There is a cinematic element to the last few rounds of federally uncovered and prosecuted San Francisco corruption; the affidavits ought to be smeared with popcorn grease stains.
The latest edition has its fair share of movie-ready moments, what with wiretaps of erstwhile Public Works boss Mohammed Nuru being feted in China with “some stone” and bottles of booze priced higher than a serviceable ’99 Toyota Camry, or former Public Utilities Commission head Harlan Kelly being utterly and totally offered up on a silver platter by former pal and running buddy Walter Wong.
San Francisco corruption is multifaceted and complex, but the misdeeds recounted in these charging documents are, for the most part, straightforward and easy to understand. That’s no coincidence — this way, the loosely veiled but unnamed figures within can recognize themselves, realize the jig is up, and “run, don’t walk” to turn themselves in, as U.S. Attorney Dave Anderson put it.
The crimes Nuru and Kelly are charged with are neither multifaceted nor complex. Nuru is accused of unsuccessfully attempting to bribe an airport commissioner — yes, an unsubtle envelope of cash was purportedly involved — to shoehorn an associate’s chicken shack into SFO. Kelly is charged with receiving bribes to favor Wong on a streetlight contract Wong didn’t even manage to land.
Not exactly Bond-villain material here. But that’s fine for the feds. They can still hold 20-year prison sentences and $250,000 fines over the heads of the accused, and apply that as leverage to land what the feds always want: a bigger fish.
But it’s less fine for San Franciscans who’d hope to be efficiently and honestly governed.
A couple of players may be removed from the game. But we haven’t invalidated the playbook or the system.
And, as of yet, we haven’t laid a finger on the coach.
The San Francisco Public Utilities Commission is, as charismatic bank robber Willie Sutton would’ve put it, where the money is — and there are ever-so-many aspirational Willie Suttons in this town.
On any given agenda, you’ll find a number of items affecting San Franciscans’ lives for generations and costing millions of dollars. Let’s take item 10e at the Dec. 8 meeting: approving two $9 million contracts for a pair of joint ventures to undertake, among other endeavors, “Construction Management Services for the East Bay Region, to provide construction management services and staff augmentation to manage multiple overlapping Regional Water Enterprise construction projects … ”
Sorry, everyone. It’s a bit complicated. Bear with us.
At issue here is the concept of a “Local Business Enterprise.”
The classification of Local Business Enterprises — or LBEs — sprang up after California voters kneecapped larger efforts at affirmative action. LBEs allowed for many of the same goals — the classification ensured that small, local companies employing local people got work and money, and not all the jobs went to the same big players.
That’s the idea, in theory. In practice, however, longtime PUC sources tell us that — throughout the decades — often the only person at the so-called LBE doing any work was the guy processing the invoice. The actual work was passed through to other entities. Entities that were not necessarily local, nor small.
See also: San Francisco’s chronicles of corruption
And this brings us back to the PUC Commission meeting of Dec. 8 and the awarding of those two $9 million contracts. The Public Utilities Commission heavily rewards bidders for its lucrative contracts who partner with LBEs — a bonus of 7.5 percent or even 10 percent of the scoring total. That’s a big deal. Especially because the top four finishers in this contract bid were separated by just 33 points — out of 1,000.
It’s clear that getting that LBE bonus was pivotal if you wanted to land one of those PUC contracts. What’s decidedly not clear, however, is if the LBEs involved really were LBEs — and if those points should have been awarded, and if this process was wholly legitimate.
Despite a slew of questions about just that, posed both in writing and orally during the meeting, the PUC Commission expediently awarded these two contracts and moved on to the next item.
Well, that was fascinating. Because, based upon the city’s own data, one company, MCK, appears to have grossed far more than the $2.5 million three-year average the city has set as a ceiling, by statute, for LBEs in its category. Over the past three complete fiscal years, it averaged $3.47 million —and that’s not even factoring in joint ventures, which nearly triples that figure.
Another LBE, Dabri, had its certification lapse on Aug. 31.
Mission Local inquired about this with the PUC. We were sent memos indicating that all is well — and that the City Administrator’s office has ruled that the lapsed certification was immaterial, as the company was certified “at the time of the proposal” in May.
That’s fascinating, too: Because, in April, the PUC itself issued an addendum on this matter stating that the LBE bonus would be applied at “each phase of the selection process” including “written proposal” and “oral interview” — and only certified LBEs would be eligible for such a bonus.
The PUC’s own timeline notes a shortlisting of firms “to continue to participate in oral interviews” coming on Sept. 3, with additional steps in the selection process continuing into October and a vote being made in December.
Of note, MCK’s certification lapsed on Sept. 30.
This item is slated to be revisited during today’s PUC Commission meeting. It would figure to be a fascinating discussion.
Why does this matter? For one thing, minus federal agents running through unlimited money and time to make cases on splashy but ultimately inconsequential crimes, it indicates the level of scrutiny necessary to scour arcane and routine — but lucrative — contracts. If there were envelopes of cash involved, nobody has found them yet. Same goes for lavish overseas junkets, some stone, or expensive bottles of booze.
But contracts such as these are far more consequential and costly — and commonplace — than most anything yet recounted in the bevy of affidavits and charging documents fluttering around San Francisco. Lurid alleged crimes provide leverage for G-men and could lead to the demise of accused bad actors. But contracts such as these, writ large, form the basis of a working government. Or a non-working one.
In short, it’s the difference between the players and the game. Players come and go. The game endures.
And, in San Francisco, the game is that contracts tend to go to insular groups of connected operators — and contractors unwilling to play this game do not find themselves on the winning end of bids, come what may. If an equity program intended to aid small and local businesses is debased, the obvious losers are honest small and local businesses. But that’s not all.
“The cost of corruption is not measured in the money allegedly exchanged between, say, Walter Wong and Harlan Kelly,” says construction management executive Ali Altaha. “It can be measured in: how much more is it costing taxpayers to build a project?”
Separate and apart from the competency and honesty of those receiving the contracts, in an artificially constrained pool of bidders, the cost of doing business goes up. “They’ll name their price,” Altaha says.
Altaha contracted with the PUC and city for a decade, but now says he can no longer abide a system in which turning a blind eye to corruption and cronyism is a prerequisite for participation. And he has been saying this publicly for a while — since well before the erstwhile PUC director was arrested and charged by the feds.
Altaha has relocated to Southern California, but continues to bird-dog the San Francisco PUC. “I truly believe public money is public money,” he said. “Someone had to say enough is enough.”
If that someone doesn’t have authority, however, it remains to be seen how much will change. It remains to be seen if shame alone will compel San Francisco to change its ways.
That, and an envelope of cash, won’t buy you a chicken shack here.