Former Department of Public Works Director Mohammed Nuru set a “tone at the top” that enabled corruption, according to a report released by the City Controller’s Office. (Kevin N. Hume/S.F. Examiner)

Nuru scandal prompts new rules for Public Works to prevent corruption

City Controller releases first in series of reports to ‘rectify bad policies and practices’

The alleged public corruption engaged in by former Public Works head Mohammed Nuru was able to go on unchecked for years due to gaps in city contracting and gift rules that he exploited, according to a new report.

The City Controller’s investigation of the Public Works Department resulted in eight recommendations in a report released Monday to reform its operations to prevent the sort of behavior for which Nuru is accused.

Some of the gaps identified include the fact that Nuru had the power to approve large construction contracts in excess of $700,000, but the other five city departments that approve construction contracts all have boards or commissions that must approve them, providing a greater level of oversight. Nuru was granted this authority in 2011 by the late Mayor Ed Lee.

The report noted that seven of 15 contracts fast-tracked for homeless services were worth $10 million and “were awarded through no discernable selection process and are at the greatest risk of fraud or abuse in the award process.”

The report also pointed to “loopholes” in city and state laws that “create avenues for unethical behavior and manipulation through the giving of gifts that are permitted and are difficult to enforce against.”

Federal prosecutors have accused Nuru of trading favors for city contractors and developers in exchange for gifts.

Nuru also created a culture conducive to public corruption, the report said.

“Although some of the opportunities to commit the schemes alleged in the federal government’s complaint were created by the control weaknesses outlined, it was the lack of cross-functional sharing of information, and disregard of ethics and gift laws propagated by the former director of Public Works that provided the pressure, rationalization, and ability necessary to carry out these actions,” the report said.

The FBI’s widening probe of corruption at City Hall has so far led to charges against former Fix-It Team director Sandra Zuniga, Nuru’s long-time girlfriend and also the former former director of the Mayor’s Office of Neighborhood Service, well-known permit expediter Walter Wong, two city contractors, a local restaurateur and a hospitality executive.

The City Controller’s report is the first in a series that will identify risks for fraud and offer recommendations. The first report focuses on contracting activities at Public Works. Between July 1, 2017 and March 31, Public Works paid $636 million for 366 contracts worth $1.4 billion, the report said.

The Board of Supervisors Government Audit and Oversight Committee will hold a hearing on its findings Thursday.

The City Controller’s Office launched its review in partnership with the City Attorney’s Office, which is investigating employee and city contractor misconduct, beginning in January when Nuru was charged.

City Controller Ben Rosenfield said his office is “seeking to rectify bad policies and practices that undermine” transparency, accountability and ethical behavior around city services and spending of taxpayer money.

Supervisor Matt Haney has vowed to introduce legislation to implement the recommendations of the report.

“The Controller’s analysis makes it clear that we need sweeping structural reform in City Hall. We’ve let years of corruption waste taxpayer dollars,” Haney said in a statement. “We have to root out the bad actors and change the laws that allow pay-to-play politics.”

The City Attorney’s investigation has so far led to the resignation of Department of Building Inspector Tom Hui, for alleged misconduct related to Wong and the Chinese billionaire developer behind the 555 Fulton project, Zhang Li.

Mayor London Breed announced earlier this year she had received gifts from Nuru but said they were legal under an exemption allowed for those with “a long term, close personal friendship.” Breed had dated Nuru in the past and remained close friends with him. She recently reported those gifts on her form 700, a gift of $719.29 on Dec. 24, 2019 for a car rental and a gift of $4,809.48 for car repair on Jan. 10, 2019. Some have argued the gifts may violate a local ethics law that prohibits receiving gifts from a subordinate.

Breed said she would work with the Board of Supervisors to pass legislation to implement the recommendations but that also “if we can take executive action, we will do so immediately.”

Breed said she was revoking the power for the head of Public Works to approve large construction contracts, as recommended.

“I am committed to doing the work to strengthen oversight and accountability in all our departments to prevent future wrongdoing and corruption,” Breed said.

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