PAY TO GRAY
California Gov. Gray Davis is feeling increasingly nervous about his campaign finances. No, he has plenty of cash. But that may be the problem: it’s where he got all that cash. Concerned about increased press scrutiny into his fundraising tactics, Davis and his mudslinging staff have begun strategically leaking negative financial material about Republican opponent Bill Simon, Jr. But what little dirt they are finding isn’t directly tied to Simon. “He’s pretty clean, actually,” says a Davis staffer based in Los Angeles. “But whenever you own a large company there is bound to be something you can get pinned on.”

And in the case of Simon, it’s a relatively small story. The San Francisco Chronicle reported on Friday that Simon’s firm, William E. Simon & Sons, was fined by New Jersey securities regulators for so-called “pay to play” deals in the early 1990s with New Jersey financial entities owned by close associates of then Gov. Jim Florio. “Pay to play,” is a technique commonly used by private firms seeking access to government officials and contracts.

And it’s a technique Gov. Gray Davis is currently under almost constant attack for practicing. For example, in the past year Davis has accepted large campaign donations from Enron, software giant Oracle, the union of state prison guards, Northrop Grumman’s Logicon and most recently, the management consultants Accenture, as he was considering state policies that would have affected those entities.

“We needed to tar the other guy,” says a Sacramento-based Davis campaign aide, who helped track down the Simon material for the campaign’s opposition research team. “Simon was getting off scot-free. Basically, if you tell the Chronicle Simon is dirty, they’ll run with it. More than the L.A. Times and the Sacramento Bee, they do us favors. This time was no different.” During the Republican primary, the Chronicle became notorious for receiving negative story leads about former L.A. mayor Richard Riordan from the Davis camp.

But Davis’s seemingly voracious appetite for cash will continue to cause him problems, if only the California media would focus on his donors.

For example, there is Alexander F. Kanakaris, who has donated more than $30,000 to the Davis campaign in the past year. In August 1999 Kanakaris was forced to settle with the Securities and Exchange Commission, without admitting or denying the allegations, that his firm misled potential investors about the financial stability of his company.

“Davis has all kinds of characters like this on his fundraising roles, if people would just take the time to look,” says a Simon staffer.

PAC IT IN
New York Republicans are pressuring former New York City Mayor Rudy Giuliani to create a political action committee to help his party compete in upcoming elections. “He’d be able to raise a couple million in no time,” says a New York Republican source. “And it would help him if he decided to run for higher office in the next couple of years.”

The pressure on Giuliani is partly the result of Sen. Hillary Clinton‘s ongoing success in raising money for her national and New York PACs, which have more than $2 million and half million in the bank, respectively.

Given Guiliani’s name recognition and through-the-roof approval numbers, says the New York source, “a Rudy PAC could bury her and the Democrats no problem. He could even farm out some of that cash to friendly Democrats. He’d be untouchable.”

In approaching him, Republican consultants showed Giuliani data that indicated he could pull in more than $2 million in the next six months from a broad base of donors, making him a political kingmaker for eager state and local candidates, as well as congressional Republicans.

Giuliani said he was interested, but not ready to make that kind of commitment to the party. “We’ll bring him around,” says the source. “He can’t stay out of politics forever. It’s in his bones.”