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The Portland Tribune
Date: 12/26/2003

Ex-guv's new job anything but certain

SAIF, utility issues may jeopardize Goldschmidt's rise to education board

By JIM REDDEN
The Tribune

Former Gov. Neil Goldschmidt's appointment to head the state Board of Higher Education, once thought to be routine, appears headed for a challenge.

The Senate Rules Committee is scheduled to hold a hearing on Goldschmidt's appointment Jan. 22. Two of the six members have told the Portland Tribune they have serious concerns about the appointment. Only one member is offering Goldschmidt unqualified support. The Tribune was unable to reach the other three members by press time.

In addition, a seventh state senator is planning to question Goldschmidt about his controversial work for the State Accident Insurance Fund at the hearing.

Oregon Senate President Peter Courtney said he's worried that Goldschmidt's nomination could be stalled or even blocked.

"From what I've heard, people are starting to gang up on him," said Courtney, a Salem area Democrat who supports the appointment but is not a member of the rules committee. "If they just want to ask him some tough questions, I'm sure he can handle them. But if there's a move afoot to block his nomination, that's not right."

The two members with concerns about the nomination are Senate Republican Leader Roger Beyer, R-Molalla, and Sen. Richard Atkinson, R-Jacksonville.

Beyer says he is concerned about a number of issues, including Goldschmidt's controversial work for SAIF and his role with Oregon Electric Utility Inc., the new company that is trying to buy PGE from Enron.

"There's a whole lot of questions out there about Neil Goldschmidt and just what exactly he's been up to lately," said Beyer, a tree farmer who's co-leader of the rules committee.

Atkinson said he also wants to ask Goldschmidt about his business interests. He's in no hurry to approve the appointment, he added.

"I'm not sure he's the right person for the job," Atkinson said. "He has been involved in Oregon politics for a long time, and I think it's time for some new leadership."

Sen. Vicki Walker, D-Eugene, said she plans to question Goldschmidt about his work for SAIF at the hearing. Although Walker is not a committee member, she has received permission from Courtney to sit on it during the hearing.

Only one committee member, Sen. Virginia Burdick, D-Portland, said she supports Goldschmidt's appointment without qualification. But Beyer, Atkinson and Walker are entitled to raise their issues, she added.

At press time, the Tribune had not been able to reach the three remaining committee members -- Senate Democratic Leader Kate Brown, of Portland; Sen. Richard Devlin, D-Tualatin; and Sen. Bill Fisher, R-Roseburg.

Goldschmidt said he has nothing to hide and welcomes the questions.

"It is entirely fair to judge someone for a public position against what they have done in the past," he said. "If the senators want to show up and ask these questions, I will do my best to answer them."

Timing of vote questioned

Gov. Ted Kulongoski nominated Goldschmidt to head the board as part of a plan to reform the State System of Higher Education. Under Oregon law, the Senate must confirm the governor's appointments to state boards and commissions.

Beyer said there are so many questions surrounding the former Portland mayor and Oregon governor that the committee probably will have to schedule additional hearings on his nomination.

"I doubt very much that the appointment will be confirmed in January," Beyer said. The eventual outcome will depend on the information gathered by the committee, he added.

Among other things, Beyer said he wants to know more about a vote that Goldschmidt's wife, Diana, took as a member of the Oregon Investment Council.

On Oct. 29, the council voted to invest $300 million in a fund administered by Texas Pacific Group, the firm putting up $2.35 billion for the new utility company to buy PGE from Enron.

The next day, Neil Goldschmidt met with Kelvin Davis, a Texas Pacific partner. At the meeting, Davis asked Goldschmidt to serve on the board of the new company that was being created to buy PGE from Enron.

"I have some questions about the timing of the vote," Beyer said.

Neil Goldschmidt said he knew nothing about his wife's vote until after he was offered the board job.

"A lot of the investment council business is confidential, and she doesn't discuss it with me," he said. "If he wants to know anything about that, he'll have to ask her."

The Tribune was unable to reach Diana Goldschmidt for comment.

Courtney said he was uncomfortable with such questions and would discuss the situation with Kulongoski and Goldschmidt in coming days.

"It's beginning to sound like some people want Goldschmidt to walk over hot coals for the appointment, and I'm not sure that's fair," Courtney said.

Contract comes to light

Goldschmidt's appointment to head the higher education board didn't seem controversial when it was announced Nov. 13. Kulongoski said the board needed new and strong leadership to overcome problems caused by years of budget cuts.

Goldschmidt made news again five days later when the PGE sale deal was announced. During that time, news about the Oregon Investment Council vote surfaced. Then, shortly after that, the Oregon media began reporting on Goldschmidt's work for SAIF.

The stories were inspired by a media statement released by SAIF on Nov. 10, which was in response to Portland attorney John DiLorenzo winning a lawsuit that allowed him access to the agency's records. The records included information that SAIF has paid Goldschmidt's firm nearly $1 million since 1998.

The SAIF statement defended Goldschmidt's work for the workers' compensation insurer, even though no one in the media was yet aware of the work.

"For strategic direction, we consult with former Gov. Neil Goldschmidt and his colleagues at Goldschmidt Imeson Carter," the release quoted SAIF Executive Director Katherine Keene as saying. Keene has since resigned from SAIF to work for a New York insurance company.

Walker said the records prove that SAIF was spending money irresponsibly. Walker, a longtime critic of SAIF, filed an ethics complaint Dec. 5 charging that the workers' compensation insurer had not properly disclosed the payments to Goldschmidt's firm.

Goldschmidt formally ended his contract with SAIF the same day.

When the rules committee considers Goldschmidt's appointment, Walker said she will ask the ex-governor what work he performed for the money and whether he lobbied against efforts by private insurers to have the state sell SAIF to the private sector during the 2003 session of the Oregon Legislature.

Beyer said the SAIF questions are legitimate and wants to go further. He thinks that Goldschmidt is exerting a lot of influence for a private consultant and wonders if the appointment is in the state's best interest.

"Is Kulongoski turning the state over to Goldschmidt?" Beyer asked.

Walker believes that Kulongoski is aware of the concerns and is working to head off any opposition. She said University of Oregon President David Frohnmayer called her last Friday to lobby her on Goldschmidt's behalf.

"He said that it was very important that Neil be confirmed to the higher education board and that he thought SAIF was a separate issue," she said.

Walker said she has an appointment with Kulongoski to discuss her concerns Tuesday.

Kulongoski and Frohnmayer could not be reached for comment.


Contact Jim Redden at jredden[AT]portlandtribune.com.

 

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