2010 GOP Gubernatorial Primary Meg Whitman vs.

Steve Poizner Republican Debate Watching Guide

Over the course of her campaign, Meg Whitman – the artful tax dodger and not-so-artful reporter dodger - hasn't let pesky things like facts get in her way. In Meg Whitman's world, facts take a back seat to fiction and reality takes a back seat to rhetoric. If past is prologue, we have every expectation that in this first debate and every debate to come, she will continue to pull pages from Pinocchio’s Playbook. State Insurance Commissioner Steve Poizner is an equally troubling candidate. Despite his claims to have been a friend to consumers, the record tells a far different story. At the California Accountability Project, we're fact checking Whitman and Poizner. The voters deserve to get the truth and the GOP candidates have made it clear they’re not interested in the truth. We are; and that’s why we have created this guide.

California Accountability Project Debate Watching Guide 1 of 31

WHITMAN SAYS: I was a great success in the business world. I'll run California like a business.
The central argument of Meg Whitman's candidacy is her success in the corporate world; since she has no experience whatsoever in public policy or governance. But the record shows that - on the whole - Whitman's business record is one of mediocrity and misconduct. MEG WHITMAN AT E-BAY When she resigned as President/ C.E.O. in 2008, Whitman left e-Bay with “Sliding Revenue and Profit”, and an “Identity Crisis,” after “Missteps,” and “Mixed Results.” “Ms. Whitman said she ‘couldn’t be prouder’ of her track record…. But in the past two years, eBay has been mired in a pronounced slowdown in growth and a painful transition. Buyers have fled the online marketplace, which many say is compromised by forgeries, disreputable sellers and an unpredictable buying experience, and the company’s stock has lost two-thirds of its value.” – Brad Stone, New York Times, February 22, 2009 “Analysts widely see eBay as a company in need of reinvention as revenue from its core auction business drops and as shoppers choose fixed-price online retail sites dominated by Amazon and other competitors. A May 2009 Wall Street Journal story about eBay's ‘identity crisis’ noted that the company ‘has had sliding revenue and profit in the past two quarters, while Amazon has reported record earnings.’” – Jack Chang, Sacramento Bee, January 10, 2010 “The Republican candidate has taken flak for some of eBay's perceived missteps, including its purchase of online phone service Skype and the roughly 50 percent drop in eBay's stock since 2004. Whitman left the company last year.” – Sacramento Bee’s Capitol Alert, November 30, 2009 “Until she stepped down as CEO in 2008, Whitman tried to keep that momentum going by expanding to foreign markets and tirelessly seeking acquisitions – with mixed results. For example, eBay purchased such lucrative companies as the money-transfer firm PayPal but also paid what many considered an inflated price for the online telephone company Skype without acquiring its underlying technology. ‘They clearly made some decisions that in hindsight don't look so hot,’ said industry analyst Peter Zollman.... Whitman… may have fallen short by Zollman's measure. Nearly two years after her resignation as CEO, eBay's future is uncertain, with its stock price about 40 percent of its peak November 2004 value.”– Jack Chang, Sacramento Bee, January 10, 2010
California Accountability Project Debate Watching Guide 2 of 31

WHITMAN SAYS: I was a great success in the business world. I'll run California like a business.
Whitman Camp Suggests She Was A Superstar at e-Bay, But e-Bay Folks Aren’t Talking “Most of Whitman's colleagues at eBay, however, have stayed mum about her tenure, and the company declined to speak to The Bee. Whitman's campaign also refused a request to interview her. To date, her campaign has tightly controlled media access to the candidate. Others who wouldn't comment include: co-founder Omidyar; former technology leader Mike Wilson; former Chief Financial Officer Gary Bengier; and Bob Kagle, a general partner at the venture capital firm Benchmark Capital, which was an early investor in eBay.” – Jack Chang, Sacramento Bee, January 10, 2010 Whitman’s Description of Her Tenure at e-Bay Doesn’t Square with Reality “Whitman often describes eBay's halcyon early days in her campaign stump speech, although parts of her account clash with other descriptions of that time. Whitman has dramatized the company's growth by describing how when she arrived, she had to replace lawn chairs still being used by employees with real office furniture. Cohen's book, however, tells how Omidyar and Skoll had already replaced the lawn furniture at the end of 1997, at least a month before Whitman's arrival.”– Jack Chang, Sacramento Bee, January 10, 2010 Whitman Claims She Wants to Help California’s Small Businesses, But as Head of e-Bay, She Hiked their Costs Repeatedly To Turn a Profit “‘For a long period of time, eBay generated revenue growth by raising fees on sellers,’ said Scot Wingo, the founder of Channel Advisor, which helps small businesses sell on the Internet. ‘Now everyone is starting to realize that was unsustainable.’” – Brad Stone, New York Times, February 22, 2009 “Sellers also complain that, under pressure to meet Wall Street expectations, eBay under Whitman repeatedly jacked up fees, driving off many sellers and making the site far less profitable for others.” - Ken McLaughlin/ Pete Carey, San Jose Mercury News/ Contra Costa Times, October 4, 2009 Whitman Erected Burdensome Regulations at e-Bay “Whitman certainly has her detractors, including many sellers who, ironically, complain that eBay during her reign erected a thicket of rules that were every bit as burdensome as the government regulations she now assails.” - Ken McLaughlin/ Pete Carey, San Jose Mercury News/ Contra Costa Times, October 4, 2009
California Accountability Project Debate Watching Guide 3 of 31

WHITMAN SAYS: I was a great success in the business world. I'll run California like a business.
Whitman Led e-Bay’s Purchase of Skype, Costing the Company More than $1 billion in Losses “Ms. Whitman also led eBay’s 2005 purchase of the Internet calling service Skype, in part based on the belief that eBay buyers and sellers would want to talk to each other to close deals. Most did not, and less than two years later, eBay acknowledged the mistake and wrote off more than half of the $2.6 billion purchase price.” – Brad Stone, New York Times, February 22, 2009 “Clearly the worst decision was buying Skype for $3.1 billion, on the questionable theory that eBay buyers and sellers would flock to the service to talk to each other to close their deals. Whitman eventually admitted she paid too much for Skype, and the company took a $1.4 billion write-down. ‘Meg was trying to paper over the cracks with acquisitions, and Skype was an unmitigated disaster,’ said Jeff Lindsay, an analyst with Sanford C. Bernstein. ‘I think she did a good job of keeping the growth going for the first five to seven years. But when the growth started to slow down, her record is a lot more mixed.’” - Ken McLaughlin/ Pete Carey, San Jose Mercury News/ Contra Costa Times, 10/4/09 Skype: Meg Whitman’s “$3 Billion Flop Investment for eBay” “Which makes sense, since Kazim was her point man at Skype – eMeg’s $3 billion flop investment for eBay. Calbuzz doesn’t expect to hear any critical eMeg war stories from these guys; for sheer interlocking intertwinedeness, the Tokoni connection is unmatched.” – Jerry Roberts and Phil Trounstine, Cal Buzz, February 4, 2010

California Accountability Project Debate Watching Guide 4 of 31

WHITMAN SAYS: I was a great success in the business world. I'll run California like a business.
Whitman Made “Tactical and Strategic Missteps” During Her Tenure At eBay “And there have been a handful of tactical and strategic missteps during Whitman's tenure. In 2002 she pulled eBay out of Japan, the world's second largest economy and Internet user, when it became clear that Yahoo Japan— then controlled by Japan's Softbank—had gotten there first and grabbed an insurmountable lead. She figured that eBay naturally would be a hit in the offline world and so spent $235 million of eBay's stock in 1999 buying traditional auction house Butterfield & Butterfield in San Francisco. The synergies were elusive; eBay quietly sold Butterfield in 2002 for what it calls an ‘immaterial gain.’ Her costliest mistake also offered the biggest lessons about how much the eBay community determines the company's success. In 2001, eBay unveiled a checkout procedure for completing transactions. The initiative…worked well, allowing buyers and sellers to settle bills quickly. But instead of hailing it, the eBay community went crazy. The problem: The checkout procedure seemed to favor payment via Billpoint, eBay's payment-processing service. Frequent sellers had grown attached to PayPal, then an independent company, and were steamed that eBay was subverting their choice. ‘About one-third of the sellers hated it,’ says Jordan. ‘They puked on it. For me it was a lesson in humility and an object lesson that this is a joint venture.’ The train kept on rolling, it seemed, whether eBay was working the levers or not. The company quickly made the checkout function optional, and in 2002 eBay bought PayPal for $1.5 billion, hundreds of millions more than it might have paid a year earlier.” – Adam Lashinsky, Fortune, August 11, 2003 Whitman’s Reign at e-Bay was “Blemished with Poor Decisions” and a “Series of Ethically Dubious Stock Deals” “In recent weeks, the Mercury News interviewed numerous current and former eBay employees, buyers and sellers, investors and stock analysts, asking them to judge her performance and predict how it might translate to running the state. The consensus: Whitman was a hands-on and savvy CEO whose reign was somewhat blemished by poor decisions and a series of ethically dubious stock deals.” - Ken McLaughlin/ Pete Carey, San Jose Mercury News/ Contra Costa Times, October 4, 2009

California Accountability Project Debate Watching Guide 5 of 31

WHITMAN SAYS: I was a great success in the business world. I'll run California like a business.
Whitman Raked in Nearly $2 Million Through IPO Spinning, A Practice Now Banned “…some fault Whitman for her ready acceptance of ‘friends and family’ stock from Wall Street giant Goldman Sachs during the superheated dot-com era. Until the practice was banned in 2003, brokerage houses routinely allocated shares of hot stock offerings to top executives as a reward for giving the investment firms corporate business. Whitman had hired Goldman to take eBay public in 1998. For the next four years, the investment bank allocated to her shares in more than 100 initial public offerings. All told, Whitman made a $1.78 million profit when she sold the stocks. After being singled out in a congressional report that called the IPO system rigged and corrupt, Whitman issued an internal memo to eBay employees saying she got the shares because she was a personal client of Goldman Sachs. ‘There is nothing worse than having your integrity questioned under circumstances where you know that you did nothing wrong,’ she wrote. Yet two professors who focus on business ethics — David Shapiro at the City University of New York and William Black at the University of Missouri-Kansas City — predict the issue might prove troublesome for her on the campaign trail. ‘The fact that she could say she could learn no ethical lesson is illustrative of moral blindness,’ Black said.” - Ken McLaughlin/ Pete Carey, San Jose Mercury News/ Contra Costa Times, 10/4/09 MEG WHITMAN’S BUSINESS CAREER BEFORE E-BAY Whitman Pre-eBay was “So Ordinary” “Like many Silicon Valley standouts, she was never a star in the old economy. People who worked with Whitman pre-eBay say she was smart but ‘so ordinary.’ She responds, ‘Well, I always felt that if I kept my head down and delivered, things would work out.’ From Disney she moved to FTD (flowers) as CEO, where she failed to fix the business. At Hasbro, she ran the preschool division. ‘Going from CEO to division president was great,’ says Whitman, 43. ‘I was able to do the Hasbro job effectively and raise two young boys at the same time.’” – Patricia Sellers, Fortune, October 25, 1999 Whitman was “Never Too Successful” Before Joining ebay “She was never too successful in her previous career. And you find this pattern a lot in Silicon Valley. It's the people that don't make it in a big way in traditional corporate America, who are the ones who are restless, who are the ones who are even the misfits, who make the leap, who take the gamble.” – Patricia Sellers/ Fortune Magazine/ CNN Newsstand, October 7, 1999
California Accountability Project Debate Watching Guide 6 of 31

WHITMAN SAYS: I was a great success in the business world. I'll run California like a business.
MEG WHITMAN AT FTD “It was her two years as chief executive of Florists' Transworld Delivery in Michigan, though, that proved her biggest disappointment. Ms. Whitman had been hired by the florist-owned member association in 1995 -- better known as F.T.D. -- to help smooth its transition to a privately held company. But several key members opposed the idea, quick decisions were politically impossible and competition was eroding market share. Conceding defeat, Ms. Whitman quit in 1997, moved briefly to Hasbro and the next year found herself at Ebay.” - Laura M Holson, New York Times, May 10, 1999 Whitman’s own executive assistant at FTD, Peggy Bacarella, was highly critical of her tenure at the Company, noting Whitman’s leadership was poorly received, and saying: "She considered all of us nothing but auto-company rejects, and she didn't want a bunch of auto-company rejects working for her…I found her to be very, very cold and impersonal, probably the coldest person I've ever worked for." [Peggy Bacarella, as quoted by Jack Chang in the Sacramento Bee, March 7, 2010] The Bee added that Whitman left FTD “…after two disappointing years struggling to turn a profit…. ‘This company is not fixable, at least not by me,’ Whitman told FTD Chairman Richard Perry at the end of her term.” [Jack Chang, Sacramento Bee, 3/7/10] “It was her two years as chief executive of Florists' Transworld Delivery in Michigan, though, that proved her biggest disappointment. Ms. Whitman had been hired by the florist-owned member association in 1995 -- better known as F.T.D. -- to help smooth its transition to a privately held company. But several key members opposed the idea, quick decisions were politically impossible and competition was eroding market share. Conceding defeat, Ms. Whitman quit in 1997, moved briefly to Hasbro and the next year found herself at Ebay.” [Laura M Holson, New York Times, May 10, 1999]

California Accountability Project Debate Watching Guide 7 of 31

WHITMAN SAYS: I was a great success in the business world. I'll run California like a business.
MEG WHITMAN AT THE STRIDE RITE CORPORATION Meg Whitman worked as a senior executive at the Stride Ride Corporation from 1992 through 1995, serving as President of the Stride Rite Division, as well as Executive Vice President of the Company’s Keds Division. In 1992, the company started overcharging customers on 5 million pairs of shoes. Beginning in 1993, state and federal authorities investigated the scheme. Eventually, the Federal Trade Commission and all 50 State Attorneys General determined that their behavior was a price-fixing scheme and the company was forced to pay $7.2 million in fines and enter into an injunction. In 1992, Meg Whitman Joins the Stride Rite Corporation, Serving as a Senior Executive Through 1995 “Prior to FTD, Whitman was president of the Stride Rite Corp.'s Stride Rite Division, where she was responsible for the launch of the highly successful Munchkins baby shoe line and the relaunch of the Stride Rite brand and retail stores. She had also been executive vice president for the Keds Division, and served as corporate vice president of strategic planning, from 1992 to 1993”.– Business Wire, January 20, 1997 “Southfield-based FTD Inc. has named a consumer-products marketer as its second-in-command. Margaret Whitman, 38, joined FTD as president last week from Cambridge, Mass.-based Stride Rite Corp., where she was president of its Stride Rite Division and executive vice president of its Keds Division. Whitman had worked at Stride Rite since 1992. She supervised Stride Rite's 250 company-owned stores and 450 licensed dealers.”-Matt Roush, Crain's Detroit Business, February 13, 1995 “Fuhrman said the departure of Kelly and the earlier exit of creative director Dave Lubars had no bearing on the decision to review agencies, a decision made by Meg Whitman, Keds' senior vp/marketing, product development and operations.” – Adweek, January 17, 1994

California Accountability Project Debate Watching Guide 8 of 31

WHITMAN SAYS: I was a great success in the business world. I'll run California like a business.
On September 28, 1993, New York’s Attorney General Announces Stride Rite Subsidiary Keds Has Agreed to Pay $7.2 Million In Fines And Enter into An Injunction Related to a Price-Fixing Scheme Which began in 1992 and Involved All 50 States “The Keds Corporation has agreed to pay $7.2 million to settle sneaker pricefixing suits brought by 50 states, the Federal Trade Commission and the District of Columbia, New York's Attorney General, Robert Abrams, said yesterday. In signing the agreement, Keds, a subsidiary of the Stride Rite Corporation, did not admit or deny wrongdoing, Mr. Abrams said. He maintained that Keds had threatened to stop supplying some of its most popular women's sneaker styles to retailers that discounted prices. Mr. Abrams also said Keds had encouraged retailers to spy on competitors and report price-cutting. He said that as a result consumers across the country paid higher prices. The settlement requires Keds to pay for its price-fixing by turning over the same amount overcharged, he said. Mr. Abrams said Keds sold five million pairs of women's sneakers, ranging in price from $19.19 to $44.99, in the United States during the reported scheme from Sept. 1, 1992, to Feb. 28. 1993. He said it involved six styles of women's sneakers. The settlement must be approved by United States District Court in Manhattan, where the suits were filed. - New York Times, September 28, 1993 “Keds Corp. of Cambridge, Mass., settled a price-fixing case in September 1993 by agreeing not to require that its shoes be sold at specific prices and donating $ 5.7 million to women's and children's charities.” – Associated Press, May 5, 1995

California Accountability Project Debate Watching Guide 9 of 31

WHITMAN SAYS: I was a great success in the business world. I'll run California like a business.
“In this case, between May 1, 1992, and April 30, 1993, Keds told retailers not to discount six of its women's Champion shoe styles: canvas and leather oxfords, canvas and leather slip-ons, leather walkers and leather booties. The purpose was to support the image of the brand by prohibiting price reductions.That's a form of price-fixing, alleged the New York attorney general and the Federal Trade Commission. Paul Kempainen, head of the antitrust division in Minnesota's attorney general's office, said the practice resulted in shoe prices that were $ 1 to $ 1.25 higher per pair than they would have been without the illegal price maintenance. (Would anyone think Keds were a higher-class shoe because its products cost $ 1 to $ 1.25 more?) As New York officials began investigating, Keds offered to settle, Kempainen said. The company wanted to avoid the time and expense of legal action, he said, and agreed to pay $ 7.2 million, including $ 1.5 million in investigation and administrative costs. As part of the deal, Keds explicitly denied wrongdoing. But it did agree not to do it again and said it would notify dealers that they can set their own prices on Keds products. The $ 5.7 million intended for consumers was to be doled out to each state according to its population: Minnesota's share is $ 98,631.”– Dan Wascoe Jr., Minneapolis Star-Tribune, November 14, 1993 “A SURPRISE $ 7.2 million settlement in a vertical price fixing dispute filed by the New York state attorney general's office against the maker of Keds athletic shoes may be a harbinger of more such suits to come. Stride Rite Corp. of Cambridge, Mass., agreed in September to settle the suit. The state attorney's investigation was begun in December 1992 after two major retailers voiced complaints to that office. At the same time, Stride Rite entered into a consent decree with the Federal Trade Commission, which has no power to levy fines or seek punitive damages, but can seek injunctive relief…. The Keds case joined by the attorney generals of all 50 states is the first major price-fixing settlement for the state since 1991, when state attorney general Robert Abrams won a $ 25 million vertical price fixing settlement with Nintendo and an $ 8 million settlement with Mitsubishi.” – Jeff Barge, Corporate Legal Times, November 1993

California Accountability Project Debate Watching Guide 10 of 31

WHITMAN SAYS: I took e-Bay, a Company with 30 employees and $4.5 million in revenues, and folding chairs, and turned it into a 15,000 employee powerhouse with $8 billion in revenues.
On the stump, on her web site, and in her book, Meg Whitman tells her e-Bay story. The fact is, the story contains multiple falsehoods, as noted below. How many employees were at e-Bay when she started at the company? Was it 35? "[Interviewer] How many employees do you have? [Whitman] It's about 200 fulltime. [Interviewer] And how many were there when you arrived? [Whitman] About 35. That does not include all of our customer support contractors.” – Chuck Lenatti, “Auction Mania,” Upside, July 1999 Was it 30? "…When I took over a $4 million company with thirty employees…” – Meg Whitman, Page 9. “The Power of Many,” Crown Publishers, 2010 "When she joined eBay, the company had just $4.7 million in revenues and 30 employees; when she retired in March of 2008, ten years later, the company had nearly $8 billion in revenues and 15,000 employees worldwide – with millions of users in California alone.” – Meg Whitman’s campaign website Was it 20? "Well, we've obviously grown very, very rapidly. When I joined eBay, there were about 20 people at eBay.” - National Press Club Luncheon Speaker Margaret Whitman, President And CEO, Ebay Inc. Moderator: Larry Lipman, National Press Club Ballroom, Washington, DC Federal News Service, April 20, 1999 When I joined the company in January, 1998, we had just finished a year where we did $4.5 million in sales. There were 20 people in the company in a small office in Silicon Valley.” – Meg Whitman interviewed by Robert D. Hof in Business Week March 19, 2001 "Every month, the company [eBay] evolves a bit. We're still growing so fast that we evolve our thinking almost every month….as we go from 20 people to 300 people at the company, we have got to get the users here so our executives, our managers, our engineers, and our customer-support reps can actually meet users face to face. –Meg Whitman int. w/ Robert D. Hof, Business Week, 12/3/01,
California Accountability Project Debate Watching Guide 11 of 31

WHITMAN SAYS: I took e-Bay, a Company with 30 employees and $4.5 million in revenues, and folding chairs, and turned it into a 15,000 employee powerhouse with $8 billion in revenues.
"But I knew that I was coming to a startup. There were 19 people here. The books were on QuickBooks.” – Meg Whitman int. w/ Charles Fishman, Fast Company, April 2001 It turns out, the answer is NONE OF THE ABOVE. The FACT is: There were AT LEAST 41 people at e-Bay before Meg Whitman joined the company in May of 1998. "The Company's total headcount grew to 41 by December 31, 1997 and to 76 by June 30, 1998.” - e-Bay Investor Prospectus September 25, 1998, Note that eBay's prospectus indicates there were 76 employees by June 30, a month after she joined the Company. Thusly, it is quite possible that eBay had DOUBLE the amount of employees she often claims it did when she joined. Whitman also can’t seem to get it right on revenues when she started at the Company. Was it $4 million? "…When I took over a $4 million company with thirty employees…” – Meg Whitman, Page 9. “The Power of Many,” Crown Publishers, 2010 "I’d put this record up against anyone’s: In 10 years, eBay went from 300,000 users to 250 million and from $4 million in annual revenue to $8 billion. But ours is a business where the pace of change is dramatic.” – Meg Whitman, as quoted by Amy Wallace for Portfolio.com, April 14, 2008, "Mitch Zack, a spokesman for Whitman's campaign, said she stands by her record as leader of the world's largest online auction firm, saying that she joined the company when it had 30 employees and $4 million in revenue.” – Carla Marinucci, San Francisco Chronicle, 4/17/09 Was it $4.5 million? "When I joined the company in January, 1998, we had just finished a year where we did $4.5 million in sales. There were 20 people in the company in a small office in Silicon Valley.” – Meg Whitman interviewed by Robert D. Hof in Business Week, March 19, 2001
California Accountability Project Debate Watching Guide 12 of 31

WHITMAN SAYS: I took e-Bay, a Company with 30 employees and $4.5 million in revenues, and folding chairs, and turned it into a 15,000 employee powerhouse with $8 billion in revenues.
Was it $4.7 million? "When she joined eBay, the company had just $4.7 million in revenues and 30 employees; when she retired in March of 2008, ten years later, the company had nearly $8 billion in revenues and 15,000 employees worldwide – with millions of users in California alone.” – Meg Whitman’s campaign website, It turns out, the answer is NONE OF THE ABOVE. The FACT is: When Meg Whitman joined the company in May of 1998, revenues were north of $5.7 million. "Since Whitman joined eBay in early 1998, its revenue has exploded--from about $ 5.7 million to an expected $ 4.3 billion this year.” –William Meyers, US News & World Report, 10/31/05 "The company looks small. Revenues for all of 1997, its first full year in business, were $5.7 million. But net sales for just the first half of this year were $14.9 million. What's more, because eBay isn't selling its own merchandise, what you see is what you get: gross profits are a hair below net sales at $13.2 million.” – Adam Lashinsky, San Jose Mercury News, July 24, 1998 "In 1997 the company reported earnings of $ 874,000 on revenue of $5.7 million, and in the first six months of 1998 it posted earnings of $ 348,000 on revenue of $14.9 million.” – Nelson Wang, Internet World, 7/27/98 "The Company's net revenues increased from $372,000 in 1996 to $5.7 million in 1997 and from $1.7 million in the first six months of 1997 to $14.9 million in the first six months of 1998. The increases between the comparison periods were primarily the result of growth in the number of items of merchandise listed by sellers for auction on the Company's Web site and from the number of auction transactions successfully concluded by the Company. The increase from 1996 to 1997 was, to a lesser extent, the result of small increases in average transaction size and certain increases in the placement fees for various forms of featured placements for listed items. The total number of items listed grew from approximately 289,000 in 1996 to approximately 4.4 million in 1997 and from approximately 1.2 million in the first six months of 1997 to approximately 10.8 million in the first six months of 1998.” – eBay Investor Prospectus September 25, 1998,

California Accountability Project Debate Watching Guide 13 of 31

WHITMAN SAYS: I took e-Bay, a Company with 30 employees and $4.5 million in revenues, and folding chairs, and turned it into a 15,000 employee powerhouse with $8 billion in revenues.
But it isn’t just the number of employees and company revenues Whitman continues to fudge. She also continues to repeat the falsehood that folks were sitting in lawn chairs and beach chairs when she started at eBay. "I walked into a room filled with computers, beach chairs, cables, coffee cups, and a crew of intense, bright, young employees in jeans, shorts, and T-shirts.” – Page 14, Meg Whitman, “The Power of Many,” Crown Publishers, 2010. "’I called the phone company to set up the phone lines,’ she tells the group. ‘I bought cubicles and furniture because we only had lawn chairs. I wrote the marketing plan myself.’” – Meg Whitman quoted by Patricia Sellers, Fortune, 3/30/09 But the fact is, that’s just not true; as noted by the Sacramento Bee’s Jack Chang. "Whitman often describes eBay's halcyon early days in her campaign stump speech, although parts of her account clash with other descriptions of that time. Whitman has dramatized the company's growth by describing how when she arrived, she had to replace lawn chairs still being used by employees with real office furniture. Cohen's book, however, tells how Omidyar and Skoll had already replaced the lawn furniture at the end of 1997, at least a month before Whitman's arrival.” – Jack Chang, Sacramento Bee, January 10, 2010

California Accountability Project Debate Watching Guide 14 of 31

WHITMAN SAYS: I’m running for Governor because I care too much about California to watch it fail.
Meg Whitman didn't care enough about California to bother voting in many, many California Primary and General Elections. By her own admission, her voting record is unacceptable and inexcusable. Contra Costa Times: Whitman’s “Misleading Statements About Her Voting History” Show A “Disdain for the Political Process and the Electorate She is Asking to Support Her” “The issue is not just that she failed to register and failed to vote; it's also the reasons she has given and her misleading statements about her voting history. It all shows an unacceptable disdain for the political process and the electorate she is asking to support her.”– Contra Costa Times editorial, October 5, 2009 Contra Costa Times: Whitman’s “Voting Record is Unacceptable” “Then, after trying to duck the issue for days, Whitman finally offered an explanation for her poor voting record. ‘I was focused on raising a family, on my husband's career, and we moved many, many times,’ she said. ‘It's no excuse. My voting record, my registration record, is unacceptable.’ She's right. Family responsibilities and moving are no excuse for not voting. (What an insult to parents across the state who somehow manage to raise their kids and still cast a ballot!) And, yes, her voting record is unacceptable.” – Contra Costa Times editorial, October 5, 2009 Reporters: “It’s Still Clear That Whitman Missed Most Elections…” “The pushback is part of a newly aggressive effort to repair the damage that came from being depicted as unengaged politically for the last 28 years. And it marks yet another attempt for the Whitman campaign, following apologies and explanations, to take control of a storyline that her campaign has been unable to squelch. Still, some political observers say, the fallout will likely linger. It's still clear that Whitman missed most elections, and other questions still remain over her fresh claims that she voted. Whitman's campaign this week said she voted in the 1984 and 1988 presidential elections for Ronald Reagan and George H.W. Bush.” – Steve Harmon & Denis Theriault, Contra Costa Times, October 6, 2009

California Accountability Project Debate Watching Guide 15 of 31

WHITMAN SAYS: I’m running for Governor because I care too much about California to watch it fail.
“Novice Candidate” Whitman Faces “Revelations” She “Often Failed to Register and to Vote,” Provides “Shifting Explanations” “In California, another novice candidate for governor, former eBay chief executive Meg Whitman, has run into a buzzsaw of controversy following revelations that she had often failed to register and to vote in elections. Critics have questioned whether she has provided shifting explanations for her record of participating in elections.” – Jeff Mapes, The Oregonian, December 22, 2009 In 2000, Business Week noted Whitman’s “Worse Than Spotty” Voting Record “Almost 9 million Californians cast ballots in the 2003 special election that swept movie star Arnold Schwarzenegger into the Governor's Office. Meg Whitman wasn't among them. The billionaire businesswoman now running for governor herself in 2010 didn't vote in that special election, even after Business Week listed her among a group of top executives with ‘worse than spotty voting records’ in a 2000 magazine story, public records show.”- Andrew McIntosh, Sacramento Bee, September 24, 2009 Further, Meg Whitman only lived in California for 11 years – from 1981 to 1992 before abandoning the State for Massachusetts. She told a reporter at the time that she felt it was the right thing to do and a better place to race her boys than California. She only returned to California in 1998, 6 years later, to take the job at e-Bay. Also, Meg Whitman doesn't care enough about California to pay her fair share in State taxes. Whitman's own IRS filings show her charitable foundation sent millions offshore, to the Cayman Islands and Bermuda, notorious havens for tax dodgers who don't want to pay the taxes they owe the state and nation. In 2007, Meg Whitman’s charitable foundation sent several million dollars offshore, to Hedge Funds based in Bermuda and the Cayman Islands.

California Accountability Project Debate Watching Guide 16 of 31

WHITMAN SAYS: I’m running for Governor because I care too much about California to watch it fail.
“The Griffith R. Harsh IV and Margaret C. Whitman Charitable Foundation in 2007…also invested $3 million in hedge funds based in the Cayman Islands — a Caribbean tax haven that's been the subject of political controversy…. ‘When you're a billionaire, you will do things with money that don't look so good when you're a political candidate,’ said John Pitney, a government and politics professor at Claremont McKenna College. ‘Even if they're totally ethical and lawful, they can still be embarrassing.’’ [Mercury News, 11/18/09] “The foundation's tax returns also show $3 million invested in Cayman Island hedge funds and $1 million in another fund in Ireland. ‘If I were her investment adviser, I would have told her to avoid the offshore investment until she had figured out her political future,’ said Morris, the accountant….The Caymans have been a target of politicians in recent years. U.S. Sen. Carl Levin, D-Mich., and Rep. Lloyd Doggett, D-Texas, recently introduced legislation seeking to rein in tax shelters in places such as the Caymans.”– [Mercury News, 11/6/09] The filings can be found at: http://dynamodata.fdncenter.org/990pf_pdf_archive/ 208/208033091/208033091_200712_990PF.pdf Here’s what they reveal: In 2007 alone, Meg Whitman’s foundation invested $4 Million in Caribbean Tax Havens. $1 MILLION INVESTED IN ARCHIPELAGO HOLDINGS (Based in Bermuda) According to information provided to the IRS by the Griffith R. Harsh IV and Margaret C. Whitman Charitable Foundation, the foundation transferred $1 million to Bermuda-based Archipelago Holdings, Ltd. on 9/28/07. [http://dynamodata.fdncenter.org/990pf_pdf_archive/ 208/208033091/208033091_200712_990PF.pdf]

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WHITMAN SAYS: I’m running for Governor because I care too much about California to watch it fail.
$1 MILLION INVESTED IN MASON CAPITAL, LTD. (Based In Cayman Islands) According to information provided to the IRS by the Griffith R. Harsh IV and Margaret C. Whitman Charitable Foundation, the foundation transferred $1 million to Cayman Islands-based Mason Capital, Ltd. on 9/28/07. [http:// dynamodata.fdncenter.org/990pf_pdf_archive/ 208/208033091/208033091_200712_990PF.pdf] $2 MILLION INVESTED IN TPG-AXON PARTNERS (OFFSHORE), LTD According to information provided to the IRS by the Griffith R. Harsh IV and Margaret C. Whitman Charitable Foundation, the foundation transferred $2 million to Cayman Islands-based TPG-Axon Partners (Offshore) Ltd. on 5/1/07. [http://dynamodata.fdncenter.org/990pf_pdf_archive/ 208/208033091/208033091_200712_990PF.pdf] In 2007, the Pittsburgh Post-Gazette (7/6/07) discussed Offshore Hedge Funds Archipelago and Mason Capital, reporting: “Between Sept. 28 and Sept. 30, 2004, the University of Pittsburgh Medical Center transferred $55 million to investment funds in the Caribbean, more than half of the money destined for a Cayman Islands office building known as the Safehaven Corporate Centre. “The transfers were part of $204.5 million sent by UPMC to sun-soaked, tax-friendly locations in the Caymans, the Virgin Islands or Bermuda during the fiscal year beginning July 2004 and ending June 2005, according to Internal Revenue Service records. Many of the funds were set up by private investment syndicates looking to avoid U.S. taxes. “….In fact, nonprofit health-care providers, colleges and philanthropies with major endowments have spent the last decade or so steering large chunks of their portfolio away from the volatile U.S. stock market and into less traditional investments -- particularly private equity and hedge funds, thousands of which are registered hundreds of miles south of Miami, in the Caribbean. Thanks to a loophole in the tax code, which is now under examination by Congress and soon could be eliminated, there are tax benefits to the offshore strategy…”

California Accountability Project Debate Watching Guide 18 of 31

WHITMAN SAYS: I’m running for Governor because I care too much about California to watch it fail.
“Investing in a U.S.-based hedge fund -- which typically borrows against the investors' kitty, using the original investment plus the leveraged money to play for big short-term gains -- normally would subject a nonprofit to something called the ‘unrelated business income tax.’ “….But by investing offshore, nonprofits are able to escape that tax -- for now. The U.S. Senate Finance Committee is considering a proposal that would tax the dividends from offshore hedge fund investments, which, if implemented, would significantly lower the nonprofits' hedge fund returns.‘It's troubling that some nonprofits are part of that game,’ Sen. Charles Grassely [sic] of Iowa, the senior Republican on the committee, said recently. “….In its most recent filing, [Pitt] reported, among other transfers, having sent $3 million to Archipelago Holdingsin Bermuda, $3.5 million to Beacon International in Bermuda, $3.5 million to Bermuda's March International, and $12.5 million to Mason Capital Ltd. in the Caymans.” [Pittsburgh PostGazette, July 6, 2007] The Associated Press reported on 2/18/10: “Thousands of international companies and hedge funds have traditionally been incorporated in offshore financial centers in the Caribbean and elsewhere, drawn by low tax rates and banking rules and legal systems that make it easy to move capital around the globe. But U.S. and European lawmakers and regulators are weighing a number of proposals aimed at cracking down on abuses and collecting more tax revenue from multinational operations…. The Cayman Islands, which lie 150 miles (240 kilometers) south of Cuba, does not directly tax any of the roughly 80,000 companies registered there, and has no income tax or capital gains tax. Its offshore financial services sector accounts for about half of the islands' economy.”

California Accountability Project Debate Watching Guide 19 of 31

WHITMAN SAYS: State spending is out of control, and I will fire 40,000 state workers to trim the fat.
The Los Angeles Times’ George Skelton writes: “It started last fall with a radio ad, later abandoned, asserting that state spending had risen 80% ‘in the last 10 years.’ It actually had increased just 27% and, considering inflation and population growth, had declined by almost 17%. [Times, 2/25/10] On the CalBuzz blog, Mark Paul also took candidate Meg Whitman to task for her fact fudging on state spending: “That hope withered the other day when I heard one of Whitman’s recent radio ads. ‘We know spending has been out of control in Sacramento,’ she crooned from the speakers. Et tu, Meg? Say it ain’t so. The only people who ‘know’ state spending is ‘out of control’ don’t know what they’re talking about. “According to the latest budget estimates, the state will spend less this year than it did in 2005, when there were two million fewer people in California. And as this chart shows, when measured as a share of California’s personal income, state spending is at the lowest level in a generation. “If it’s smaller government you want, California has already got it, the smallest since Ronald Reagan’s final years in Sacramento. “When they say what they’ll do about ‘out of control’ spending, Whitman and Steve Poizner, her rival for the Republican nomination for governor, point quickly to how many people work for the state. Here, too, they have flunked their business due diligence. “Yes, more people work for the state today than a generation ago. As this chart shows, their number has almost doubled in the last 35 years. But so has California’s population. If state government employment were increasing faster than state population, you’d be worried. In this chart, you can see the opposite is true. The number of state employees per 1,000 Californians has declined since the mid-1970s. “…If you believe California is out of line in how many people it employs in state government, you haven’t been paying attention.” [CalBuzz, 2/26/10] California Watch’s Robert Salladay also weighs in on Meg Whitman’s fact fudging.
California Accountability Project Debate Watching Guide 20 of 31

WHITMAN SAYS: State spending is out of control, and I will fire 40,000 state workers to trim the fat.
Salladay writes: “Republican gubernatorial candidate Meg Whitman wants to chop the state's workforce by 40,000 employees, a pledge she made again this weekend at the state GOP convention. But does the nation-state of California really have such a bloated government? “Not according to the Center for Continuing Study of the California Economy, an independent research group based in Palo Alto. The director, Stephen Levy, is one of the principal experts on the state's economy, and he reported in December: “‘There is broad agreement that seeking efficiencies in government programs is good public policy. Yet, the data suggest that at the aggregate level California is not overstaffed relative to caseloads in the major program areas. Indeed, a stronger case can be made that public programs are being carried out with less staffing than in most other states.’ “In his report from last December, Levy's organization found that California – which has 38 million residents – had the third lowest number of full-time state government employees relative to the population. “California and Florida both had 103 state employees for every 10,000 residents, while Illinois had the lowest ratio at 97, the group reported. The U.S. average was 143 state employees per 10,000 residents, with California 28 percent below the national average. “But what about all the local government employees? Even adding those to the mix, California still has a comparatively small workforce, according to the employment and population numbers from 2008. The report concluded: “When state and local government employees (including education) are added together, California has the fourth lowest ratio of employees to population. California had 484 state and local full-time equivalent employees per 10,000 residents in 2008 compared to the national average of 549. Nevada was the state with the lowest ratio (440) followed by Michigan (475), Pennsylvania (478), and Utah (493). California’s ratio was 12 percent below the national average. “Levy's group also found that between March 2008 and October 2009, the number of state and local government jobs declined by approximately 70,000, while the state added approximately 600,000 residents.
California Accountability Project Debate Watching Guide 21 of 31

WHITMAN SAYS: State spending is out of control, and I will fire 40,000 state workers to trim the fat.
“Whether the government payroll is inflated or not depends a bit on your perspective, of course. Could some government services, such as running prisons or monitoring toxic waste in rivers, be performed more efficiently and effectively in the private sector? Is California simply one of the least bloated out of 50 bloated state governments? “Whitman uses state Department of Finance figures to highlight the total number of all state employees, including University of California, California State University, employees of the Legislature and state courts, the state pension system, and other departments outside of the governor's direct control and, in some cases, operating without general fund support. “That figure shows state positions have grown from 313,684 in the 2004-05 state budget to 345,288 in the current budget. “But look at the (PDF) chart Whitman links to on her Web site. Another measure of state government spending has been reduced or stayed flat, even while the number of all state employees has increased. The state of California is spending less per capita and less per $100 of personal income than it did in 2004-05.” [Robert Salladay, California Watch, March 15, 2010]

California Accountability Project Debate Watching Guide 22 of 31

WHITMAN SAYS: California is 'the welfare state', and 22% of the people on welfare don't even work to earn their benefits.
Meg Whitman regularly attacks the State’s CalWorks program; and, as news reports and expert make clear, her rhetoric does not match reality. In the Modesto and Sacramento Bees, Frank Mecca, executive director of the County Welfare Directors Association of California, has taken Whitman to task for making “false allegations” which are “flat-out wrong.” [Modesto Bee, 2/26/10, Sacramento Bee, 2/21/10] The Sacramento Bee’s Jack Chang also noted: “Whitman's ad hits hard at a signature issue for her party but continues her pattern of using statistics selectively to exaggerate her point. It's true that only 22 percent of welfare recipients statewide from October 2007 to September 2008 spent a required number of weekly hours working for income or doing community service, adult education or other work-related activities, according to the most recent federal data. “But 39 percent of welfare recipients are minors whose parents have lost their aid because they didn't comply with the program's requirements or have exceeded its lifetime aid limit. Whitman's ad doesn't say how the proposed changes would affect these children. And it's not true that only 22 percent are working at all. Another 16 percent of recipients work or do work-related activity for less than the required number of weekly hours.” [Bee, 1/29/10] The San Jose Mercury News also took issue with Whitman’s CalWorks fact fudging; editorializing that: “One of Whitman's chief criticisms of CalWorks is also misleading. She trumpets that only 22 percent of California's welfare recipients are working for their welfare checks. But about four of every 10 welfare recipients are minors. She also neglects to mention, as the Sacramento Bee reported, that another 16 percent work or do work-related activity, although it's less than the state's required number of weekly hours.” [Mercury News Editorial, 2/12/10]

California Accountability Project Debate Watching Guide 23 of 31

WHITMAN SAYS: The State is using an outdated IT infrastructure; outdated computers.
In an article called “Ad Watch: Whitman's efficiency message distorts reality,” Sacramento Bee political writer Jon Ortiz noted that: “It's true that some state organizations use 30-year-old software, such as the Employment Development Department. But the ad's implication that the state hasn't invested in IT to pour money into payroll isn't accurate.” [Bee, 2/20/10] The Los Angeles Times’ George Skelton also weighed in on Meg Whitman’s IT/ Software claim, writing: “…Adrian Farley, chief deputy honcho for the state's computer system, says 90% of the machines run modern Windows XP. And although some software is decades-old, it is more efficient than any of the newfangled stuff.” [Times, 2/25/10]

California Accountability Project Debate Watching Guide 24 of 31

WHITMAN SAYS: I’ve lived in California for 30 years.

"Unfortunately for Whitman, much of the mom-and-apple-pie talk was eclipsed by controversy over the only specific in the ad: her statement that ‘the state is in the worst shape that I've seen in the 30 years that I have lived in California.’ Trouble was, she hasn't actually lived in California for 30 years. Her decampments here have been punctuated by moves elsewhere, including one to Massachusetts, which she proclaimed a better place to raise her sons than California.” - Cathleen Decker, Los Angeles Times, 2/7/10 “I have lived in California for nearly 20 years and I’ve never been to see the elephant seals. And we had a ball. We drove to Half Moon Bay, drove down the coast, had a picnic lunch, went to see the elephant seals, on the most spectacular California day that you have ever seen. And then took off to a hike in the redwoods that’s just north of … or just a little bit south of Half Moon Bay, and did about a 10-mile hike, which I was dying at the end of.” – Meg Whitman interview with Lesley Stahl, WowOWow.com, March 13, 2008 - http:// www.wowowow.com/post/part-vii-meg-whitman-ive-got-lots-other-things-my-plate

California Accountability Project Debate Watching Guide 25 of 31

POIZNER SAYS: As Insurance Commissioner, I kept watch over the Insurance Industry and protected consumers.
Steve Poizner was elected to keep watch over the insurance industry, but the record shows he’s surrounded himself with Insurance Industry insiders, and that time and again, he’s been asleep at the switch when it comes to regulating them and protecting consumers. He allowed automobile and homeowners insurance companies to raise rates on California consumers, and dropped the ball with health insurance companies accused of illegally cancelling people’s coverage after they got sick. Poizner Has Surrounded Himself with Insurance Industry Insiders, Angering Consumer Advocates “Poizner has angered critics by surrounding himself with insurance industry insiders. Poizner's first move was to hire former insurance industry lobbyist Bill Gausewitz as his special legal counsel for policy issues. His chief of staff is Jim Richardson, who'd previously served as chief of staff for former Assembly GOP leader Jim Brulte, a consultant with California Strategies, whose client roster is known to include big-name insurance companies. Brulte, who co-headed Poizner's 2006 campaign and is leading his exploratory committee for governor, declined to comment for this story. Poizner's staff counsel is Adam Cole, who previously was a partner at a major law firm that has long battled Proposition 103, though his own role was seeking claims against insurance companies.” – Steve Harmon, Contra Costa Times, December 22, 2008 “California's newly elected insurance commissioner, Republican Steve Poizner of Silicon Valley, promised to create a non-partisan agency that is ‘fiercely independent from those being regulated.’ But in one of his first moves, the potential gubernatorial candidate in 2010 has appointed a longtime insurance industry representative, Bill Gausewitz, as his special counsel, a top legal position in his office. Poizner -- who presides over the obscure but powerful agency that regulates the state's insurance industry -- also selected as his chief of staff a former high-level Republican staffer in the state Senate…. But the appointments have prompted questions about Poizner's commitment to create a centrist, independent office. One leading consumer rights advocate who endorsed Poizner instead of Democrat Cruz Bustamante was incensed by the choice of Gausewitz in particular, saying it creates a fox-guarding-the-henhouse scenario. ‘It contradicts what Poizner promised to the public,'’ said Harvey Rosenfield, the author of Proposition 103, the landmark 1988 measure that established regulations for the auto insurance industry. ‘He's proposing putting an industry guy in charge of regulating the industry. That's devastating.’” – Mike Zapler, San Jose Mercury News, February 14, 2007
California Accountability Project Debate Watching Guide 26 of 31

POIZNER SAYS: As Insurance Commissioner, I kept watch over the Insurance Industry and protected consumers.
As Insurance Commissioner, Poizner Has Been “Cozying Up to the Insurance Industry” “But critics are worried that Poizner, the independently wealthy Silicon Valley entrepreneur, is cozying up to the insurance industry in less blatant ways than a direct exchange of money. They suggest that Poizner has proposed a series of rule changes that will result in higher costs for homeowners and drivers as a nod to the industry, and indirectly to build his alliances with the Republican Party, which relies heavily on contributions from insurers.” – Steve Harmon, Contra Costa Times, December 22, 2008 Consumer Watchdog Says “Public Perceives” Poizner to Be “In Bed With” The Insurance Industry and Devoted to the GOP “But critics say that Poizner has allowed his role as advocate for consumers to be trumped by his devotion to the free market and to the Republican Party. He has spent the past two years cultivating relationships with Republican activists in an attempt to overcome their reluctance to support an abortion rights candidate. Mollifying the pro-business wing of the party with a more lenient view toward the insurance industry, they said, could go a long way in pulling the party behind him for his gubernatorial race. ‘I think he's struggling with his own ideology; he has an inbred dislike of regulations,’ Bach said. ‘That is proving to be a substantial challenge for him. I do think there will be political fallout for him if by the time he runs for re-election or for governor, the public perceives him to be in bed with industry and is rubber-stamping rate increases.’” – Steve Harmon, Contra Costa Times, December 22, 2008 Consumer Advocate Says Poizner Is Trying to Deregulate the Insurance Industry “Rosenfield, who heads Consumer Watchdog in Santa Monica, said the dispute goes beyond politics. ‘The things that Poizner has been doing and is now proposing constitute a deregulation of the insurance industry,’ said Rosenfield, the author of 1978's Proposition 103, which created strict regulations for California insurers.” - Dean Calbreath, San Diego Union-Tribune, February 1, 2009

California Accountability Project Debate Watching Guide 27 of 31

POIZNER SAYS: As Insurance Commissioner, I kept watch over the Insurance Industry and protected consumers.
Poizner Rule Change Allows Insurers to Game The System “Another important change involves the rate-setting process. When evaluating requests for rate changes, Garamendi used a standard three-year base period to determine whether an insurer's business trends justified a higher -- or lower -rate. Poizner changed the rule to let insurers suggest their own base periods of up to six years. His critics say such a change allows insurers to game the system, since they can extend the period to show the effect of a long-resolved event such as the 2003 wildfires, which might have little revelance [sic] to their current financial position. In a letter to Garamendi last spring, Poizner said his changes were necessary to protect the ‘health, vibrancy and competitiveness’ of the insurance market…. But Rosenfield said Poizner's changes were nearly identical to revisions previously proposed by the insurance industry. ‘Insurance companies have happily embraced the changes to request major rate increases,’ he said. Rosenfield said insurance rates have generally been on an upward trend since Poizner changed the laws.” - Dean Calbreath, San Diego Union-Tribune, February 1, 2009 Poizner Allowed Auto and Homeowner Insurers to Charge More Money for Their Policies , Boost Their Profit Margins “After several years of lowering their rates, some of California's top insurers have been given permission to charge more money for their auto and homeowners policies. Within the past six months, the state Insurance Department has granted rate increases ranging from 4.25 percent to 6.9 percent on auto policies issued by such companies as Progressive, Farmers, Hartford, Wausau and Lincoln. More than half a dozen other major insurers, including 21st Century, State Farm, and Safeco, are applying for similar increases, worth more than $220 million. Insurers also are pressing for increases in homeowners policies. The department, headed by Insurance Commissioner Steve Poizner, maintains that there are valid reasons for the increases….. But Poizner's critics -- ranging from insurance industry watchdog Harvey Rosenfield to Lt. Gov. John Garamendi -accuse him of rewriting regulations to make it easier for insurers to raise rates. ‘Poizner's job is to protect the consumers, not the insurance industry,’ said Garamendi, Poizner's predecessor at the Insurance Department. ‘His actions threaten to gut the consumer agency.’” – Dean Calbreath, San Diego UnionTribune, February 1, 2009

California Accountability Project Debate Watching Guide 28 of 31

POIZNER SAYS: As Insurance Commissioner, I kept watch over the Insurance Industry and protected consumers.
“Last spring, for instance, Poizner enacted so-called emergency regulations that reversed some of Garamendi's policies. Among other things, he allowed insurers to boost their profit margins by 2 percent above previous levels.” – Dean Calbreath, San Diego Union-Tribune, February 1, 2009 Consumer Watchdog Says Poizner Rule Changes “Raised Auto Insurance Rates by $26 Million” “Poizner issued a series of changes this year. Rosenfield said those regulations have raised auto insurance rates by $26 million, and eight companies have applied for another $300 million in increases to auto and homeowner coverages.” – Steve Harmon, Contra Costa Times, December 22, 2008 Poizner Proposed Changes That Consumer Groups Said Would “Increase Rates for Automobile, Homeowner” and “Most Other Kinds of Coverage by Millions of Dollars” “State Insurance Commissioner Steve Poizner is under fire from his predecessor and a consumer group for proposing regulation changes that they say would increase rates for automobile, homeowner and most other kinds of coverage by millions of dollars. The proposed rules would alter how insurers calculate the rates they can charge, allow them to cut rates without facing a full review from the Department of Insurance and allow the commissioner to phase in big rate changes. Opponents say the rules would allow companies to ‘cook their books’ to justify rate hikes, make smaller rate cuts than they should and keep excessive rates in place longer than justified. ‘Insurance rates will go through the roof at a time when we can hardly afford to deregulate another industry in the financial sector,’ said Harvey Rosenfield, founder of the Consumer Watchdog group and the author of Proposition 103, a rate-regulation initiative approved by voters in 1988. Lt. Gov. John Garamendi, Poizner's predecessor as commissioner, said Poizner's actions ‘threaten to gut the consumer agency we worked so hard to rebuild after the Quackenbush scandal,’ a reference to former Commissioner Chuck Quackenbush, a Republican who was forced from office in 2000 amid corruption allegations…. The pending amendments come on the heels of a series of changes Poizner issued in May. Rosenfield and Garamendi say those regulations have raised auto insurance rates by $26 million and triggered applications for another $305.2 million in increases to auto and homeowner coverage.” - Steve Lawrence, Associated Press, December 18, 2008

California Accountability Project Debate Watching Guide 29 of 31

POIZNER SAYS: As Insurance Commissioner, I kept watch over the Insurance Industry and protected consumers.
Times Columnist Hiltzik: “Poizner Goes Too Easy On Insurers” In a column entitled “Poizner Goes Too Easy on Insurers,” Times consumer columnist Michael Hiltzik noted, “Poizner has made much of his refusal to accept political contributions from insurance companies, which makes him look independent. But going easy on them -- by pledging to extract big fines, but settling for less -- makes it seem as if he doesn't really want to shake them up, either. It may be too cynical to assume that Poizner's approach is designed to win insurers' support and the GOP's for his gubernatorial bid. But the interests of California's millions of health insurance customers would be better served if he really got tough.” – Michael Hiltzik, Los Angeles Times, January 26, 2009 In “Backroom Deal,” Poizner “Quietly” Dropped Effort to Seek Refunds for Homeowners Who Overpaid “California Insurance Commissioner Steve Poizner has quietly dropped an effort to seek refunds for Allstate Corp. policyholders who might have paid too much for their homeowners' coverage in recent years. Critics immediately denounced his decision. On July 10, Poizner announced that Allstate had been ordered to slash its homeowners' rates by 28.5% for policies that begin or renew after July 30. But still pending, his office said at the time, was whether a refund would be ordered for previous years. In an unannounced legal settlement July 31, Allstate agreed not to contest Poizner's rate cut order. In return, the Republican commissioner agreed to ‘not take any action’ based on allegations that Allstate previously charged rates that were excessively high. Consumer advocates criticized the agreement. ‘Commissioner Poizner's backroom deal with Allstate effectively pardoned them for past misdeeds,’ said Daniel Y. Zohar, a Los Angeles attorney who represented Consumer Watchdog, a Santa Monica advocacy group, in the rate case. Poizner's decision to avoid a confrontation with the state's third-largest property insurer, which was not released by his office, contrasted with his tough public stance toward the company in May 2007. ‘I am drawing a line in the sand,’ Poizner said at the time. ‘If I find that Allstate 's rates are excessive, refunds will occur. I will take clear and decisive action to protect consumers.’” - Marc Lifsher, Los Angeles Times, August 5, 2008

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POIZNER SAYS: As Insurance Commissioner, I kept watch over the Insurance Industry and protected consumers.
Consumer Advocate Says Poizner Avoided Suing Insurance Companies To Win Their Support “Yet Poizner also appeared to see the job principally as a warmup for his current campaign for the Republican nomination for governor, said Amy Bach, executive director of the consumer advocacy group United Policyholders. His interest in maintaining support from insurance companies made him more likely to negotiate with than to sue the firms he regulated, Bach said…. ‘his political aspirations and his political views have held him back in being as good a regulator as he could have been’” – Jack Chang, Sacramento Bee, January 24, 2010 Consumer Advocates Say Poizner Staffing Changes Hampered Office, Led to Higher Insurance Premiums “Consumer advocates such as [Amy] Bach [of United Policyholders] and Harvey Rosenfield, founder of Consumer Watchdog, said that while cutting employee numbers made for good Republican politics, it hampered a department that was already short-staffed. ‘The changes that were made made it harder for the Insurance Department staff to do their jobs,’ Rosenfield said, and ‘undermined the uniformity, consistency and stability of the regulatory process, and led to higher premiums.’” – Jack Chang, Sacramento Bee, January 24, 2010

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