Payback Delayed

By Geoff Metcalf
October 2, 2006

Mendacious: Given to or marked by deliberate concealment or misrepresentation of the truth.

John Garamendi is running for Lt. Governor and to supplement an apparent mendaciousness, he is praying for induced selective memory loss.

Some fifteen years ago, as California insurance commissioner, Garamendi seized the assets of the Executive Life Insurance Company. In doing so, he allowed a questionable junk-bond player and a French government-owned bank to realize a humongous windfall despite a bunch of annuities and policyholders getting the short (and dirty) end of the stick.

It is beyond troubling that the man who is ‘supposed’ to be the policyholders/victims advocate seems to have helped the sleazy exploiters instead...and then has consistently tried to hide both the truth and his own culpability.

Garamendi would love to see the entire Executive Life issue just disappear. He tried (hard) to settle out of Court. He needs (like breath) not to see the lawsuits make it to trial.  From his perspective it would be a bad thing to have to answer questions about what did and didn’t happen…To have to answer probing questions ‘under oath’ would be real bad…To have to answer them before the election is unthinkable.

There are some very serious concerns/questions that should be (and never have been) clarified. Frankly, as a candidate for Lt Governor, if (there is that noxious word), Garamendi did nothing wrong regarding Executive Life, HE should be the one demanding the opportunity (under oath) to correct any mean spirited partisan attacks on his integrity. He has has his integrity (or lack of it) and his intelligence (or lack of it) challenged. He ‘should’ be angry at these attacks. His failure to take on his critics raises yet more questions.

• Garamendi had a relationship with the infamous Leon Black.

  • Black used to work for Michael Milken's Drexel Burnham

  • Black is the guy who educated the French as to the immense value of the troubled Executive Life bonds. Beaucoup bucks…n’est pas?

• Black was the financier who had arranged Executive Life’s original portfolio of corporate junk bonds and he created Apollo Fund and Apollo Real estate group.

  • The Apollo group has close personal and business ties to Yucaipa Company (this is Ron Burkle's investment company).

• Burkle has been a big contributor to Democratic candidates in California for many years.

Now, let’s take a brief look at the underbelly of politics and sausage making.

Garamendi left the U.S. Interior Department in April 1998. He left reportedly to join Yucaipa as a partner ‘based in Washington D.C.’. He ‘worked’ for Yucaipa from 1998 to 2001.

Forbes magazine looked into Garamendi’s role at Yucaipa and his six figure job. When John took the gig (or was gifted the gig) he said he would establish an office in Washington D.C. However, to date (more significantly, during the less than three years Garamendi ‘worked’ for Yucaipa) Yucaipa had NO D.C. office…and still doesn’t.

Beyond confirming he was a partner, Garamendi never has said what he was doing for the company (besides cashing their checks).

Again, if these questions, suggestions, and intimations about something ‘squirrelly’ are baseless, it should be Garamendi who should be screaming for any and all opportunities to respond. However, the silence is deafening….

When Garamendi returned to the California Department of Insurance post he appointed his friend Rick Baum as his chief deputy. No biggie…that kind of appointment happens all the time. Baum was Garamendi’s first chief of staff, and they had a close personal and professional working relationship. However, Baum was also responsible for handling the Executive Life case.

In the Executive Life scandal, Garamendi wants voters to believe he was a victim. It wasn’t HIS fault. He was ‘duped’ by, well a LOT of people….the French government, the French consortium, anyone and apparently everyone who was providing him advice and counsel…including Rick Baum.

Some partisan types complain Garamendi also has relationships with law firms and attorneys in California that perform work for his Department of Insurance and for consumer groups. These same firms have contributed money to his campaign and have handled litigation for the commissioner.

Hey, that kind of ‘reciprocity’ isn’t unique to Garamendi, or even Democrats. However, it does raise questions about his ability to be independent and a for real defender of the consumer.

The last time I addressed this New York Life debacle I noted, “His own staff reported that losses to Executive Life policyholders were over $4.5-Billion…So why would Garamendi settle for less than $600-Million?”

The candidate who wants the ‘one heartbeat away’ from the California Governor gig, continues to duck and hide and whine, “I was duped”.

Before Garamendi can presume to hold office, he should insist on a complete and thorough delineation of what did and did not happen (and how) with Executive Life.

Come on John…informed voters want to know.