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home / insurance / in the media

Associated Press
Mar 26, 2000

Critics question gifts to official

Firms pay $245,000 to state insurance chief
SACRAMENTO -- Insurance Commissioner Chuck Quackenbush collected tens of thousands of dollars in contributions from insurance companies and used it to repay his wife's loans in her failed state Senate campaign, the Los Angeles Times reported in today's editions.

During the last six months of 1999, Quackenbush, an elected official with regulatory power over the state's insurance companies, accepted $245,000 worth of political contributions, most of which originated from companies he regulates, finance records show.

Insurance interests, such as companies, their lawyers and employees, gave a total of $216,000. The insurance commissioner transferred $100,000 of that money to his wife, Chris, to help pay off personal loans she made on her 1998 campaign.

The Glendale-based Fremont Compensation Insurance Co. gave the most to Quackenbush, putting $93,350 in his political bank account nine days after he proposed an 18.4 percent increase in workers' compensation rates.

Allstate Insurance Co. donated $50,000 six months after Quackenbush decided not to fine the company for unfair claims practices related to the 1994 Northridge earthquake.

Other firms that gave to the commissioner were Metropolitan Life, at $20,000, and Progressive Insurance, with $10,000.

Through a spokesman, Quackenbush said he keeps his regulatory obligations and his political business distinctly separate and the two do not influence each other.

"There is absolutely no nexus at all between the business of the California Department of Insurance and the commissioner's political operation, including campaign fund-raising," Deputy Commissioner Dan Edwards told the Times.

Although Quackenbush is not running for re-election because state law bars him from seeking another term, Edwards said it was appropriate for him to accept political contributions because he could seek another office.

However, the contributions were troubling to Assembly Insurance Committee Chairman Jack Scott, D-Altadena, who said he plans to call hearings to investigate the matter.

"I'm very alarmed that there appears to be more than a coincidental relationship between the commissioner's enforcement actions and the stream of money that flowed into his campaign coffers," Scott told the Times last week.

Complicating the question of the propriety of the donations is the fact that Quackenbush gave $100,000 of the money to his wife.

While it may be unusual for an officeholder to transfer political contributions to his wife, there is no law in California against transferring contributions to another campaign fund.

Former Secretary of State Tony Miller, who used to enforce some campaign finance laws while in office, said the Quackenbushes' behavior demonstrates the weakness of California's ethics laws and lack of enforcement of current ones.

"Mr. Quackenbush is a poster child for why we need campaign finance reform," he said.

Miller said he will ask for an investigation by the Fair Political Practices Commission into possible violations of a state law prohibiting an agency official from accepting a contribution of $250 or more from any party involved in getting a license, permit or other entitlement from that agency.

Sal Bianco, the Fremont firm's vice president for governmental affairs, said the company's contribution was not related to Quackenbush's recommendation to increase workers' compensation rates. He said the donation reflected the company's opinion that Quackenbush "has done a good job trying to deal with all sorts of insurance problems in the state."

Likewise, a spokesman for Illinois-based Allstate said there was no connection between his company's contribution and Insurance Department decisions.

But the Quackenbushes' actions bring up questions of corruption to Harvey Rosenfield, a consumer activist who wrote Proposition 103, a successful 1988 initiative that converted the job of insurance commissioner from an appointed to an elective office.

"What's happening is the insurance industry has been funding the Quackenbushes' family political aspirations, and what they've done is paid off the Quackenbush family debts," he said. "It may be legal, but it's certainly the kind of legal institutional corruption that gives politics a bad name."


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