Buying power - Page 8

How PG&E and Mercury Insurance are spending millions to try to trick Californians into voting for corporate interests


The state party has yet to take a stand on the measure, and neither Democratic Party executive director Bob Mulholland nor chair John Burton returned our calls on the issue, just as Rosenfield told us he "can't get Burton to return my calls." But he remains hopeful the party will oppose the measure at its April convention and put money into defeating it.

"I'd like to think the Democrats will stand up against this insurance company, but Mercury Insurance is very politically connected and the Democratic Party, as we know all too well lately, doesn't seem to have that kind of backbone," Rosenfield said.

San Francisco Democratic Party chair Aaron Peskin said he's confident the state party will join the fight to defeat it: "This is a complete abuse of the initiative process and the voters of California should not be fooled."



Rosenfield isn't the only one who has battled with Mercury for many years. "I've been after them for 20 years, so this is not a new issue for me," said U.S. Rep. John Garamendi (D-East Bay), who served as California's first Insurance Commissioner from 1991 to 1995 and then again from 2003 to 2007. "He [Joseph] has refused to accept the fact that the world has changed around him."

Beyond just trying to change the rules, Mercury has blatantly ignored them, as a decade's worth of documents from the Department of Insurance that were released last month show, triggering upcoming legislative inquiries. In 275 pages unearthed by the Chronicle and then obtained by the Guardian, Mercury documents show the company illegally discriminating against certain professions, including soldiers, artists, bartenders, and traveling salespeople.

The Department of Insurance, now headed by a Republican, singles out Mercury as an especially bad actor with a history of hostility to regulation. As Rosenfield told us Feb. 9, "Here's what California Insurance Commissioner Steve Poizner said about Mercury in a case that's actually going to be heard tomorrow in Oakland. This is a quote: 'Mercury's lengthy history of serious misconduct and its attitude, contempt towards and/or abuse of its customers, the commissioner, its competition, and the Superior Court are all relevant to determining the penalty needed to best ensure the protection of the public for future violations and wrongdoing.' In my 22 years of working on insurance stuff, I've never heard the Department of Insurance refer to a company like that."

And here in San Francisco, the Guardian has a long history of exposing political corruption by PG&E, from essentially bribing local officials to give it control of the city electricity system — in direct violation of the Raker Act, the federal legislation that authorized the city to construct O'Shaughnessy Dam — to illegally funneling money into anti-public-power campaigns (one such violation in 2002 resulted in the largest fine ever issued by the San Francisco Ethics Commission).

The record on both companies is clearly malevolent, their political dealings utterly corrupt. Good government advocates say Props. 16 and 17 represent a clear litmus test on the power of corporations to push their interests ahead of the general public's in California.

"To me, it's a classic case study of what's going on with the initiative process in California and politics in general," said Derek Cressman, western regional director of Common Cause. "These are two initiatives literally sponsored by corporations to push very narrow interests."

"They are laws designed to give a financial advantage to a specific industry or company," Garamendi said, adding that he is afraid the effort may be successful. "Money talks. It always has, particularly in propositions, and the odds are money will talk again."

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