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US: Senator to Testify in Oracle/Logicon Inquiry

Los Angeles Times
January 15th, 2003

The grand jury investigating the Davis administration's ill-fated software contract with Oracle Corp. has subpoenaed a state legislator to testify, the first public indication that the state attorney general's office is continuing an active investigation of the matter.

State Sen. Dean Florez (D-Shafter) is being summoned as a witness, not a subject or the target of the investigation. He said Tuesday that he believes the grand jury is investigating possible false testimony in front of the legislative committee he headed last year that investigated the Oracle contract.

"I would assume that we are looking at criminal aspects," said Florez, who was handed the subpoena in a Capitol hallway, "and that this is an active pursuit by the attorney general of some folks who ... maybe were not as forthright with the committee as they will be with the grand jury."

The investigation is being run by deputies to Atty. Gen. Bill Lockyer, whose spokesman declined to comment.

Florez, who won a state Senate seat in November, was in the Assembly last summer when he headed the joint legislative audit committee and presided over more than 100 hours of hearings into the administration's decision to enter into a $95-million software licensing contract with Oracle.

No evidence emerged during the hearings that Gov. Gray Davis orchestrated the deal with Oracle and its partner in the venture, Logicon, a subsidiary of Northrop Grumman. But several of Davis' top aides approved the contract, despite warnings from career civil servants about the sales pitch and promised millions in savings.

The contract gained wide attention when the Bureau of State Audits questioned the deal in an unusually blunt report. The audit found little demand within the state's 127 departments for the products offered under the six-year contract, called an Enterprise Licensing Agreement. Oracle promised to save the state money by providing software to all state workers. The audit, however, concluded that the deal could cost the state millions and that few departments actually needed the software.

Fueling the perception that the governor was trading policy for campaign money, an Oracle lobbyist handed one of Davis' aides a $25,000 check made out to the governor's reelection campaign committee in June 2001, a few days after the administration agreed to enter the deal.

Davis fired the aide last year, after the incident became public. Davis returned the money last summer. Oracle had donated $20,000 more to Davis in February, but withdrew the check.

In all, the governor fired three lower-level aides who helped negotiate the Oracle deal. He did not oust any of the top aides who had oversight authority and signed off on the deal.

Following the hearings, Davis rescinded the Oracle deal.

Justice Department investigators sat in the audience listening to the committee proceedings. Once the hearings ended, the matter appeared to go dormant. But the subpoena of Florez makes it clear that the Justice Department continues to pursue the matter and is sharing evidence with a grand jury.

In an interview, Florez said he was surprised when the investigators contacted him before serving him with the subpoena and discussed at least some aspects of the investigation.

"I wondered whether the attorney general was going to bury this or push forward," Florez said. "It signals that the attorney general is going to be aggressive. I'm ready and willing to tell them everything I know."

Florez speculated that the grand jury is looking into perjury by witnesses. The committee required that witnesses provide testimony under oath. One witness refused to testify, citing his 5th Amendment right against self-incrimination. Other witnesses said they could not remember some details.

"There were a lot of 'I don't remembers; I don't recalls,' " Florez said. "A grand jury is a different forum."

After the hearings, Assembly Speaker Herb Wesson (D-Culver City) dropped Florez from the chairmanship of the committee and installed Assemblywoman Rebecca Cohn (D-Saratoga). Florez had clashed with Cohn during the hearings. Though Wesson replaced him, Florez said he expects Senate President Pro Tem John Burton (D-San Francisco) to give him a slot on the two-house oversight committee.



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