Democrat Jerry Brown, candidate for president of the United States, and Republican Susan Golding, candidate for mayor of San Diego, have at least two things in common. Both are faring exceptionally well in their current campaigns. Both also have close ties to Richard Silberman, who is quietly sitting out this year’s election season in a remote federal prison.
Both have also managed to involve themselves with a Japanese company closely linked to Silberman’s business interests. Now, as both Brown and Golding enter the final phase of their primary races, their respective relationships with Silberman, once California’s consummate political money-man and deal maker, may raise unwanted questions.
Just how closely Silberman is tied to the careers of both Brown and Golding is shown by FBI wiretap logs introduced into evidence during Silberman’s trial two years ago. According to the logs, the taps of multiple phone lines into the San Diego officers of Yuba Natural Resources, Silberman’s gold mining venture, picked up thousands of conversations during February, March, and April of 1989, a time when Silberman was married to Golding.
In addition to conversations with mobster Chris Petti, indicted along with Silberman in the money-laundering scam, the logs show calls from some of the state’s biggest Democrats, including Jerry Brown himself, who called Silberman several times to discuss unspecified business. “Jerry Brown asking for Dick — not in,” reads a log entry from March 24, 1989. “The governor trying to reach him, res [Bay Area phone number].”
The logs also reveal multiple calls from Jerry Zanelli, a Sacramento lobbyist closely linked to state legislative Democrats. Zanelli’s officers were raided in 1989 during the FBI’s investigation of legislative corruption. The Sacramento Bee reported at the time that Zanelli’s files were targeted because of his “particularly close connections” to then-Senator Joseph Montoya who was later convicted on bribery charges. The Feds were reportedly seeking records pertaining to “bills that Montoya had carried for interests represented by Zanelli or his partner, Hedy Govenar.” Montoya was later tried and convicted. No charges have ever been filed against Zanelli.
Reese said she has known Zanelli for years, but, she added, “It fascinates and surprises me that he mentioned my name to Dick Silberman and that the Hospice was mentioned. I lobbied to see licensing permission for the Hospice, that is no secret. But I don’t have a clue why he would say that Maureen and I are close friends or why he would be talking to Silberman about me at all. It doesn’t surprise me that Zanelli shows up on the wiretaps, though. He and Silberman go back many years.”
Zanelli’s ties to Silberman, Brown, and other California Democratic bigwigs in fact reach back to the 1970s, when Jerry Brown was governor and Zanelli was an aide to Roberti. Silberman himself held a series of powerful executive posts in Jerry Brown’s administration and was also Brown’s chief fundraiser during his failed 1976 bid for the presidency. In 1977 he was named Brown’s secretary of Business and Transportation, then director of Finance, and then, temporarily, chief-of-staff for the governor.
During this period, Silberman took on one of the biggest issues of his career; the fight to repeal California’s so-called “unitary tax” on foreign corporations. The tax was strongly opposed by Japanese and other foreign interests. One of Silberman’s biggest clients in this lobbying effort was a San Diego subsidiary of a Japanese Firm. Kyocera International, an offshoot of Japan’s Kyoto Ceramics, took the lead in opposing the levy, spending heavily to lobby against the tax over a ten-year period. Brown administration insiders say the company counted heavily on Silberman’s influence with the governor, but they deny Silberman received payment from Kyocera until after he left Brown’s staff.
Bill Everitt, a vice president with Kyocera in San Diego, confirms that Silberman was in his firm’s corner from “very early on” in the years Brown was governor. Notes Everitt, “We first got connected with Dick [Silberman] in the late ‘70s. He was a great guy, very supportive of us. And we got verbal commitments from Brown, too, that he would support our efforts to abolish the [unitary] tax because he felt it was unfair.”
Whether as a result of Silberman’s efforts or not, Brown, who originally favored the tax, announced a change of mind in 1977 after returning from a trip to Japan. Says lobbyist Zanelli, “If there’s one thing you can count on with Jerry Brown, it’s that he’ll come out on both sides of every issue. He was a hypocrite then and he is now. He was a friend of anyone who contributed to his campaign, and he was always close with the Japanese because they spent a lot of money lobbying.”
According to FBI wiretap summaries in the money-laundering case against Silberman, Zanelli discussed with Silberman the possibility of being hired by San Diego County. The logs report that during some of the conversations, a woman named “Susan,” presumed to be Golding, was repeatedly mentioned. Another February 1989 call between Silberman and Zanelli, according to the logs, involved a discussion of “an unknown female, her political clout, her large salary. Susan’s confirmed appointments were discussed.” During the same conversation, Silberman said he wanted Zanelli’s “help in getting an appointment with Willie,” presumably a reference to Assembly Speaker Willie Brown.
In a recent interview, Zanelli confirmed that the calls to and from Silberman had taken place and that the county had indeed retained him as a lobbyist, starting in 1989. When asked if his friendship with Silberman, and Silberman’s marriage to county supervisor Golding, influenced his getting that job, Zanelli replied, “Yes, I suspect it could have.”
County records show that, beginning in March 1989 --just two weeks after Zanelli and Silberman discussed a possible job with the county --Zanelli was hired by the board of supervisors. Zanelli’s first lobbying contract with the county, which ran through July of 1989, was for $25,000. A second agreement between Zanelli and the county, reached in March 1990, paid him $35,000, and a third, reached in June 1991, also paid him for $35,000.
“There were major structural changes going on in Sacramento at that time, and the county was in a critical stage as far as getting money,” recalls John Sweeten, director of the county’s lobbying program. “We needed someone who had contacts on the Democratic side, and Zanelli had access to [state senate president pro tem David] Roberti and others. He was valuable. But the county has [recently] informed Zanelli that we do not have in our budget to continue paying him.”
Another cryptic entry in the Silberman wiretaps, dated February 1, 1989, describes a conversation between Silberman and Zanelli regarding a woman named Kathy Reese, who was said to be “close friends with Maureen O’Connor. She represents the city of San Diego. It would not be a motivator for Susan.” In the same conversation, Reese is said to have done “something for Krock [sic] on the hospice bill.” The reference seems to be to McDonald’s heiress Joan Kroc, who records show was supporting a proposed hospice facility in San Diego.
The reference, it appears, was to Kathy Reese, a Sacramento-based lobbyist for the City of San Diego since 1987. She says she was selected for that position by O’Connor and then city council members Mike Gotch and Gloria McColl. In an interview from her Sacramento office last week, Reese denied the suggestion was made by Zanelli on the wiretaps that she and O’Connor are chummy. “I do not have a friendship with Maureen O’Connor,” she said. “We do not see each other socially at all. I had never even met her before she appointed me to my present position. I’m shocked that my name was mentioned on those wiretaps. This is the first I have heard of any of this.”
Zanelli should know. After Brown left office in 1983, Zanelli and Silberman teamed up to lobby on behalf of Japanese and other foreign firms against the unitary tax, which remained law until 1986. According to a 1985 account in the San Jose Mercury News, Zanelli and Silberman’s “California Unitary Coalition” gave $178,000 to California politicians and paid out $86,000 in 1984. The group got money from an impressive roster of foreign corporations, including Japan’s Sony, Royal Dutch Shell out of Netherlands, and Barclay’s Bank of England. Silberman’s older son Jeff is listed as the group’s secretary and chief financial officer on state filings. Craig, Silberman’s other son, is listed as the group’s chief executive officer.
Zanelli also lobbied for the California Investment Environment Coalition, which spend $370,000 in 1985, the Mercury News reported. According to state records, Kent Watabe, the coalition’s secretary, was a Kyocera employee. In 1986, Golding’s financial disclosure report revealed that Silberman personally received at least $10,000 from the committee in 1985.
San Diego Republican Mac Strobl, who lobbied for unitary tax repeal as vice president of the San Diego Economic Development Corporation, argues that it is “more than reasonable to assume that Brown changed his position on the tax because of the power and influence that Silberman had in his administration.” Concludes Strobl, “When [Brown] was governor, he was always returning favors to special interests --he’d switch his position on an issue whenever he thought it would get him more votes or please his rich friends; I suspect he switched his position on the unitary tax just to appease his supporters.”
Kyocera has also been friendly to Supervisor Golding. Kyocera vice president Everitt has given money to her supervisorial campaigns, as has Rodney Lanthorne, who is also listed as a Kyocera vice president on Golding’s campaign statements. The California Investment Environment coalition was reported to have paid her husband “over $10,000” in both 1985 and 1986, according to the annual statements of economic interest Golding filed with the county as required by state disclosure laws.
Golding’s first Kyocera-related action as a county supervisor came in May 1985, a period, records show, when Silberman was still working for the Kyocera-backed lobbying groups. In a letter to the board of supervisors, she proposed the establishment of the San Diego International Trade Commission and then successfully lobbied her supervisorial colleagues to pass it into law.
The commission’s purpose was to “encourage and expand foreign trade” and “improve the region’s emphasis on Pacific Rim markets,” according to a letter Golding wrote to the board on May 23, 1985. The county, she argued, needed to take “a provocative and aggressive stance” on foreign trade “by mobilizing existing private-sector leadership and governmental resources.”
Along with her request to set up the new commission, Golding attached a list of appointees she recommended and asked her fellow supervisors “to confirm these individuals.” Included in the roster was Kasey Hasagawa, then-president of Kyocera. Along with the 17 others on Golding’s list, Hasagawa soon ratified by the full board of supervisors. In 1986, Hasagawa was replaced by Kyocera’s Everitt, who says he has been friends with Golding for years. “She is a terrific woman,” he says, “and for what it’s worth, I support her for mayor.”
Golding also became a strong proponent of Mexico’s maquiladora industry, another issue of great financial interest to both Kyocera and Silberman. In December 1986, she attended a conference in El Paso intended to “combat a rising tide of criticism against the Mexican assembly plant operations,” according to a story in the San Diego Union. Three months later, in March 1987, she went to Washington and lobbied a group of congressmen against placing any restraints on the growth of maquiladoras, which U.S. labor unions claimed were exporting American jobs to Mexico. Golding, the Union reported, “told the congressmen that maquiladoras have kept American companies competitive.”
As it happened, Japanese owned Kyocera was also preparing to build its own maquiladora in Tijuana in 1987. The plant was to be constructed on land owned by yet another of Silberman’s wealthy and powerful friends, Carlos Bustamante, whose association with both Silberman and Jerry Brown dates back to the 1970s.
According to a March 1979 story in the New York Times, the FBI once investigated several allegations of unreported contributions by Bustamante to Brown’s 1974 gubernatorial campaign totaling at least $40,000. The Times reported that Brown was “attempting to persuade Mexico to sell its energy products to California companies” and in the process had been “lending the weight of his office to proposed projects that would benefit” Bustamante.
The story also quoted Woody Wilson, a Los Angeles businessman said to have been a close associate of both Brown and Bustamante. “Jerry goes down to Tijuana, he stays at Carlos’s house, I was there.” Wilson reportedly told the Times, “You know how frugal he is. He doesn’t like to pay for a hotel.” Brown himself would not comment, but Gray Davis, his then-chief of staff (now state controller), denied the allegations.
Whether by coincidence or not, Bustamante also enjoyed a close relationship with both Kyocera and Silberman. According to Kyocera’s Everitt, “We were interested in building a maquiladora project in Tijuana [in 1987], and the land where we wanted to build it was owned by Bustamante.” Everitt says Kyocera not only purchased the land from Bustamante but also gave him the construction contract for the factory, which was completed in 1989.
According to the wiretap logs, Silberman and Bustamante may have discussed a Kyocera-related maquiladora plant as late as February 1989. “RS says he talked to Bustamante this weekend,” the logs say. “Bustamante told RS about his deals & in two weeks “Inamouri” (a wealth ceramics tycoon) is coming to town. Inamouri is pushing the idea of a twin plant so he can bring his buddies in.” Kazuo Inamori is Kyocera’s founder and chairman.
The wiretaps are full of other references to Bustamante. In one Februrary 1989 call, apparently in Spanish, according to a note in the logs, Bustamante’s name is mentioned, along with the line: “Oh --very good, I turn over the factory then on the last day of the month; It’s about $400,000 plus the contract.” A reference from March 1989 says, “Carlos Bustamante for Dick. In lobby waiting for Dick. Carlos is coming up to the office for meeting with Dick.” In April 1989, another passage says, “Carlos to Kathy. Asks about Dick — give my condolences to Susan.”
Despite Silberman’s previous connections to both Kyocera and Bustamante and the repeated wiretap references, Everitt says Silberman was never involved “in any way whatsoever with our deals with Bustamante on the maquiladora project or anything else.” According to Everitt, Kyocera’s relationship with Silberman ended after the unitary tax issue was resolved in 1986. “After that we pretty much severed our ties with him, “he says. “He’d still come in and try to make deals. Sometimes I’d see him in the lobby and not even recognize who he was. He was always trying to make deals.”
But the wiretaps suggest that Silberman and Kyocera were still closely aligned in 1989 and discussing country business. In a log entry dated February 15, 1989, an individual named “Marks Memura” calls for “DS.” The entry goes on to say: “Confirmed Fri. 24th 3:30 PM County Supervisors Building. Holding a reception for city and state officials for T.J. business etc. Memora feels honored of recognition. D.S. needs resources of INAMURI.”
Everitt confirmed that Mark Umemora is a Kyocera vice president, but says he has no idea what that phone call was about. “I don’t remember that at all,” he says. “We got lots of proposals from everyone from the Mexicans to Silberman because of our annual report. We are a profitable, successful company, and when you are, dollar signs pop up in people’s heads and you get proposals.” Neither Umemora nor Inamori could be reached for comment.
Augie Bareno, director of transborder affairs for the county, says there is no record of a board of supervisors’ reception for Tijuana businessmen in early 1989, as the wiretap suggests. But, he adds, “It should not come as a surprise to anyone that Silberman was talking about a reception for international business people. He’s had business relationships with Mexico and Japan for years.” Bareno does recall that in 1988 there was a “huge reception” for the general counsel of Japan, which was attended by Bustamante’s son, Alfonso Bustamante, as well as Golding. “Silberman might have been there too,” says Bareno, “but honestly I can’t remember. There were a lot of people. It was a big thing.”
Silberman’s involvement in border-related business is also indicated in wiretap conversations with local investor Duwaine Townsend. According to the logs, a man named “Kene Wolcott” told Silberman on February 9, 1989, that Townsend “has put together a fund. RS is to be invited in as a part of the management team.” Keene Wolcott is a Del Mar financier and long-time Silberman associate who has repeatedly given money to Golding’s political campaigns. Wolcott did not return repeated phone calls.
The wiretap entry continues: “RS doesn’t care for Townsend, who is a mental masturbator, according to RS. KW says we can make some money on this guy. KW mentions the Bustamantes; KW says there is a deal that is going to close in March. RS says he is entitled to make some money. KW says RS is entitled to 1/3. RS will call him.”
In a recent interview, Townsend confirmed that his company, Ventana Growth funds was working on a maquiladora fund that invested in small U.S. companies interested in moving some of their manufacturing to Mexico. “We got loads of commitments from investors and raised money for this from all over the world. That led us to Dick Silberman,” explains Townsend. “He was interested in investing in the fund. We met once or twice to discuss the concept, and I talked to him on the phone a couple of times, but he expressed to us right away that he was more interested in real estate south of the border. He knew everyone down there, but he wasn’t so much interested in the industrial side as the real estate side. He told us he wanted to develop industrial parks down there. Our meeting was very short, and I’m glad to say we never took a dime of his money.”
As for Silberman’s “mental masturbator” remark, Townsend says he doesn’t know why Silberman would make it. “I don’t have any idea what he thought of me personally,” he notes. “It was business. I do hear good things about his wife, though. She’s maintained herself quite well through all of this.”
Indeed, Golding, who did not return repeated phone calls regarding questions for this story, has now distanced herself from Silberman and his cohorts. Her divorce from the imprisoned financier became final last month. Her most recent financial disclosure statements show no income from Kyocera or other border-related business activities Silberman may have been involved in before his arrest in 1989.
Meanwhile, Brown has struck a national chord, denouncing the corrupt Washington establishment for favoring special interests and supporting free trade with Mexico at the cost of American jobs. Brown would not return calls seeking commitment on this story. “He’s just too busy campaigning,” notes Tom Pier, deputy press secretary for Brown’s presidential campaign. Besides, Pier adds, “the media should be more concerned with what Governor Brown is saying and doing today. He’s admitted in recent speeches that he was once a part of the political establishment he now criticizes. But that was then, and this is now.”
The Taps: Verbatim transcripts from federal wiretap logs