The San Francisco Controller’s Office on Thursday recommended a slew of measures to prevent city departments from engaging in “pay-to-play” schemes through “non-city” entities — schemes that Mohammed Nuru, the embattled former Public Works boss and accused federal criminal, allegedly mastered.
In a detailed assessment released Thursday, the Controller homed in on the San Francisco Parks Alliance, a nonprofit that makes improvements to parks and other public areas in the city, which allegedly became a conduit for Nuru to funnel payments to his cohorts.
Nuru allegedly solicited donations from contractors and permit-seekers for the Parks Alliance and that money went into accounts there, over which Nuru had wide discretion. The money in the accounts totaled $990,830 over a four-and-a-half-year period. Nuru allegedly used it to direct the donated money to vendors.
Those vendors include restaurateur Nick Bovis and permit expediter Walter Wong, both of whom have pleaded guilty to charges of conspiracy and fraud.
A major recipient of the money was SDL Merchandising which, according to the Controller, was owned by a former Public Works employee, who worked for Nuru at the time, and who the Controller did not name. Other funds from Nuru’s account at the Parks Alliance were used to reimburse Public Works employees for “staff appreciation” parties.
“Mohammed Nuru and others would direct staff to procure goods and services for staff appreciation, volunteer programs, merchandise, community support, and events from specific vendors, circumventing city purchasing controls,” the Controller wrote in its report. “These purchases would then be reimbursed through Public Works subaccounts held by the Parks Alliance, a non-city organization, again outside of city purchasing rules.”
“Mr. Nuru solicited funds for these purchases from interested parties, including businesses that had contracts with the department or city building permits,” the report added. “The gifts, which were not accepted or disclosed by the City, create a perceived “pay-to-play” relationship.”
The review further found that the money directed to some of these vendors was not properly accounted for. In the case of SDL Merchandising, “multiple payments totaling $164,885 were made to SDL Merchandising for various shirts, caps, and merchandise” over roughly three years, the report says. “No quantities are documented.”
In other words, it’s unclear if the shirts, caps and merchandise were ever received.
Through its audit, the Controller zeroed in on so-called “friends of” organizations, non-profit entities that support city departments through charitable donations. The accounts are unregulated by the city and can be “unscrupulously exploited by city officials,” as in the case of the San Francisco Parks Alliance.
In theory, any “interested party,” such as someone holding a city contract, could make a donation to one of these organizations at the urging of a department head in exchange for preferential treatment.
Any unregulated account or “friends of” organization without formal agreements and oversight by the city can create “the opportunity for unethical steering of purchases to occur,” the report says.
The Controller noted that the Parks Alliance said it was not aware of Nuru’s manipulation and had attempted to formalize its relationship with Public Works in 2019 but was ignored.
The Controller made 10 recommendations to create more transparency so they can’t be exploited. These include formalizing a department’s relationship with “friends of” organizations through written agreements, prohibiting anonymous donations, and prohibiting non-elected department heads from soliciting donations from “interested parties,” such as contractors and people seeking permits. The Controller recommends clearly defining what an “interested party” is.
Following its release on Thursday, city leaders seized on the report, denouncing the gaps that led to the alleged corruption and promised to take action.
Mayor London Breed issued an “executive directive” requiring department heads to report any money directed to such nonprofits and requiring formalized relationships between such organizations and departments. The directive also asked departments to “ensure compliance” with the city’s rules for reporting gifts.
“These ‘Friends of’ organizations provide important philanthropic support for our parks, our libraries, and other important civic services, but we need to ensure that this support is not tainted with any perception or risk of ‘pay to play’ politics,” Breed said.
Moreover, Supervisor Matt Haney said he would introduce legislation at Tuesday’s Board of Supervisors meeting. Following the Controller’s first recommendation, the legislation would “prohibit department heads, who are very close to control of contracting decisions, from asking any person or party doing business with or seeking to do business with their department for donations at the Department head’s behest.”
Haney denounced what could happen without the proper controls.
“This loophole creates a situation where contractors can access business with the city or receive preferential treatment because of donations given, rather than work that has been done,” he said in a statement Thursday afternoon. “This is a massive disservice to the residents of San Francisco and a blatant violation of the public trust.”