Report: Mayor Ed Lee in 2011 granted Mohammed Nuru oversight of himself.
Over the course of two-and-a-half years, San Francisco Public Works signed some $10.5 million in contracts using “no discernible selection process” — a disturbing discovery even if Public Works’ longtime director, Mohammed Nuru, wasn’t facing federal corruption charges.
Mission Local has learned that two of those contracts went to companies controlled by Walter Wong — who is, himself, facing federal charges stemming from the ongoing FBI Nuru probe.
Those are the findings of an initial report from the city controller’s office coming in the wake of Nuru’s January arrest. More reports are pending regarding various elements of flawed city policy; you could liken them to chapters of a book being serialized like a Dickensian novel.
This may be a rather infuriating novel for San Franciscans to read.
That’s because the controller’s office found that Nuru had a uniquely free hand in assigning out contracts in a manner susceptible to waste or fraud.
Public Works is one of six city departments that assigns construction contracts — but is the only one without the oversight of a commission. What’s more, the controller points out that former Mayor Ed Lee nearly a decade ago removed whatever oversight there was over Public Works, giving final approval over contracts to Nuru — his appointee and former Public Works lieutenant.
“In August 2011 Mayor Edwin M. Lee designated Mr. Nuru as the director of Public Works to act on the Mayor’s behalf in the approval of various aspects of the contracting process, including to award all public work, professional service, and construction contracts in excess of the threshold amount, which is currently set at $706,000,” notes the controller’s report.
As such, a mayoral check on possible wrongdoing from the head of Public Works was, instead, assigned to the head of Public Works.
With no oversight body and the mayor kicking ultimate control back to the department head, notes the controller’s report, “there is no external oversight over Public Works’ … procurement.”
Today’s report comes after an analysis of 366 Public Works contracts worth $1.4 billion awarded between July 2017 and March 2020.
The controller identified several areas in which loopholes or lax oversight enabled Nuru — bad policies that benefitted bad actors. Among them were favored entities being chosen repeatedly out of the pool of pre-qualified contractors; gaps and incompatibilities in rules about gift-giving; and a lack of coherent centralized rules regarding grants provided to nonprofits. Among the controller’s key findings:
- Public Works established 114 contracts with a value of $151 million through the use of pre-qualified pools during our review period. Tighter citywide procedures that require competitive selection in pre-qualified pools such as these would minimize fraud risks in all city departments;
- Gaps in city and state restrictions about soliciting and receiving gifts can enable unethical behavior and manipulation through the giving of gifts;
- Gaps in citywide monitoring of purchasing activities – given both code-driven decentralization of some contracting methods and lack of effective citywide systems to monitor these activities – need to be addressed.
Today’s report inspired quick action from city legislators. Supervisor Matt Haney has proposed legislation to shut some of the loopholes identified by the controller, including the direction of contracts to “pre-qualified” contractors; the pressuring of contract-seekers to donate funds to nonprofits that, in turn, spent money on city employees and lavish holiday shindigs; and the curtailing of the “BFF Gift Exemption,” in which a longtime friend or associate is not restricted from imparting favors or valuable items to department heads or city officials they’ve long known and befriended.
Nuru was in January arrested by the FBI and charged with fraud by the Department of Justice; a lengthy criminal complaint alleged a series of schemes involving casual corruption, bribery, and, bid-rigging, and other forms of bad government. Seven other individuals ensnared in the feds’ web have since been charged.
In a parallel investigation, the City Attorney has sent out dozens of subpoenas, with many directed to companies with ties to Wong — a longtime city contractor and permit expediter now facing federal fraud and money-laundering charges — and Zhang Li, a billionaire Chinese hotelier and developer allegedly introduced to Nuru by Wong. Zhang purportedly showered Nuru with costly gifts and luxury accommodations in return for help moving along the stalled 555 Fulton project.
This investigation led to both the ouster of Department of Building Inspection boss Tom Hui, and the revelation that Nuru gifted Mayor London Breed $5,600 last year, ostensibly for auto repair — a move the mayor defended at the time as allowable under the so-called “BFF Gift Exemption” (but which actually violated stricter city rules regarding gifts being accepted from subordinates).
While the City Attorney is tasked with ferreting out alleged bad actors, the controller focuses on bad policies and practices.
The next installment is due within a month’s time, and will focus on nonprofit “Friends of” groups accused of “funneling money” back to city officials.
Update, 2:40 p.m.: Mayor London Breed today announced she is rescinding the 2011 delegation of authority Mayor Ed Lee granted to Public Works head Mohammed Nuru, essentially granting him oversight of himself.
I know these are the first in a series of recommendations, and we need to continue to identify problematic issues that erode public trust across our city,” said Breed via a statement. “We have work to do, but we will do that work. Our residents and City workers deserve nothing less.”