Jeff Smith noon, March 8
Governor's sister and crony now both on Sempra board
Brown family has history of controversy regarding cross-border-related energy involvement in California and Mexico
Governor Jerry Brown's insider contingent at Sempra Energy got bigger last week with the announcement that his sister, former California Treasurer Kathleen Brown, had joined the board of the San Diego-based utility giant, which owns SDG&E and the Southern California Gas Company.
“With her extensive background in investment banking and public service, Kathleen Brown provides our board with valuable experience in a broad range of financial and legal issues,” Debra Reed, Sempra's chairman and chief executive officer, said in a news release.
After running unsuccessfully against Republican Pete Wilson for governor in 1994, Kathleen Brown got a gig with Bank of America and then went on to the California office of Wall Street's Goldman Sachs.
When Jerry Brown was elected governor in 2010, his sister moved to the company's Chicago offices, from which she retired earlier this year.
Kathleen Brown told the Chicago Tribune last year that she had relocated to Illinois to avoid an appearance of conflict of interest while her brother was governor.
"I've been in various out-of-state witness-protection programs, as I like to call it," she said. "When my father was elected governor, I went to Massachusetts. Now, to be [in Chicago] when my brother is governor, is just fine."
Even by Wall Street standards, having the sister of the California governor leading your California municipal finance team would not have passed ethical muster.
"Had she continued to work with California municipalities, it might have created the perception of a conflict of interest," Goldman spokesman Michael DuVally said when Brown's move was announced.
On the Sempra board, Kathleen Brown joins fellow lawyer Lynn Schenk, the one term San Diego congresswoman and Jerry Brown's onetime staffer, longtime friend and political ally, who became a board member in 2008. Schenk is vice chairperson of California's controversial high-speed rail authority, one of the governor's biggest pet projects.
Jerry Brown, Schenk, and one-time San Diego wheeler-dealer Richard Silberman were California's power trio during Democrat Brown's first gubernatorial era back in the 1970s.
But following Brown's loss of his U.S. Senate bid to Wilson in 1982, Schenk and Silberman had a falling out after the latter married Republican Susan Golding and backed her successful run for county supervisor against Schenk.
(Silberman wound up in federal prison in 1990 after he was busted in an FBI money laundering sting. Golding went on to become a two-term mayor of San Diego, though her political career ended there.)
According to Sempra’s website, Schenk chairs the board's Liquid Natural Gas "Government Relations and Permitting" committee. Kathleen Brown will be a member of the corporation's LNG "Joint Venture and Financing" committee.
Natural gas, the Brown family, and its late patriarch, California governor Pat Brown, father of Jerry and Kathleen, have had a controversial past together.
In March 1979, the New York Times reported allegations that Jerry Brown had been using his influence on behalf of Silberman's old friend from Tijuana, Carlos Bustamante.
"The governor has been courting Mexican officials, including President Jose Lopez Portillo, with the behind-the-scenes aid of Mr. Bustamante.
Some of the projects Brown has been pushing in talks with the Mexican president are those in which Mr. Bustamante and his family, the Tijuana-based owners of ten gas utility companies, have a strong financial interest.
The Bustamantes have wealth and political influence on both sides of the border, and they are emerging as vital middlemen and partners with American individuals and companies doing business with Mexico.
The story went on to say that the FBI was investigating Brown's 1974 gubernatorial campaign for failing to report “large Bustamante contributions.” It added that Brown “would not discuss his relationship with the Bustamantes, but Gray Davis, his chief of staff, said there was not 'the slightest connection' between the governor's actions and the interests of the Bustamantes.”
The wealth of the Bustamante family - Alfonso Sr., 64 years old, and his two sons, Alfonso Jr., 35, and Carlos, 34, - exceeds $200 million, according to a business associate, and includes real estate, construction, hotels, and ten utility companies that distribute propane and butane gas, the sole source of cooking and heating fuel for most of the residents of Baja California.
Their political influence in Mexico is equally vast, according to friends of the family and political observers.
The Times story added that the Bustamantes “are involved in Mexican oil and gas deals with close associates of Brown, including his father, former Governor Edmund G. Brown, Sr., according to principals in the transactions.”
Governor Brown has publicly disavowed any financial ties to his father’s business activities. His father and his father’s associates have contributed sizable sums to his campaigns, however.
Some of Jerry Brown's meetings with Mexican officials, the story said, were “arranged by Carlos Bustamante and Roberto de la Madrid, governor of Baja California Norte, Mr. Bustamante says. Mr. Bustamante attended some of the meetings and was the only nongovernment person present, according to participants.”
Bustamante, according to the 1979 Times account, "was then under contract to San Diego Gas & Electric to secure the approval of the Mexican government” for a power plant project to be built in Baja California.
"The Bustamantes received more than $100,000 from the utility to make contact with and entertain Mexican officials,” the story said. Gordon Pearce, legal counsel and vice president of SDG&E, was quoted as saying, “We always suspected the Bustamantes would ultimately build the plant and that it would be on their land.”
Carlos Bustamante is currently the mayor of Tijuana.
Brown the governor has received plenty of political cash over his career from Sempra.
Most recently, the utility kicked in $26,000 to his 2014 re-election campaign fund, disclosures show.
More like this:
- Sempra Energy gave out more than $1.2 million in California political cash through June — Oct. 12, 2012
- Governor Has Big Stake in Firm of Fair Board Appointee's Father — March 2, 2012
- Breaking Stories — Dec. 1, 2005
- Mr. Bandstand Snarled in High-Tech Tijuana — Dec. 14, 2000
- All in the Family — July 22, 1999