Can City Hall clean up its act?

Supervisors reform charitable fundraising practice abused in Nuru scandal

San Francisco’s City Hall is working to restore its moral character on several fronts this week, nearly two years after a sweeping corruption scandal erupted.

On Tuesday, the Board of Supervisors unanimously voted to restrict how public officials can solicit donations for their favorite causes – a mechanism that federal prosecutors say was abused by San Francisco’s Public Works Department, which lies at the center of their ongoing investigation.

“We have an imperative to pass this legislation today,” Supervisor Aaron Peskin said, to address what he called “embarrassing and shameful behavior.” Matt Haney, co-author of the legislation, said the bill sought to reform “a coziness that creates a culture of corruption.”

The legislation prohibits elected officials and city department heads from requesting donations to charities from “interested parties,” including lobbyists, and those seeking contracts and permits from The City.

But that’s not the only effort afoot to curb City Hall’s pay-for-play culture. On Friday, the San Francisco Ethics Commission, a panel of appointed members that evaluates conflicts of interest facing The City, discussed a ballot measure it hopes to put before voters that would lay out broad guidelines on bribery, gifts, other prohibited behavior and ethics training.

Both Peskin and Haney, the supervisors who championed the measure, cited the public works scandal as motivation for the law. In that federal case, three Recology subsidiaries admitted to conspiring to bribe former Public Works Director Mohammed Nuru in exchange for his help raising garbage rates. The company and its subsidiaries also agreed to pay major penalties to both the federal government and The City. Nuru, who was arrested in January 2020 and remains at the center of City Hall’s ongoing corruption scandal, awaits trial.

In another example, The City’s Ethics Commission pointed to former Supervisor and Mayor Mark Farrell, who facilitated $882,500 in donations to the Parks Alliance, a powerful nonprofit where Farrell’s wife serves as the chair of the board.

The commission found that in 2016 a registered lobbyist contacted Farrell on behalf of the telecom giant AT&T on the same day that Farrell introduced legislation related to renters’ internet service. A month later, the lobbyist contacted Farrell about the ordinance. The lobbyist’s firm, which was working for AT&T, made a $5,000 payment at Farrell’s request to the Parks Alliance, the commission found.

The Parks Alliance took in anonymous donations ranging from $1.5 million and $3 million or more from 2016 to 2020, an analysis of the nonprofit found this month. Connie Chan, another supervisor who co-authored the legislation passed Tuesday, requested the report from the Budget and Legislative Analyst’s Office.

Anonymous donations allow a donor to win the favor of an official without the public knowing, Chan told The Examiner. A company, or other powerful donor, might then benefit from the official’s actions without sufficient transparency, Chan said.

Farrell, who has left city government to work for a venture capital firm, did not respond to requests for comment.

The Parks Alliance said, in a statement to The Examiner, it has implemented a series of measures to increase accountability. “We look forward to working with The City on additional common-sense policies that provide greater transparency and allow us to continue to support and improve San Francisco’s parks and public spaces,” the nonprofit said.

AT&T, when contacted by The Examiner, said the Ethics Commission report “draws conclusions and attempts to find connections among unrelated events. We never directed our consultants nor anyone else to make contributions on our behalf.”

San Francisco’s new law aimed at reforming the practice of charitable gifts made at a public official’s request – which are known as “behested payments” – marks progress where The City has failed for years. In 2018, the head of the Ethics Commission quit in the middle of a meeting because of his inability to restrict the donations.

Ethics Commission Chair Peter Keane packs his things after quitting in disgust over San Francisco’s failure to regulate the practice of behested payments at a February 2018 meeting. (SFGovTV)

Ethics Commission Chair Peter Keane packs his things after quitting in disgust over San Francisco’s failure to regulate the practice of behested payments at a February 2018 meeting. (SFGovTV)

These types of donations have taken many forms over the years. Nuru, and other Public Works employees, allegedly solicited behested payments to various Parks Alliance accounts, then used the money for parties and other personal uses, federal prosecutors say.

And big tech companies and investors have legally given millions to the favorite charities of Mayor London Breed, at her request. In December 2020, Airbnb founder Joe Gebbia gave $2.5 million to All Home, a nonprofit that addresses homelessness, at the behest of Breed, an Ethics Commission report filed by the mayor shows.

Gebbia gave $25 million, in total, to nonprofits fighting homelessness at the time, which Breed announced in a press release. “I want to thank Joe Gebbia for his incredibly generous support for these organizations,” the mayor said at the time.

The mayor’s press director, Andy Lynch, said in a statement to The Examiner that she has worked with charities and philanthropists to promote causes like housing and youth employment. “The mayor reports charitable behested funding to the Ethics Commission,” the statement said, which “ensures transparency by identifying the amount of the funds, the funder, the recipient organizations and the purpose of the funding.”

Gebbia and Airbnb did not provide a comment on the donation. But Gebbia said, at the time, he was “proud to support the work Rising Up-Larkin Street Youth Services and All Home are doing to improve the lives of so many.”

Some say Tuesday’s vote comes after damage has already been done. “It’s a day late and a dollar short,” San Francisco Ethics Commissioner Larry Bush told The Examiner, pointing out he was only speaking for himself, not for the commission. “A lot of what happened with Mohammed Nuru could have been forestalled.”

San Francisco isn’t alone in struggling to regulate behested payments. California regulators approved new transparency requirements in October for behested payments from unidentified donors – including $1 million given last year on behalf of Gov. Gavin Newsom, as revealed by a Los Angeles Times investigation.

And the Ethics Commission says the issue of behested payments is just one part of what City Hall must address. On Friday, the commission plans to discuss a proposed June ballot measure that would regulate gifts to individuals and departments and outline broad ethical guidelines.

Commission auditors said an example of what needs to be reined in would be the Airport Commission, which “reported accepting $1,018,000 in gifts from non‐city sources.” The commission found 86% of that money came from airport contractors or tenants. The largest donor, giving $99,000, was a contractor that was party to a $1.1 billion construction contract with the airport, the commission found.

The Airport Commission told The Examiner it had followed city rules because the events involved a fund created by the Board of Supervisors, known as the Airport Capital Improvement Promotion and Event Fund, for such donations.

City Hall insiders say the legislative and reform efforts also seek to send a broader message. “We need to stop that culture of pay to play,” said Chan.

Friday’s discussion could lead to further ethics reform on the June ballot, Ethics Commission officials said. “This package of reforms represents a holistic approach for improving the ethical culture of city government. As we approach the two-year anniversary of the federal corruption charges against Mohammed Nuru, this measure is a way for San Franciscans to make ethics a priority for The City, and for The City to regain the public’s trust,” Patrick Ford, the commission’s senior policy and legislative affairs counsel told The Examiner. The commission will discuss the proposed ballot measure again in January.

The reform efforts moving forward took years in the making, and aim to repair scars inflicted upon City Hall’s reputation. Some saw it coming.

“I’m hoping that sometime in the future we’ll have another chance to look at this again,” Charles Marsteller, former director of the Bay Area chapter of Common Cause, a nonpartisan open-government nonprofit told the Ethics Commission in 2018. “It may come after a series of major corruption scandals.”

Shortly after those comments were made, the commission’s former chairman, Peter Keane, quit in disgust over San Francisco’s failure to regulate the practice of behested payments.

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