Following news stories critical of the U.S. Small Business Administration under Hector Barreto, California Governor Arnold Schwarzennegger has been criticized for adding one of the highest-ranking Hispanics to serve in the Bush Administration to his re-election team.

Mr. Barreto was named one Mr. Schwarzennegger's chairmen for his statewide leadership team on July 20, approximately three months after he announced plans to step down as head of the SBA. His decision to accept the chairmanship of the Washington, D.C.-based lobbying group the Latino Coalition came amid growing criticism of the SBA's response to Hurricane Katrina recovery.

One of his harshest critics on that matter and other SBA actions had been Rep. Nydia Velazquez, a Brooklyn Democrat and the ranking member of the House Small Business Committee, who claimed he was "running the agency into the ground."

In announcing Mr. Barreto role in the re-election effort in July, the Schwarzennegger campaign did not note his SBA role, although it did extol his acumen. "Hector understands the important role government can play in helping create an economic climate where businesses thrive," said Steve Schmidt, Californians for Schwarzennegger campaign manager.

But Wednesday, after a series of stories detailing how small business set-asides at the SBA sometimes go to not-so-small businesses like Lockheed and Wal-Mart, the activist American Small Business League came out swinging. The league, founded in 2002 specifically in response to seeing big companies get federal contracts that had been set aside for small businesses, has been critical of the SBA and by extension Mr. Barreto. (The group has been equally critical of Mr. Barreto's replacement, Steven C. Preston. "I'm afraid that it's going to be business as usual at the SBA with Preston at the helm," says Lloyd Chapman, president of the league.)

"If Governor Schwarzennegger wants someone on his leadership team that has helped to force thousands of small businesses into bankruptcy to enrich the coffers of Fortune 500 corporations, then Hector Barreto is an excellent choice," says Mr. Chapman.

When Mr. Barreto took the SBA post in 2001 he was widely acclaimed as having the experience necessary to thrive in the job. He ran a financial services company in Southern California, was vice chairman of the board for the U.S. Hispanic Chamber of Commerce and had served as chairman of the board for the Latin Business Association in Los Angeles.

On leaving the SBA, he noted the positive achievements of his tenure. "Accountability, greater efficiencies and results-oriented management are now part of the SBA culture," Mr. Barreto wrote in his resignation letter to the president. "I am confident that the foundation has been established for even better results in the future to the benefit of our small business clients as well as the U.S. taxpayer."

In a statement, the American Small Business League also suggested that Barreto's appointment was designed to increase Mr. Schwarzennegger's support in the Hispanic community. The Austrian-born actor-turned-governor has taken some lumps of late in that area. Last month, a state legislator who had been one the governor's allies in the state Senate criticized the governor for "a lack of respect" toward Latinos.

Abel Maldonado, a successful Santa Maria, Calif. businessman who is one of the highest-profile Hispanics in California's Republican politics, was apparently irked that Mr. Schwarzennegger had not supported him in a bid for statewide office. Mr. Maldonado lost his quest for the state controller's job in a June primary.

Although Mr. Maldonado later apologized after his comments were printed in the Los Angeles Times, Mr. Schwarzennegger has been at a disadvantage in the mostly "blue" state where the Hispanic vote traditionally skews Democratic. He also follows Republican leaders such as former Gov. Pete Wilson, who alienated some when he championed ballot Proposition 187, which would have taken away many social services from illegal immigrants had it ever been fully enacted.

But California's Hispanic vote may be more in play than usually acknowledged. Studies by the William C. Velasquez Institute find that the while a majority of the state's Hispanics are registered Democrats, more than one in five are registered as independents, and that figure is higher among the youngest voters. The institute has also reported that the Democratic Party's share of voter registration has declined since Prop 187, while the GOP's has not moved.

Mr. Barreto has been a high-profile Hispanic addition to the Schwarzennegger campaign, and along with Inner-City Games founder Daniel Hernandez is one of two members of the 17-membr leadership team – which includes former governor Wilson. Mr. Barreto is also one of the chairs of the Hispanic Families for Arnold, a business-heavy group that debuted July 11.

Less than thirty days after his departure, the truth about Hector Barreto's tenure as head of the Small Business Administration has come to light. Stories on ABC, CBS, in the New York Times, the L.A. Times, and dozens of other publications have exposed the true picture of the SBA under Barreto.

What Barreto claimed was a "victory for America" and "record-levels" of contracts awarded to small businesses has turned out to be a sham. The real recipients of Federal small business contracts have been identified as a who's who of corporate giants. Contracts to firms such as Boeing, Bechtel, Lockheed, Northrop Grumman, AT&T, Office Depot, Walmart, Rolls Royce, and even Microsoft were reported as small business awards during Barreto's tenure.

The American Small Business League estimates that as opposed to the $79.6 billion in prime contracts Barreto claimed went to small businesses in 2005, the actual number was less than $20 billion. While Barreto was in office, our organization won a series of federal lawsuits against the SBA that forced the release of damaging information proving Barreto knew about the wholesale diversion of small business contracts to large corporations.

Barreto has now joined a Statewide Leadership Team in California to back Governor Arnold Schwarzenegger in his current re-election campaign. According to the Governor's website, this organization will "take his message of protecting the California dream to every Californian." It's well-known that the Governor would like to increase his support among the Latino community.

If Governor Schwarzenegger wants someone on his Leadership Team that has helped to force thousands of small businesses into bankruptcy in order to enrich the coffers of Fortune 500 corporations, then Hector Barreto is an excellent choice.

RICHMOND, Va. Governor Tim Kaine wants the state to more than double the amount of business it gives to small businesses, including those owned by women and minorities.

Less than 15 percent of the state's purchases of goods and services went to such businesses in the last quarter of 2006. Kaine today signed an executive order establishing a goal of 40 percent.

Kaine said he's making it a priority to see that every company -- regardless of size and regardless of who owns it -- has an opportunity to compete for state government contracts.