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Ethics Commission Debates ‘Problematic’ Gift-Giving at City Departments

Ethics Commission Debates ‘Problematic’ Gift-Giving at City Departments

Last year, dubious gift-giving at City Hall formed the basis for a federal corruption probe that toppled several department heads on fraud and other charges. But the problems may run even deeper, according to San Francisco ethics watchdogs.

At a meeting on Friday, members of the Ethics Commission urged tighter restrictions, and perhaps heavier penalties, on gift-giving by contractors, nonprofits and individuals who do business with the city. But some voiced doubts that the commission could devise rules to stamp out every possible avenue for corruption. 

“There are folks out there who are already plotting how to go around [new regulations], and we’ll be back in a year or so looking at ways to close those loopholes,” said commissioner Yvonne Lee. “That’s my frustration.”

In a report released last week, the Ethics Commission pointed to several instances of “problematic” gift-giving at city departments that created—at minimum—the appearance of favoritism in awarding city contracts or other benefits. 

In one example, the Planning Department hosted a 2019 staff party, estimated at $17,500 to $21,000, that was funded by a number of real estate and other firms that either sought approval for projects or lobbied the city on various matters. The largest funder of that party was Rueben, Junius & Rose, a real estate law firm that reported 2,930 contacts with planning officials in the preceding year. One partner, Andrew Junius, lobbied planning officials 126 times during that period—and several employees at the firm reportedly lobbied officials on the day of the party.

Other gifts came in the form of pricey event tickets: Another Planet Entertainment, which organizes the Outside Lands music festival, donated thousands in free tickets that were then distributed to city officials. The report found that between 2015 and 2019, the Recreation & Park Department distributed 1,855 Outside Lands tickets, valued at $430,950, to city employees and guests. The ticket arrangement was baked into the city’s contract with Another Planet Entertainment, which required the events firm to donate a “reasonable and customary number of general admission passes” to the festival. 

Those practices may run afoul of the so-called “restricted source” rule in the city’s ethics code, which prohibits city employees from soliciting or accepting gifts from contractors or those seeking to influence their actions. But the current rules are inadequate, according to ethics commissioners, who said that gifts have either gone undisclosed or been funneled through intermediaries to evade oversight. 

“There is a huge need to convince the public—and perhaps convince them again—that the work we do has integrity,” said Patrick Ford, policy and legislative counsel at the Ethics Commission.  

Ford noted that several departments were found to have engaged in problematic gift-giving, including the Mayor’s Office, the Airport Commission and the War Memorial. The ongoing federal investigation has led to the resignations or indictments of more than a dozen city officials and contractors: Mohammed Nuru, former head of Public Works and Harlan Kelly, former general manager of the Public Utilities Commission, were both accused of accepting bribes last year. Tom Hui, former head of the Department of Building Inspection, and former City Administrator Naomi Kelly also resigned last year in connection with the probe. 

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In response, the Ethics Commission issued a number of recommendations for tightening up gift-giving rules. Those recommendations include barring intermediaries from giving gifts and creating standardized disclosure requirements for departments, among others.  

“The bottom line here is the perception that government officials are getting something public officials should not be getting,” said Lee, who argued that gift-giving should be banned outright to dissuade the savviest, “professional” gifters who could likely identify loopholes. 

Under current rules, the Ethics Commission can assess penalties of up to $5,000 per ethics infraction. It’s possible that penalties of $5,000 “don’t have the same deterrent effect” that they did decades ago when the fine was introduced, said Jeff Pierce, director of enforcement at the Ethics Commission. 

The commission approved the recommendations on Friday and plans to draft a formal ordinance to clarify rules around gift-giving at city departments. That proposed ordinance, if approved at the commission, would be sent to the Board of Supervisors for a vote to become law. 

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