Foundation for Taxpayer & Consumer Rights Corporateering
  Home | Volunteer | Donate | Subscribe | FTCR Websites | Books | Site Map   
Main Page
Press Releases
In the Media
The Whistleblower
Meet Our Staff
Books from FTCR
Job Opportunities
 - Corporate Accountability
 - Healthcare
 - Insurance
 - Citizen Advocacy
 - The Justice System
 - Billing Errors
 - Energy

home / ftcr / commentary

Mar 28, 2000

Insurancegate, Quackenbush and the Law

by Harvey Rosenfield
The revelations that Insurance Commissioner Chuck Quackenbush got campaign contributions from insurance companies shortly after absolving them from wrongdoing in their handling of Northridge homeowners' damage claims should come as no surprise. This kind of thing has been happening since he got elected in 1994 with $2.5 million in insurance money.

Perhaps more novel is Mr. Quackenbush's ordering State Farm, Farmers and other insurance companies to pay $5 million to non-profit organizations he controls. (He has no statutory authority to do this).

The question is, how much more of this will the state's law enforcement officials and legislative leaders accept before they do something about it?

FTCR first caught Mr. Quackenbush cutting a deal like this in 1996, when Surety Company of the Pacific -- a highly-connected company by virtue of its political donations --- hired former Governor George Deukmejian to intervene on its behalf in a Department of Insurance investigation. No one knows what that investigation uncovered, because Quackenbush's office shut it down. Twice during the investigation, the company gave him contributions. That's a violation of the law.

FTCR filed a complaint with the Fair Political Practices Commission, the state agency that is supposed to enforce the state's campaign laws.

But the FPPC's members are appointed by the Governor, the Attorney General, Comptroller, and the Secretary of State, and when it comes to going after politicians, it's been a huge disappointment. By the time it gets around to examining violations of California's limited campaign laws (which are mostly about disclosure of campaign contributions and expenditures), the elections are long over and the fines relatively modest. For those candidates willing to break the law to get elected, anything short of losing that office is no punishment at all, especially since they can use campaign contributions to pay fines imposed by the FPPC.

At first, the FPPC told the press that the law FTCR cited didn't apply to Quackenbush. We set them straight on that. So in October, 1998, two years later, we got a letter from the FPPC saying they had denied our complaint for "insufficient evidence."(These documents will be on our web site shortly).

Case Closed.

Is it any wonder that people hate politics and distrust government? Newspapers endlessly chronicle the fundraising machinations of top officials, the daily conflicts-of-interest, but then what? After a while, people give up if nothing happens.

The Office of the California Attorney General is the best equipped to investigate and prosecute unlawful actions by politicians. But, of course, that office is an elected position itself. Dan Lungren, the previous AG and a Republican, never took action against fellow Republican Quackenbush, nor against any other politician for that matter.

The present AG, Bill Lockyer, may be different. But Lockyer's a politician (Democrat), too. Once you start investigating political corruption, you never know where it's going to take you or who you might end up with in your net; conceivably, people within your own party. Chuck Quackenbush certainly isn't the only elected official who's crossed over the line.

That's why the last serious effort to prosecute political corruption in Sacramento was conducted by the United States Attorney, with the help of the FBI. Those cases also involved the insurance industry. State Sen. Alan Robbins went to jail, but not before he wore a wire that caught the industry's vaunted super-lobbyist, Clay Jackson, trying to win his clients a reprieve from insurance reform Proposition 103 in exchange for money. He also went to jail.

Finally, the California Legislature also has authority to investigate wrongdoing of public officials. It oversees the activity of state agencies. And, under the California Constitution, it may remove an elected official for "misconduct in office." We can't find an instance, in modern history at least, where it has done so.

Campaign Reform?

Every time some public official is found to be raking in big campaign contributions, the cry goes out: we've got to have new campaign finance laws that restrict contributions to political candidates.

First of all, California voters have already done so, by initiative. The latest, Proposition 208 approved in 1996, has been delayed by litigation. The bigger obstacle is court decisions ruling that big corporations have a 1st Amendment constitutional right to "express themselves" with unlimited expenditures of money to influence elections and government officials. Until that nonsensical extension of the Bill of Rights is reversed, the ability to impose true controls on who can spend how much and when is very limited. (FTCR's volunteer-based Oaks Project is currently collecting signatures to place targeted conflict-of-interest legislation on the ballot in six California cities. Read more about this).

But more important, passing laws to regulate campaign contributions means nothing by itself. What good are laws if no one is willing to enforce them?

California Penal Code 67 makes it a crime to give a public official money to influence an official action. 68 makes it a crime for any official to ask for or receive money with the understanding that it will influence their actions. The crime is called bribery. It's on the books right now.Both the elected official and the individual making the bribe can be sent to the slammer if convicted. (Corporations can be convicted, too).

But only a District Attorney or the Attorney General can bring these charges. (Idea for future ballot initiative: let citizens appear before grand juries to present charges themselves).

Whether Commissioner Quackenbush -- or any of his pals in the insurance industry -- committed a crime in the nascent "insurancegate" scandal can only be determined by a serious and thorough investigation. Item #1 will be the reports and recommendations made by the Insurance Department's civil service staff who reviewed the conduct of State Farm, Farmers and other major insurance companies. These documents will tell us whether Quackenbush properly let them off the hook.

State authorities have the legal power and the resources to conduct such an investigation. They should start using 'em.

To respond, email For more about Insurancegate, read FTCR's 3/27/00 news release and request for documents from Quackenbush

back to top

©2000-2004 FTCR. All Rights Reserved. Read our Terms of Use and Privacy Policy | Contact Us