The lumber company that contributed to Mayor Ed Lee’s campaign through two former city officials charged Friday with bribery and money laundering felonies was paid more than $100,000 in taxpayer money for wood used to build ladders for the Fire Department, documents obtained by the San Francisco Examiner show.
Channel Lumber arranged in 2012 with then Human Rights Commissioner employee Zula Jones and then Human Rights Commissioner Nazly Mohajer for $1,500 in contributions, according to emails obtained by the Examiner through the Freedom of Information Act. The emails were first reported by the Examiner on Jan. 21.
After being asked Wednesday by the Examiner about the payments, City Administrator Naomi Kelly, who oversees the purchasing department, launched an internal investigation.
“I have asked the Controller to review these transactions to ensure that they meet all fiscal and legal requirements,” Kelly said in a statement. In an earlier interview, she said she had no knowledge of the contract or those involved.
“The San Francisco Fire Department is one of a handful of Fire Departments nationwide that still uses wooden ladders,” according to the department website. “SFFD is, however, the only Fire Department that uses custom built, handcrafted wooden ladders.”
Both Jones and Mohajer were charged Friday by District Attorney George Gascon for bribery and money laundering related to a scheme in which an undercover FBI agent posing as a developer allegedly paid bribes in exchange for unspecified preferential treatment. There remains an ongoing investigation into political corruption led by the District Attorney. For some, the charges indicate a pay-to-play culture at City Hall.
Channel Lumber owner Michael DeSimoni has denied any wrongdoing and had said he was visited by investigators with The City “a couple of months ago” about the contributions and had not heard from them since.
Mayor Lee’s spokeswoman Christine Falvey said, “This doesn’t involve the mayor, but a city department that makes routine purchases must follow all of the appropriate rules and laws of city purchasing.”
Channel Lumber’s human resources employee Karen Rathe completed the contribution transactions via email with Jones and Mohajer. Later, just eight days after the contributions were received by Mayor Ed Lee’s campaign, she arranged to meet with Jones on May 11, 2012, according to the emails.
Rathe would not comment Wednesday about why she met with Jones, the contributions or the contract. “I don’t really have any comment,” Rathe said. “I have no comment. I just think you really need to do your research because you are really grasping at straws. I’m at work. I have to get to work.”
The newly obtained documents show that Central Shops, a city department which works on municipal vehicles, placed the lumber orders for firefighter ladders. The record of three lumber purchases — there are more but The City was unable to provide outstanding requested documents as of press time — were signed off on by purchaser Whitney Bagby in the Office of Contract Administration, overseen by Jaci Fong.
Bagby didn’t return requests for comment. Fong said she had no knowledge of the contracts. “Your request was the first I had heard of these transactions,” Fong said. “I’m not aware of anything that would suggest that they were handled improperly.”
It remains unclear whether Channel Lumber competitively bid on the contract.
Channel Lumber was first paid $30,263 on Oct. 3, 2013, according to documents requested from the City Controller’s Office. The company continued to receive steady payments, with the last one in January 2016, totaling $117,997. The City Controller’s Office has no records of payments to the company prior to October 2013.
Don Jones, the head of Central Shops, said he only recently became a supervisor and couldn’t speak to the transactions. “Anything purchased before October would not have been me.” He added, “All that contracting stuff is done through OCA.”
Board of SupervisorsChannel LumberChristine FalveyCity HallcorruptionFBIGeorge GasconHuman Rights CommissionerKaren RatheMichael DeSimoniNazly MohajerPoliticsRaymond ChowSan FranciscoShrimp BoyZula Jones