Oracle-pact scandal grows
Aide who took donation for Davis resigns
By Amy Chance, Dan Smith and John Hill -- Bee Staff Writers
Published 2:15 a.m. PDT Friday, May 3, 2002Gov. Gray Davis' director of e-government personally accepted a $25,000 political contribution from a lobbyist for the Oracle Corp. last year, shortly after the state signed a controversial long-term software contract with the company, The Bee learned Thursday.
E-mail communications from the administration obtained Thursday, meanwhile, provide the strongest indication yet that Davis may have known about the contract after all. Davis aides have maintained the governor himself knew nothing about the contribution or the contract at the time.
As the scandal gripping the Davis administration's ill-fated deal with Oracle continued to escalate Thursday, California Highway Patrol officers descended on the state's technology offices to prevent document shredding, while Oracle officials and Davis aides said they were moving to rescind the deal.
Davis accepted the resignation of Arun Baheti, who was in charge of administration efforts to use technology to improve government service. Sources said Baheti personally accepted a check from a lobbyist for Oracle last year and transmitted it to Davis' campaign committee.
Davis also suspended Elias Cortez, head of the state Department of Information Technology (DOIT), "until further notice."
The personnel actions came as The Bee learned that a top Davis adviser sought details of the ill-fated computer software contract about a week before the pact was signed last year, indicating she would have to brief Davis on the deal.
The Democratic governor's office has maintained that Davis knew nothing about it when the deal was signed on May 31, 2001. An audit subsequently found that the $95 million, six-year software licensing agreement could cost the state $41 million more than it would have spent without the deal.
But according to e-mail obtained by The Bee, Kari Dohn, who advises Davis from the governor's inner office, called the Department of Finance's chief deputy director, Betty Yee, on May 22 to ask what was holding up the contract.
In the e-mail sent to three others in the Department of Finance, including Director Tim Gage, Yee sought the status of the contract "so I can brief Kari before she has to talk with the governor about this (likely sometime this week)?"
The e-mail also related that "per Kari, (the Department of Information Technology) and Arun (Baheti) are hot to trot on nailing this agreement down with Oracle, but they have advised Kari that Finance is not on board."
Davis spokesman Steve Maviglio said Dohn was simply preparing herself in case Davis brought up the deal.
"He was never briefed and he never asked any questions about it," Maviglio said. "She was being a good staff person and doing her homework."
Maviglio said Davis "knew nothing about the contract" and generally is "completely mystified by technology."
In an interview, Yee said she routinely gets inquiries from Davis' policy unit about matters. "I think (Dohn) was just trying to get a handle on where this was at in the event the governor asked her about it," Yee said.
Dohn did not respond to requests for an interview.
On May 23, Yee called Dohn to relate what others in the Department of Finance had told her: The department did not have a formal proposal before it to analyze, but indeed had concerns about what it knew.
Within a week of the contract signing, on June 5, Davis' political committee reported receiving the $25,000 campaign contribution from Oracle.
Sources said Baheti accepted the contribution from Oracle lobbyist Ravi Mehta at a Sacramento restaurant.
State law doesn't prohibit delivery of contributions to state officials outside the Capitol, but Davis political adviser Garry South said it would have violated the governor's own policies, which prohibit administration officials from participating in fund-raising activities.
"Far from using state employees as couriers or agents to accept and deliver checks to us, our policy has been they're not even allowed to go to fund-raising events," South said.
Davis legal adviser Barry Goode said the Governor's Office has reported all allegations involving Baheti to the state attorney general. Baheti declined to comment, and Mehta was unavailable Thursday.
"While I was briefed on the Oracle contract and supported the concept of an enterprise licensing agreement, it is apparent in retrospect that I should have more vociferously raised questions about the details," Baheti said in his resignation letter. "Had I asked more questions of (the Department of Information Technology) and (the Department of General Services), they might have seen the potential problems. For that, I must take responsibility."
Officials investigating the contract have said Baheti raised questions about how the agreement would affect the state's existing Oracle contracts, but also supported the deal.
Oracle spokesman Jim Finn confirmed Thursday that Mehta had hand-delivered the contribution. He said the contribution was made in connection with a fund-raiser held in April 2001 and had "absolutely no connection whatsoever to any pending business."
"Ravi's an outside lobbying contractor to us," he said. "He's not an Oracle employee. Ravi's judgment is Ravi's judgment in this case. It is not Oracle's judgment."
Finn said Oracle offered to rescind the contract with the state when it first became an issue several months ago.
"We stand by that offer today," he said. "However, we continue to believe that our contract delivers great value to the state."
Maviglio said state officials intend to pursue rescinding the contract as soon as possible.
Davis named Baheti as director of e-government in September 2000, moving him from deputy director of the Governor's Office for Innovation in Government. He managed technology projects, including development of the state's Web portal, and was involved with statewide technology policy.
Lawmakers' inquiry into the state's signing of the Oracle contract has shown that Baheti listened to a pitch from Logicon, the company that acted as a middleman in the deal, a week before the contract was signed.
The audit said inexperienced state negotiators signed the contract despite limited demand for the database software, which allows a computer user to store, access and work with information.
Maviglio said Cortez was asked to step aside until the investigation is complete because "of the number of allegations."
Last week, Davis announced the resignation of Barry Keene, director of the Department of General Services, for his role in securing the contract.
Administration officials said Vin Patel, director of Executive Information Systems, will serve as interim director of e-government. They said Robert Dresser, chief counsel at DOIT, will serve as interim director of DOIT.
The Bee's Amy Chance can be reached at (916) 326-5535 or achance@sacbee.com.
