By Michael Hiltzik, THE LOS ANGELES TIMES

We may finally have discovered a remedy for corporate executives with more greed than brains: Let them invest corporate funds by the millions in California ballot initiatives, then vote the things down.

Isn’t that the lesson of Tuesday’s balloting on Propositions 16 and 17, those majestically cynical initiatives sponsored by Pacific Gas & Electric Co. and Mercury Insurance Group?

To recap for the 82% of eligible voters statewide who didn’t bother to vote last week, Proposition 16 was an initiative concocted by PG&E, the state’s biggest private utility, to hamstring the public power agencies that are its chief competitors — pretty much its only competitors. Of the $46 million in cash contributions raised to pass the initiative, $46 million, or 100%, came from PG&E.

Proposition 17 was an initiative concocted by Mercury to undermine the insurance consumer protection system put into place by Proposition 103 of 1988. Of the $13.56 million in cash raised to promote Prop. 17, $13.5 million came from Mercury, whose founder and chairman, George Joseph, has turned the punching of holes in Prop. 103 into a personal obsession. That spending may make Mercury a cheapskate by PG&E standards, but by any rational standard of democratic process, the scale of it was obscene.

Yet these initiatives went down in defeat by almost identical margins, losing about 52%-48%.

That doesn’t speak well of the management prowess of the executives in charge. PG&E Chairman Peter Darbee walked his company down a $46-million plank to secure it nothing but a permanent place in the corporate citizenship hall of shame. He collected $10.6 million in compensation last year.

Do the PG&E directors really believe that the outcome of Tuesday’s vote is the sort of performance they’ve so lavishly paid Darbee to achieve? If they do, I have a follow-up question: What makes them qualified to serve on a corporate board?

Considering that the U.S. Supreme Court has given the green light to almost limitless political spending by corporate interests, it’s worth pondering how the initiatives lost, the better to deal with the oil slick of electoral cash sure to be heading our way on the next tide.

The most striking statistic that emerges from Tuesday’s results, as my colleagues Marc Lifsher and Dianne Klein have observed, is the margin by which Proposition 16 got beaten within PG&E’s service area in Northern and Central California — a “no” vote of more than 60% in much of the region.

The measure lost by narrower margins in many Southern California counties, where there wasn’t enough familiarity with PG&E to breed that much contempt.

The “no” vote on Mercury’s Proposition 17 followed a similar pattern, which suggests that the proximity on the ballot of the two corporate power grabs made anti-PG&E sentiment infectious.

That indicates that the antidote to unrestrained corporate political spending is to make sure that voters know that a corporate interest is behind an ad, an issue campaign or a candidate.

As it happens, that’s the approach chosen by Sen. Chuck Schumer (D-N.Y.) and Rep. Chris Van Hollen (D-Md.) in their Disclose Act, which would require CEOs to appear on camera to endorse any ad or commercial their companies fund, as candidates do. (The act has recently run into opposition from the National Rifle Assn. and the AFL-CIO, which don’t care to be held to the same rules.)

That the proposed disclosure rules would likely have a disinfecting influence follows from a very interesting pattern discernable in the corporate initiative campaigns in this state — along with Props. 16 and 17, let’s throw in the attempt by the oil company Venoco to cripple the municipal planning process in the city of Carpinteria (slaughtered Tuesday 70%-30%), and the oil industry’s developing campaign to suspend the state’s emissions limits (due for a vote in November).

The pattern is that the companies and industries most willing to subvert democracy by turbo-funding deceitful initiative campaigns are those with already dodgy records of corporate citizenship.

PG&E’s reputation for customer service and its compliance record on regulatory directives are unremittingly foul — so much so that the Public Utilities Commission had to issue a four-page letter last month explaining to the company, in terms even a 4-year-old could understand, how its machinations against Marin County’s renewable energy initiative violated the law.

Mercury has been repeatedly accused by regulators of dealing with the state’s rules on insurance underwriting by simply ignoring them. Occasionally the company has agreed to rectify illicit practices, according to a complaint filed in April by the Department of Insurance, and then failed to do so.

“Ultimately, Mercury does not believe that we have the authority to require them to change … their business practices,” observed a 2004 agency memo, which is as concise a description of this company’s attitude as you could wish.

As for the oil industry, the evidence of its concern for the public interest has been washing up on the beaches of the Gulf of Mexico every day for a month and a half.

One lesson of the Proposition 16 and 17 campaigns may be that PG&E and Mercury, as regulated companies, have been treated far too indulgently by government overseers. The regulators plainly have allowed both companies to overcharge their customers so much that the excess cash has been burning a hole in their pockets.

Take PG&E, which currently has an application before the PUC for a multibillion-dollar rate hike. The utility maintains that the $46 million it spent on Proposition 16 belongs to its shareholders, not ratepayers, but that’s a typically neat piece of deception. The truth is that every penny PG&E has comes from its customers’ pockets; it’s possible that eventually the firm will have to cut shareholder returns to cover the Prop. 16 campaign, but it won’t have to document for the PUC how it accounted for those expenditures until years have passed. In the meantime, it was able to use the customers’ money, essentially for free, against those customers’ interests.

As for Mercury, it reported that it spent well below 70% of its collected premiums on claims last year. Even health insurers typically pay out more than that.

Both firms have proved that they can’t be trusted to use their spare cash for their shareholders’ good, much less the public interest. The PUC and Insurance Department should take the evidence to heart: Give companies like this too big an allowance, and they’ll only use the money to cause trouble.

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Michael Hiltzik’s column appears Sundays and Wednesdays. Reach him at mhiltzik@latimes.com, read past columns at www.latimes.com/hiltzik, check out www.facebook.com/hiltzik, and follow @latimeshiltzik on Twitter.

By Mark Glover and Dale Kasler, THE SACRAMENTO BEE

Opponents of Propositions 16 and 17 said Wednesday that the defeat of the two measures was all about money.

Or to be more precise: voter dissatisfaction that Pacific Gas and Electric Co. and Mercury Insurance spent a whopping $60 million combined on the respective measures.

Jack Pitney, a political science professor at Claremont McKenna College, said the lesson is that “if you’re going to win a special-interest initiative, you need a better disguise. The link was too obvious, and the voters smelled a rat.”

Pitney cited the primary victories by Meg Whitman and Carly Fiorina as proof that voters don’t inherently object to business people entering politics.

“People like the idea of free enterprise, but in (Propositions 16 and 17) people sensed that one specific corporation was seeking a benefit for (itself),” he said.

With all precincts statewide reporting, 52.5 percent of voters were giving Proposition 16 a thumbs down. “No” votes on Proposition 17 accounted for 52.1 percent of the total.

While the California secretary of state’s office said “tens of thousands” of absentee ballots are still being counted, political analysts said it’s highly unlikely the results will change.

Out of about 3.85 million votes cast, Proposition 16 trailed by about 185,000 votes. Proposition 17 was failing by about 156,000 votes.

Proposition 16 – formally known as the Taxpayers Right to Vote Act – was put on the California ballot as a constitutional amendment requiring a two-thirds vote before a public utility could extend service to new customers or new territories.

From the beginning, it was spearheaded virtually single-handedly by San Francisco-based PG&E, which spent $46 million to persuade voters to approve it.

Proposition 17 was put on the ballot by Los Angeles-based Mercury Insurance. It would have overturned state law prohibiting insurance companies from considering a driver’s insurance history to set rates. It would have allowed customers to take their “loyalty discounts” with them even if they switched insurance providers.

Mercury spent about $16 million to back the measure.

PG&E insisted that it was simply good policy for voters to have a say when millions of electric customers and taxpayer dollars are on the line. Mercury claimed that Proposition 17 worked to the benefit of millions of Golden State motorists.

Opponents said otherwise. They said the businesses were just trying to shanghai the initiative process to make more money and grab more power.

Proposition 103 author Harvey Rosenfield warned Wednesday that “the initiative process is in danger of being co-opted by big corporations. You had two big corporations trying to enact their business plan as law.”

Gale Kaufman, a campaign consultant for No on 16, said opponents only had about $100,000 to spend, with about $30,000 going into an early poll. She said that poll indicated that Proposition 16 was “losing very convincingly” from the start.

Kaufman said voters didn’t see Proposition 16 as a citizen-empowerment measure, but as a cleverly worded ploy of a single for-profit utility.

“(PG&E’s) biggest miscalculation, besides spending all that money, was that they really thought they could trick people by the phrasing they used on that initiative,” she said.

Kaufman credited an aggressive viral campaign “and a lot of people who did their own thing” for rallying voters against Proposition 16.

Greg Pruett, senior vice president of corporate affairs for PG&E, issued a statement that said, in part: “While the election outcome hasn’t diminished our steadfast belief that citizens should have a vote in local government efforts to enter the electric utility business, we respect the decision voters made on this initiative.”

Mercury Insurance portrayed the defeat of Proposition 17 as a blow to consumers. “Proposition 17 was a pro-consumer initiative that would have lowered auto insurance rates for millions of California drivers,” the company said in a statement.

PG&E Corp. stock closed at $40, down 90 cents, on Wednesday, and Mercury General Corp., the parent of Mercury Insurance, closed at $42.18, down 24 cents. Both are traded on the New York Stock Exchange.

Contact the author at: mglover@sacbee.com