to be the day-to-day press secretary. But don’t look for a communications director: Brown has always managed his own communications and it’s not likely there’ll be anyone on hand to teach old dog Crusty to bark on command.

Jerry and Richard Maullin, of the survey firm Fairbank, Maslin, Maullin, Metz are old friends from the Mesozoic Era so we expect him to manage polling and focus groups.  But we also hear our old friend Paul Maslin is really interested in the race and we expect Brown will also rely on polling by labor groups and others who piggy-back questions for him on their surveys.

We understand Glazer has hired an opposition researcher and there are some other paid people in the office already. But Brown is apparently going to try to prove his belief that it’s possible to run a bare bones, frugal, heavily-volunteer campaign for governor in the biggest executive-level political contest in America outside of the presidency. Good luck with that.

*In late December, Glazer was already clearly signaling he would be the campaign manager, but asked people to respect his timing in announcing it. We honored his request.

The Commish (sorta, kinda, almost) goes negative: Nice work by Team Poizner putting together a comprehensive, well-sourced, well-linked oppo memo on eMeg, e-blasted to the world on Tuesday.

In honor of the Great Woman’s book launch, Commish campaign operatives framed a three-page dossier around chapter heds of eMeg’s magnum opus, “The Power of Many: Values for Success in Business and in Life (Plenty of Free Parking!).” Okay, we made that last part up.

Titled “Meg-A-Tales,” Poizner’s poison pen peppering covers mostly familiar negative ground – from the Great Woman’s sleazy treatment of Craigslist, disgraceful voting record and obscene campaign spending, to her strategic missteps at eBay, political re-invention as a conservative and cowardice in refusing to answer questions from reporters or debate her rivals – but it makes an impressive, hefty package all pulled together.

That said, there are two big problems with the hit: a) Poizner obviously isn’t prepared to put any money behind an attack that goes much beyond the 2,000 people in state politics who talk to each other, plus the rest of the plucky population of Calbuzzville and b) even if he was, there’s a good chance it would blow up in his face; at a time when he’s trailing Whitman by 30 points, two-thirds of Californians have never heard of him and over half of those who have hold a negative opinion.

So Poizner’s Greatest Hits Against eMeg ain’t exactly nothin’, but up against her millions of dollars of earnest, feel good radio ads, it’s pretty damn close.

PXP goes viral: After AP picked up* our story last week on the once-secret offshore oil drilling agreement between PXP oil company and the Environmental Defense Center, Calbuzzer and campaign media consultant Don Ringe worked up an animated political cartoon featuring a monologue by “Mr. PXP” about the deal, which you can find here.

And special Calbuzz T-Ridge props to KQED’s John Myers, who closely questioned Schwarzmuscle about the issue at the governor’s Monday appearance at the Sacto Press Club and offers a smart take on the exchange on his blog at Capital Notes.

Two points worth noting here: a) As Myers reports, it’s interesting to see how breezily Arnold is in abandoning the notion of “principles” when the going gets tough; b) the governor clearly formulates the deal on T-Ridge as a “budget-driven” decision, not an energy vs. environment balancing act.

That is precisely the point that most concerns many environmental opponents of the deal: that California’s landmark environmental protections should be conditioned on the ebb and flow of the budget. In other words, any time Sacramento is in the red, just suspend the Coastal Sanctuary Act or AB 32 or local development guidelines and generate some fresh cash. Laissez les bons temps rouler.

The environmentalists who support the deal, like the EDC, do not agree with this fiscal argument of Arnold’s for the deal: to them T-Ridge has always been a pathway to end some offshore oil drilling permanently, essentially by horsetrading a lease to slant drill in state waters for a promise to decommission four  operations in federal waters.

But: Lay down with dogs, wake up with fleas.

*AP not only picked up but also properly credited the story. Having played the MSM exclusivity rip-off game for many years, your Calbuzzers these days are as scrupulous as possible about crediting and linking to other media sources, new and old alike, and we appreciate the same in return. As for those who jack our stuff, Dr. Hackenflack knows who you are and where you live.

What happens in Mass. stays in Mass: In our piece on the seismic Senate election in Massachusetts, we noted the absence of any election day exit polls that might have provided a data foundation for any of the scenarios spun about Republican Scott Brown’s surprise victory.

Now comes the Washpost, which conducted a survey in the immediate aftermath of the election, in partnership with the Henry J. Kaiser Family Foundation and Harvard’s School of Public Health.

In their piece on the poll, postmen Dan Balz and Jon Cohen noted that Brown, significantly, won two-thirds of the 63 percent of special-election voters who said the country is on the wrong track:

Dissatisfaction with the direction of the country, antipathy toward federal-government activism and opposition to the Democrats’ health-care proposals drove the upset election of Republican senatorial candidate Scott Brown…

HT to Bill Carrick for the heads up.

DBI: Cal Forward, Con Con, Campaign Finance

Tuesday, January 26th, 2010

A plague in the newsroom: When dinosaurs roamed the Earth, the Old Chronicle had a cityside editing slot known as the “Plague Desk,” assigned to whatever unfortunate assistant city editor was tasked with herding the cats who covered Politics, Law and Government.

In due time, old school Old Chronicler Carl Nolte invented a fanciful PLAG  desk publication, which he called “DBI: The magazine of politics, law and government.”

DBI stood for “dull but important,” and, thanks to Nolte’s abiding interest in designing and drawing covers for his imaginary mag, it featured headlines like, “Infrastructure: Threat or Menace?” and “The Secret World of the Bay Area Air Pollution Control District,” or “Up Close and Personal with Regional Planning Superstars” and “What’s New in Waste Water Management.”

For whatever reason, in recent weeks the News Gods have favored Calbuzz with a plague of DBI stories, from tax reform to T-Ridge, so today we honor Nolte’s extraordinary contributions to newsroom saloon humor with our own version of DBI.

Kaufman, wearing a Calbuzz botton

Cal Forward moves forward: California Forward has hired ace Democratic consultant Gale Kaufman to quarterback their 2010 campaign for two reform initiatives, after their efforts to get things started faced some delays, thanks in part to a big assist from Calbuzz.

Facing an April 16 deadline to collect 694,354 valid signatures — which means a million or so raw ones — Cal Forward is still awaiting title and summary for its proposed constitutional amendment to revamp the state’s budget process. AG Jerry Brown’s office, which appears to be struggling to keep up with the zillion or so would-be  initiatives flying around, only recently signed off on the group’s other measure, aimed at keeping the state’s hands off local government revenues.

“We’re definitely going ahead with the initiatives. The deadline is tight, but we’ll have enough time,” Kaufman told us, adding that she is confident Cal-Forward, a business-labor-goo goo coalition, will have no problem raising money for the campaign.

Kaufman, who’s elected half the Democrats in the Assembly and whose  client list also includes the CTA, is coming on board amid a batch of rumors about Cal Forward floundering to qualify its initiatives.

Some members have been grumbling that the bipartisan group should scrap its local finance measure, because it’s too similar to an initiative backed by the League of California Cities. Cal Forward’s John Stevens defended the measure, noting that it would give cities, counties and school districts new authority to gain voter approval of one-percent increases in the local sales tax with a majority, instead of a two-thirds, vote. Passage would be pegged to a comprehensive government finance plan prepared by local pols, Stevens told us.

Their second initiative, a proposed constitutional amendment which, at post time, was  still gathering moss in Crusty’s office, has gained more attention and discussion.

Among other provisions, it would require the governor and Legislature to put in place a performance-based budget and a two-year spending plan. It also would reduce the two-thirds requirement for passage of a budget to a majority of both houses.

Amid the initiative push, some legislators are still screwing around with their own version of a similar ballot measure, a rear guard action which isn’t helping the urgency of Cal Forward’s own effort.

Cal Forward submitted an amended version of the budget reform initiative after Calbuzz reported that the original would place restrictions on the Legislature’s ability to enact new fees for state services under the Sinclair Paint decision, an obscure but important policy procedure. After we blew the whistle on the play, some liberal-leaning Cal Forward types screamed bloody murder, and the Sinclair section was rewritten, a move which is partially responsible for the delay.

And thank you for that.

Con Con petitioners vs. pros: We hear there’s a story percolating about the, um, questionable actions by agents of some statewide signature gathering firms unhappy about the initiative petitions being circulated by backers of a constitutional convention.

Apparently some of the professional petition movers fear that delegates to a constitutional convention will, among other things, seek to change the current ballot initiative process, disrupting or killing their business. They want nothing to do with the con con effort, which instead is trying to organize its own, largely volunteer, petition force of 400 people on the street by President’s Day.

Word is that some of the opposition to the convention petitions has been expressed in what you might call your allegedly extra-legal manner. Nobody’s talking for the record about this yet, but don’t be surprised if there’s some action on this front within the week.

What campaign finance decision means for us: The best line we’ve read about last week’s big U.S. Supreme Court decision allowing corporations to buy elections contribute to federal campaigns appeared in the NYT’s thundering editorial of outrage about it, which summed up the politics pretty well:

The ruling is likely to be viewed as a shameful bookend to Bush v. Gore. With one 5-to-4 decision, the court’s conservative majority stopped valid votes from being counted to ensure the election of a conservative president. Now a similar conservative majority has distorted the political system to ensure that Republican candidates will be at an enormous advantage in future elections.

Beyond the bald facts of partisan politics, two other things seem perfectly clear about Citizens United v. Federal Election Commission: 1) it will create more work for lawyers; 2) its practical impact in California this year will likely be limited to Barbara Boxer’s U.S. Senate race.

“There’s no impact on state races,” said Karen Getman, one of the smartest campaign law attorneys in the state, with Remcho, Johansen & Purcell.  “But in House races and the U.S. Senate race, the dynamic has changed.”

With most of the state’s congressional districts nicely gerrymandered for one party or the other (this could change in the future if a proposed initiative for a new redistricting commission to redraw House seats passes), it’s unlikely to cause huge changes on that front.

But Boxer, who’s already facing a very tough political environment for Democrats, could well become a test case for how the new court decision affects a big, expensive Senate race. It’s easy to imagine any of the three contenders for the Republican nomination – even third-place runner Chuck DeVore, who could benefit from Tea Party astroturfing right-wing donors or industry-specific hit squads – flooding the zone with big corporate bucks against Babs.

Of course, the decision also allows labor to contribute freely to independent expenditure campaigns on behalf of candidates, so it’s likely Boxer would get a boost from SEIU and AFL-CIO types if she runs into trouble. Bottom line, of course, is that the big winners will be campaign media buyers and TV stations throughout the state, which could find corporations and campaigns road blocking available ad times.

Our own discount copy

Costco Carla strikes again: The forces of eMeg are being weirder than ever in providing info about “The Power of Many: Values for Success in Business and in Life,” the Great Woman’s new self-serving propaganda piece memoir.

Seems like Her Megness is concerned about running afoul of state laws that might look askance on her using the private book venture for campaign purposes, and so has engaged a new battalion of purse holders and coat carriers to staff her book tour.

While campaign types insist they couldn’t possibly scare up a review copy of the thing for the Sensitive New Media Guys covering the governor’s race, the Chron’s resourceful Carla Marinucci scored one in her weekend big box foray:

With less than five months until the June 8 gubernatorial primary, the release of Whitman’s book – listed at $26, but available at Costco over the weekend for $14.99 – is as much a skillfully timed campaign effort as it is a literary one.

Following Costco Carla’s leadership on the matter, Calbuzz managed to secure our own copy of the book at the Santa Cruz Costco Monday, fighting off hordes of fellow shoppers who were actually looking for bargain prices on cargo shorts and shrink-wrapped cartons of dental floss.

We know you’ll find it as scintillating as we have already to hear eMeg tell us, “I personally would have passed on buying Shatner’s old toupee, but I found getting Weird Al for eBay Live! an irresistible opportunity.” We’ll have a full report once we manage to work our way through the damn thing, which clocks in at 277 pages.