The San Francisco Ethics Commission voted unanimously on March 14 to waive a pair of ethics rules in order to allow Kyri McClellan, a project manager in the Mayor’s Office of Economic and Workforce Development (OEWD), to become executive director of the nonprofit America’s Cup Organizing Committee (ACOC). The fundraising arm of the America’s Cup effort, ACOC’s role in bringing the world-famous sailing regatta to San Francisco is to secure corporate donations to offset city costs.
For months, McClellan has been on the city’s side of the negotiating table in discussions with ACOC to hash out a memorandum of understanding (MOU) concerning its fundraising obligations to the city. Without skipping a beat, she’ll now be interfacing with the city on the ACOC side. At press time, it was unclear whether McClellan had already started her new job, but her voicemail with OEWD was still in service. We left a message, but haven’t heard back.
McClellan sat down with the Guardian last November for an interview about the America’s Cup. She seemed knowledgeable and organized — and race organizers were clearly impressed with her performance. Regardless of how qualified she may be, however, the Ethics Commission’s decision to grant these waivers raises the question of whether McClellan received special treatment from the very entity that’s tasked with ensuring ethical government conduct.
The move also raises concerns about a revolving door between the Mayor’s Office of Economic and Workforce Development and the powerful private-sector interests behind the prestigious sailing event. Rather than preserving the ethical barrier that the rules intended, ACOC will now gain a team member who has detailed knowledge of OEWD’s inner workings.
In order to accommodate McClellan, commissioners agreed to waive two post-employment restrictions for city officials. The first is a yearlong post-employment communications ban, and the second prohibits former city employees from receiving compensation from city contractors for two years.
To better understand the intent behind these bans, the Guardian phoned the Ethics Commission and was connected to Deputy Executive Director Mabel Ng. She explained that the communications ban prohibits former city employees from taking private-sector positions that interface with the same department they worked for, “because you might have some undue influence.”
The two-year ban on receiving compensation from city contractors is meant to ensure that city officials engaged in negotiating contracts are not doing so to secure an outcome that would benefit them personally. “This again, just to make sure that when you are negotiating a contract … you’re doing this on behalf of the city,” Ng said.
Asked to explain the commission’s reasoning behind the granting McClellan the waivers, Ng said it was because “it determined that there would not be a potential for undue influence … because it seemed like [ACOC’s] interests were aligned with the city’s interests.”
As one ethics commissioner pointed out during the meeting, however, the same could be said of virtually any nonprofit entering into an agreement with the city.
Asked what would happen if ACOC somehow failed to raise the agreed-upon funds, placing McClellan in the position of having to explain the shortfall or re-negotiate with her former coworkers, Ng allowed, “If something like that happened, there might be a conflict.”
And what justification was given for waiving the ban on former employees receiving compensation from city contractors? “For that one, in the law itself, it says the commission may waive it … if it would cause extreme hardship,” Ng explained. “There would be a hardship, because … this is a great opportunity for her, and there was a short timeline for her to do it.”
Pressed on that point, Ng confirmed that the “hardship” in this case was the possibility of being barred from a great job opportunity, not the threat of financial impact or job loss.
The other issue, Ng said, was that without McClellan serving in that post, the committee’s fundraising effort might not be successful. “It just seemed like, you need to have somebody take charge,” she said. “The committee may suffer without her at the helm. If she were not able to do that, the committee — which plays a very crucial role in this — may not be able to meet its obligations.”
When we mentioned to Ng that the committee was composed of some very well-connected individuals, she noted that she was not familiar with its membership.
As we reported in previous coverage of the America’s Cup, ACOC is a veritable who’s who. Hollywood mogul Steve Bing, who’s donated millions to the Democratic Party and funded former President Bill Clinton’s 2009 trip to North Korea to rescue two imprisoned American journalists, is on the committee. Tom Perkins, a Silicon Valley venture capitalist, billionaire, and former mega-yacht owner, has a seat. George Schultz and his wife, Charlotte, are members. Billionaire Warren Hellman, San Francisco socialite Dede Wilsey, and former Newsom press secretary Peter Ragone are also on the committee. And that’s to say nothing of the less well-known investors, or the honorary members — elected officials serving at all levels of government. Would a powerful crew such as this have a difficult time raising money without McClellan’s leadership? Seems like a stretch, but that reasoning was offered as a factor in the decision to grant the waiver.
In an odd twist, McClellan might also be working alongside her former boss on the America’s Cup effort. In January, ACOC named its “first ever” Ambassador at Large: Lt. Governor Gavin Newsom.
While several ethics commissioners raised questions before granting the waiver, the vote ultimately came to 4-0 in favor of McClellan’s request. Board President David Chiu sent his legislative aide, Judson True, to speak in support of issuing the waiver.