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Ethics’ Dummy Investigation of Banned Contributions

by Larry Bush on 10/19/2011

in Uncategorized

Working hard or hardly working?

Judging from reactions to the Ethics Commission by  San Francisco organizations, neighborhood representatives and ordinary citizens, the verdict is in.

The city’s Ethics body is hardly working.

It claims to be working so hard that it simply can’t find the time to enforce the city’s ban on contractors making contributions to those who approve their contracts.

That’s what they said in a San Francisco Chronicle article that played big on the front page on Monday, October 17.

But it was a lie and the Chronicle apparently couldn’t see through it.

“I’ve got two books of these, thicker than Yellow Pages,” he said of the contract disclosure forms. That’s part of the reason his office has never compared the contract forms with campaign filings.

“I don’t have enough staff to cross-reference all of those forms,” St. Croix said.

Boy, sounds like St. Croix gets more letters than Santa Claus at Christmas. But in St. Croix’s case, he doesn’t keep track of who’s been naughty and who’s been nice.

There’s just one problem with that explanation.

It was St. Croix’s decision to reject electronic filing of the contract notifications and continue with paper filing.

As former Ethics Commission filing officer Oliver Luby noted in an online comment, St. Croix’s “complaints about the volume of paper caused by the contract disclosures and the difficulty in cross-referencing them should be viewed with suspicion.”

“While on staff, I recommended not only that cross-referencing of the reports be undertaken but also that the contract report requirement be changed from a paper form to an electronic requirement.

“With zero impact on the agency’s budget, Ethics could replace the paper form with an emailed Excel form, as it has already done with another campaign form.

“Besides saving trees, such a change would allow Ethics and the public to easily set up a database of all the prohibited donors, permitting automation of cross-referencing with contributions.

“Despite such an obvious tech smart option for both facilitating enforcement of the law and providing a compliance tool to campaigns, St. Croix opted to stick with paper.”

Testing St. Croix’s Claims

In fact, CitiReport did exactly that last June in our reporting on the failure to monitor contributions from banned sources.

CitiReport was the first to report on city contracts for the Chinese Community Development Corporation that was in the lead of the “Run, Ed, Run” effort and strongly backed an Ed Lee candidacy. Lee had approved several million dollars in contracts for the agency, whose officials had a practice of contributing to city officials who vote on their contracts.

The issue of nonprofit contractor reporting was a thorn in St. Croix’s side, so CitiReport examined how difficult it was to determine whether violations were occurring.

A further CitiReport investigation into the top ten nonprofit contractors as well as selected nonprofits revealed that in almost every case, the nonprofit officers or directors are making contributions that are prohibited by city law.

CitiReport’s survey showed that for the top seven city nonprofit contractors, every one of them had officers or board members that made banned contributions.

CitiReport then selected other high profile nonprofit contractors and found banned contributions from groups ranging from the Chinese Chamber of Commerce to the San Francisco Convention and Visitors Bureau to the San Francisco Chamber of Commerce to California Pacific Medical Center – all with contracts above the trigger.

After CitiReport posted the results of our survey, we briefed Ethics Commission Deputy Director Mabel Ng on how easy it is to check the electronic records.

The Controller keeps an updated electronic public record of all city contractors. The Ethics Commission keeps an electronic record of all contributions. maintains a public database of all nonprofits in the nation with the list of their officers and board of directors.

Ng said she was unaware of the Guidestar site or the Controller’s site.

Matching these three data sources was the work of a few hours, and showed that the law is not being enforced.

Ethics Skips Training

The Ethics Commission also has no effort to educate city contractors about the prohibition, or to ensure that the legal requirement that contractor boards of directors and officers are informed that they fall under the same prohibition.

While Ethics offers training and education programs for lobbyists, consultants, campaign committees, filing officers and others, it offers no training on the contractor ban and its limitations.

It also fails to provide city agencies with language to be added to the contracting process that implements the law’s disclosure requirement.

That requirement is found in Section 1.126 of the city’s code, and states, “Any prospective party to a contract with the City and County of San Francisco, a state agency on whose board an appointee of a City elective officer serves, the San Francisco Unified School District or the San Francisco Community College District shall inform each person described in subsection (a)(1) of the prohibition in subsection (b) by the commencement of negotiations for such contract.”

St. Croix, without authorization from his commission, suspended the requirement that city officials notify the Ethics Commission when contracts are signed by them and that fall within the trigger threshold for reporting.

When commissioners became aware of his action, they ordered it reversed.

St. Croix then sought to change the law.

St. Croix wants the ban lifted when it comes to nonprofit agency contractors, who account for some $470 million in contracts each year. He also wants the ban lifted for all contractors at Redevelopment, Treasure Island, the Housing Authority and other so-called “state agencies” led by appointees from the mayor or Board, claiming that those officials don’t know about contractors at these agencies.

So far, he has been unable to find any Supervisor willing to introduce his proposal, which passed the Ethics Commission on a 4-1 vote last October.

However, one lobbyist for Platinum Advisors who serves as a nonprofit board member expressed his hope to the Chronicle that the Board might now “take another look at it.”

In the interim, St. Croix has admitted that his staff provided incorrect advice to Mayor Lee’s office on what contracts have to be reported.

For his part, Lee has asked that regulations be changed so that he and other city officials no longer have to file notifications of contract signing and instead have that responsibility transferred to an unelected bureaucrat in another city agency.

While most of the public views nonprofits as engaged in social service and human service functions, almost any organization can claim nonprofit status. One newly-minted nonprofit is the organization handling the America’s Cup events for San Francisco.

Ban Has More Loopholes

While St. Croix wants to open new loopholes in the contractor ban, he has not undertaken any effort to close loopholes that were passed by the voters and later changed.

While contractors may not contribute to a campaign, they are free to solicit contributions from others and bundle them for a candidate. They are also free to serve on a candidate’s finance committee.

The definition of contractor also was changed so that it does not include those seeking other City Hall actions that provide a financial benefit. The San Francisco Botanical Garden won City Hall approval for a non-resident admission fee worth millions of dollars, but that action is not included as a “contract.” California Pacific Medical Center is seeking approval for zoning changes that allow it to undertake major expansions, but zoning changes that benefit a specific applicant are not included.

For St. Croix, closing those kinds of loopholes would just mean more work.

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