SF Audit Critical of Non-Profit in Public Corruption Scandal

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A new audit calls for greater controls over the San Francisco Parks Alliance, the major non-profit group named by federal prosecutors last year as helping to foster the city’s public corruption scandal by managing an off-the-books contractor fund that Public Works officials tapped to pay for employee parties and swag for city workers.

“The audit has confirmed a very problematic relationship between the San Francisco Parks Alliance and city departments,” said city Supervisor Connie Chan about the findings of the review, “particularly with the San Francisco Recreation and Parks Department.”

It was Chan who called for the city supervisors’ budget analyst’s audit amid lingering questions about the Alliance’s management of the $1 million account that federal prosecutors said served as a “slush fund” for Public Works director Mohammed Nuru. Prosecutors say Nuru used the fund to pay for everything from T-shirts to gift bags, from funeral expenses for a worker to event entry fees for public works teams. Separately, Chan has challenged a deal the city struck that guaranteed the alliance – not the city -- proceeds from a five year deal to operate the 150th Golden Gate Park anniversary Ferris wheel.

The Alliance has not been accused of wrongdoing in the city corruption scandal and did not get paid for its account management. However, it has since agreed to new restrictions on fundraising activities that require it to disclose all contributions of more than $100.

Despite the progress, the audit found there remains a lack of “adequate controls” on the contracts the Alliance makes to provide services for the city. The audit says those contracts need to adhere to basic city contract standards to prevent conflicts of interest. Without more detailed oversight, the audit found, “this benefit of philanthropic support risks being overshadowed by the possibility of corruption.”

The audit tracked the money going in and out of the Alliance over a five year period. In that span, the non-profit took in $44 million, including an estimated $3.5 million in anonymous donations, the audit concludes. Those undisclosed donations, the analysis found, raise “questions about potential conflicts of interest.” The analysis found that the problem of not knowing who contributed is that there is no way to determine if the contracts were being awarded ethically.

At the same time, the non-profit reaped $11.9 million in city payments. Chan says she hopes to ask more about the cash flow for the non-profit at a hearing she will hold on Thursday.

“It's a large amount of money coming to the city,” she said. “While the city, of course, appreciates donations, it is also our responsibility to know where the money is coming from, and most importantly, is to prevent the pay to play culture and that it is our responsibility and the reason why I called for this audit.”

The Parks Alliance said in a statement Monday that it appreciates the city’s “work to strengthen transparency and accountability between nonprofit organizations and the City of San Francisco.” “Along with many other nonprofit groups, we continue to work with city departments to meet or exceed these good government controls,” the Alliance said.

“We will implement any additional common-sense policies that provide greater transparency and allow us to continue to support and improve San Francisco’s parks and public spaces.”

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