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PEARCE: Jerry Brown, oil baron
Question of the Day
When Jerry Brown recently held his first fundraiser as an official candidate for governor, he chose as the venue the Sacramento apartment where he lived the last time he held that office, after famously declining to live in the governor’s mansion. Faced with multimillionaire Republican opponents, Mr. Brown wants to be seen as just a regular public employee, trying to hold his own against tycoons at the top of America’s wealth disparity. While politically expedient, the image of Jerry Brown as everyman is patently false.
Mr. Brown has a lot of money - how much exactly is not public - and unhappily for his environmentalist and global-warming-alarmist supporters, it’s oil money. Even more unhappily for his campaign managers, it’s money that may have led him to an attack against California’s largest employer and a rewriting of state regulations to feather the family nest.
Sacramento Bee political columnist Dan Walters spent months researching the source of the Brown family wealth 30 years ago and recently shared the story with me in his small office crowded with family pictures, catty-cornered from the Capitol.
In a nutshell: After Jerry’s father, Pat, left the governorship in 1967, he was introduced to the Indonesian generals who had just overthrown the country’s post-colonial dictator, Sukarno, and set up a military junta. The former governor was able to cobble together a consortium of banks that lent $12 billion to the junta - “a lot of money in the late ‘60s,” Mr. Walters said. The banks were interested in the immense Royal Dutch Shell petroleum holdings in Indonesia, which Sukarno had nationalized and the junta controlled.
The grateful generals then set up two trading firms - one in Hong Kong and one in California - that handled the oil-exporting paperwork and were rewarded with a fee for each barrel, “a little taste, as they might say in the Mafia,” Mr. Walters said with a grin. Pat Brown was given 100 percent ownership of the California brokerage and half-ownership of the Hong Kong office. The deal was a very lucrative one because California’s early clean-air standards set a sulfur limit for the fuel burned in power plants - a limit only the clean, low-sulfur oil from Indonesia could meet.
Jerry Brown, alone among the Brown children, didn’t get a share of the business, but that changed after Alaskan oil came on the scene and threatened the monopoly Indonesian oil had in California’s power plants.
Chevron had just finished building a refinery in El Segundo that was designed to process Alaskan crude to compete against Indonesian oil for the California power-plant market. Before the facility could refine a barrel of North Slope crude, however, Jerry Brown’s Air Resources Board - headed up by his former campaign manager, Tom Quinn - passed a new air-quality standard for sulfur just barely too high for Chevron to meet with Alaskan oil. That cemented the Indonesian monopoly, and the Brown family, as the only oil provider to the California power industry.
Not surprisingly, when Jerry Brown left the governorship, Pat Brown finally gave him his own cut of the family oil business.
“To this day, Jerry’s very sensitive about it,” Mr. Walters told me. “He just hates the idea that people will bring it up because what it is, is the Brown family is in partnership with these corrupt, murderous dictators. It’s not something that a Jerry Brown wants to be associated with.”
The junta generals of Pat Brown’s day have given way to the more transparent, democratic government that rules in Indonesia today. The question here in California is: Will Jerry Brown also become more transparent and share with voters the details of this foreign influence on his personal finances?
Laer Pearce is a 30-year public-affairs professional currently involved in the Crazifornia Project, chronicling egregious policies responsible for tarnishing the Golden State.
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