An interesting anecdote about your good friend Gray....

	"This man, in his official capacity, has no nexus with the issue of power or energy and he has no nexus with the issue of 	ethics or conflict of interests," South asserted. "He's a pure political phony."

THE STATE
Renewed Ethics Attacks Put Davis on the Defensive
* Politics: The governor's conflict-of-interest problems with his energy advisors give GOP rival Bill Jones a ray of hope for his struggling campaign 

by MARK Z. BARABAK, TIMES POLITICAL WRITER


In 1998, when Gray Davis first ran for governor, his Republican rival tested a series of attacks on Davis' ethical conduct.

There were charges that he improperly used state workers in a previous campaign, accusations that he placed cronies on the state payroll and questions about possible conflicts surrounding Davis' voracious fund-raising activities.

But when voters heard the allegations, they simply shrugged them off. The response was, "He's a politician. Of course he does stuff like that," recalled one GOP strategist who sat in on the voter interviews conducted for Republican nominee Dan Lungren. The campaign shelved its line of attack and Democrat Davis romped to a landslide victory.

Now he is under renewed assault for alleged ethical lapses, this time surrounding the state's electricity crisis. The issue has put the governor and his campaign aides on the defensive just as the state's power crunch appears to have finally eased.

The charges have also invigorated the struggling campaign of Bill Jones, the Republican secretary of state and Davis' sole declared rival in the race for governor. Last week, Jones called the conflict-of-interest allegations "one of the most significant, pervasive and costly" ethics scandals in California history.

But as yet, there has been no evidence of profiteering on the part of Davis' energy advisors, let alone the governor himself. And unless there is some proof, many observers doubt that the revelations will seriously set back the governor's reelection prospects in November 2002.

"I don't see this becoming a dominant campaign issue," said Jim Knox, executive director of California Common Cause, the good government group and one of Davis' most prominent critics. "It's likely that the more resonant issue . . . is going to be how well the overall crisis was resolved or not resolved."

That said, Knox worries that the controversy will only contribute to the corrosive cynicism turned up in Lungren's focus group interviews.

"The danger is that this could undermine the public's confidence in state government's ability to resolve this crisis in their best interest," Knox said. "It does surprise me that the governor's office, with all of its experience and talent, could so cavalierly disregard the state's conflict-of-interest laws, which, to me, appears to be what happened."

The controversy involves nearly a dozen Davis administration officials with financial ties to some of the major energy companies doing business in California. Their investments surfaced months after the officials should have filed economic disclosure statements--revelations that resulted, in part, from Jones' pressure. Five of them have been fired and others are facing state or federal investigations.

Garry South, the governor's chief political strategist, points to the firings as evidence of Davis' probity. "Clearly, if the governor's office did not feel there was a conflict of interest there, they would not have been fired," South said.

As for others in the administration who may have failed to promptly disclose their ties to the energy industry, "there is absolutely nothing illegal about anyone on the governor's staff--or anyone in state government--owning stock in any company whatsoever," South said.

Even so, Davis' top spokesman, Steve Maviglio, earlier this month sold his 300 shares of stock in a California power company after news of his holdings surfaced. Maviglio said he lost $1,300 in the transaction.

At the least, the revelations have been a distraction for Davis at a time when he would rather boast about a blackout-free summer.

"It is a mistake that didn't need to be made and shouldn't have been made," said Gale Kaufman, a Sacramento campaign consultant and one of the rare Democratic strategists willing to publicly criticize the governor. "The fact that it took a while to correct it creates an image problem he didn't need."

Republicans, of course, see a larger problem.

"He's either incompetent or there is corruption within his administration," said Rob Stutzman, a spokesman for the California Republican Party. "And we think it starts with the tone and example he sets with those who work for him."

In characteristically pugnacious fashion, the Davis campaign has sought to turn Jones' charges around by accusing the secretary of state of exploiting his public office for political gain.

"This man, in his official capacity, has no nexus with the issue of power or energy and he has no nexus with the issue of ethics or conflict of interests," South asserted. "He's a pure political phony."

But Jones said political oversight falls well within his purview as the state's chief elections officer. "For the governor's office to say that I don't have any jurisdiction in this area or shouldn't be able to speak to it is patently false," Jones said.

New Life for Jones' Campaign

Whatever his stake, there is no question that the attention has given life to Jones' campaign while he is fighting desperately to sustain his gubernatorial bid.

The $960,000 in contributions that Jones reported for the first six months of the year is embarrassingly small by California standards, and the Bush White House has all but formally endorsed rival Richard Riordan, who is still exploring the race.

(Fellow Republican William E. Simon Jr., a Los Angeles investment banker, has been campaigning for governor for months but has yet to officially declare his candidacy.)

But ironically, for all Jones' efforts, it may be Riordan who is best able to capitalize on the ethics controversy. Unlike Simon, a political neophyte, and Jones, an 18-year officeholder, Riordan had a decades-long business career before serving two terms as Los Angeles mayor.

"He's cut from a different cloth," said Don Sipple, a GOP strategist who is neutral in the governor's race. "If this serves to remind people that politics is a slimy game, Riordan can point to the fact he didn't start public service until he was more than 60 years old."

But even while insisting that Davis did nothing wrong, strategists say voters will make a careful distinction between the governor's professional conduct and any evidence of personal enrichment. And Davis' best defense, they argue, is his famously modest lifestyle--a frugality symbolized during his 1998 campaign by his cramped West Hollywood home.

If anyone thinks Davis has used his office to get rich, one advisor said, "All [wife] Sharon has to do is throw open the door to their condo."