SF Corruption Saga: Newly Released Messages Between Former SFPUC Chief and City Contractor Suggest Cozy Relationship

San Francisco’s corruption scandal has sprawled across four city departments, spanned years, and seen bribery touch even mundane aspects of city life, like monthly trash bills.

Now, there’s evidence to suggest it even tried to reach our underwear drawers.

A federally indicted San Francisco official, who prosecutors allege offered insider details on a citywide contract in exchange for a jet-setting lifestyle provided by an admittedly crooked contractor, also may have sought improper help growing an “undergarments” manufacturing business in China, newly disclosed text messages show.

The exchange in question took place in 2014, between former San Francisco Public Utilities Commission General Manager Harlan Kelly and Walter Wong, a contractor and city permit expediter who was hired by housing developers to navigate the city’s byzantine permitting system.

In the texts, Kelly asks for Wong’s help in assisting an unnamed friend set up an “undergarments” business in China.

Although it is not obviously evident who actually wanted to set up that business, this exchange provides yet another clear example, among many, in which Kelly solicited assistance from Wong.

Federal authorities announced corruption charges against Kelly last November. They allege he accepted dinners and a lavish trip to China paid for by Wong in exchange for favorable treatment securing city contracts.

Under San Francisco ethics laws, city officials are barred from soliciting gifts, including in the form of services, from a “restricted source” — someone doing business with the department that the official works for. Moreover, federal law prohibits government officials from defrauding the public through bribery or kickbacks, and from using interstate wire communications to do so, both of which form the basis of the federal charges against Kelly and Wong.

San Francisco Supervisor Gordon Mar, who has called for more transparency from the SFPUC in the wake of Kelly’s indictment, says the texts suggest the possibility that additional people may be implicated in the still-unfolding investigation.

“The text indicates how Kelly used his relationship with Wong to help a friend’s business interests,” Mar told KQED. “This is concerning new evidence of the culture of casual corruption that is unfortunately not limited to one agency or individual.”

Kelly’s attorney, Brian Getz, said he wasn’t aware of the specific text message exchanges related to the underwear business, but that generally, Kelly is a person who helps his friends evenly across the board.

“As a general proposition, Harlan would have given that information to anybody if anyone contacted him in connection with trying to manage their business or advance their business,” Getz said. “And [if] Harlan had information that would be helpful, he would have given it. He’s always been very open to requests from the community.”

The messages, which were obtained through public records requests by a person using the pseudonym “anonymous,” and later gathered by KQED, offer a microscopic view of the financial relationship between Wong and Kelly.

“Anonymous” — the requester — has previously contacted KQED about other records related to city government officials. Those records, and also links to SFPUC’s own published records, are automatically posted online to a public records repository, which KQED reviewed.

Some of the newly disclosed texts also show that Kelly sought advice from Wong on remodeling his mother-in-law’s kitchen.

San Francisco Supervisor Aaron Peskin, who first learned of the text exchange from KQED, says seeking such advice may violate city ethics laws and warrant further investigation, particularly into the role that Kelly’s wife, Naomi Kelly, played in the relationship with Wong.

“This does not look good,” said Peskin, who is among other city leaders now pushing to expand the corruption investigation.

Naomi Kelly served as San Francisco’s city administrator until stepping down in January, following her husband’s indictment. Her reasons for leaving City Hall were initially unclear, as she only tangentially appears in her husband’s federal charging documents and was never actually charged with a crime herself.

These exchanges, said Peskin, may shed new light on Naomi Kelly’s hesitance to remain in the public eye.

Naomi Kelly’s attorney was quick to refute that suggestion.

“Naomi stepped down because she needed to take care of her family, which unfortunately in the unequal world that we live in, often falls to women a lot more than men, and even more so in a pandemic, and even more so when the family has children,” her attorney Martin Sabelli said.

Naomi Kelly, he stressed, was not involved in any aspect of the city corruption scandal.

“Naomi Kelly wants people to know that she did not commit a crime. She did not betray the public trust,” he said.

Wong, though, may also have been considered a “restricted source” for Naomi Kelly. In her position as city administrator, she oversaw 25 different departments, including San Francisco Public Works, where Wong frequently conducted business. So, any time Wong had contracts with Public Works, Naomi Kelly was in an oversight role.

Michael Carlin, the SFPUC’s acting general manager, explained as much in an email sent to “anonymous” in February, which the agency later shared with KQED.

“Mr. Kelly redacted a significant number of text messages in the document, asserting that the redacted communications between him and Mr. Wong did not relate to City business. Following the standard practice of City departments and the general guidance of the City Attorney’s Office, the SFPUC relied on Mr. Kelly to prepare the redactions, and did not ask to review the unredacted text messages before producing the document to you in response to your records request,” Carlin wrote.

But, after being tipped off by “anonymous,” KQED obtained the exchanges before they were pulled down.

The SFPUC then re-released the text messages last month, with many of the conversations detailed in full and the black boxes removed. Except, not all of the text messages listed in the first release were included in the second version.

Read the re-released text messages from SFPUC here.

KQED was able to read what was behind the blacked-out boxes of the first release — by simply either deleting the bars or changing the font color — believing strongly in the public’s right to know about Harlan Kelly’s financial dealings.

While many of the revealed redactions included content of a personal nature — and will not be disclosed here — others appear to be related to the charges against Kelly, and the city’s ongoing corruption scandal.

And some of the text exchanges KQED uncovered were not included in the agency’s second release of the documents because it fell outside of the years specified in the original public records request, an SFPUC spokesperson said. That includes the 2014 exchange about the undergarments business, which were apparently shared in the first batch by mistake.

Kelly’s attorney lambasted the SFPUC for releasing some of the text exchanges and defended his client’s decision to block the public from seeing discussions with Wong.

“Those additions have nothing to do with work-related topics,” Getz said.

The solicitation for help with an undergarments business is not something that appeared in the federal government’s initial filings against Kelly — a request would only be considered illegal if it had taken place at the same time Wong was seeking business from Harlan Kelly’s department.

That’s why the federal government is alleging that Kelly’s 2016 trip to China, allegedly paid for by Wong, violated federal law — because it occurred while Wong was seeking the multimillion-dollar citywide lighting contract from Kelly’s department.

“This is an example of the incestuous relationships at the highest reaches of government,” said Supervisor Matt Haney, on learning of the “undergarments” exchange. “All of this is not only inappropriate and unethical, but it may very well be illegal.”

It also suggests that others may have been involved, he said. “This is a string that when you keep pulling it, more and more people are involved and caught up in it.”

Naomi’s Mom’s Kitchen

Sabelli, Naomi Kelly’s attorney, said there was nothing problematic with the specific text exchanges about the kitchen remodel.

“Well, that text message certainly doesn’t establish any kind of financial relationship,” he said. “That sounds like one person asking somebody who he thinks knows about construction and renovation for advice for his wife’s mother. That’s what that sounds like to me.”

“I think it’s a smart thing to do before you renovate your house to get as many opinions as possible,” Sabelli said.

Sabelli said Walter Wong never ended up inspecting Naomi Kelly’s mother’s home. The incident, however, still raises questions for Peskin.

“At a minimum, when you’re in a position like that, and you’re the city administrator who oversees the director of Public Works, and your spouse is the general manager of the PUC, you are held to a higher standard, and you need to ask questions: ‘Does Walter have any business in front of my spouse’s agency? Does Walter have any business in front of an agency under my control and supervision?’ ” Peskin said.

Haney also said the texts appear to be problematic because they are a “mixing of personal and business and city decisions.”