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

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Screenshot of a 2014 text message exchange between former SFPUC General Manager Harlan Kelly (at top) and city contractor and permit expediter Walter Wong, both indicted on federal corruption charges.

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."

original charges against Harlan Kelly

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.

Screenshot of a 2016 text message exchange between former SFPUC General Manager Harlan Kelly (on the right) and permit expediter Walter Wong. (Courtesy SFPUC)

"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.

But taken all together, Peskin said, the text messages raise "some very serious questions not only about what the general manager of the PUC knew, and favors he appears to be taking, but what the city administrator of San Francisco, who is his spouse and cohabitant, knew. This is deeply troubling."

"Bottom line," he added, "is it has the appearance of, if not the fact of, a government contract funded by the taxpayers being given to a vendor who is giving cut-rate services to a government employee for said favors."

Since being indicted by the FBI in June 2020, Wong has pleaded guilty to his charges and has agreed to cooperate with the federal government's investigation, while Kelly — who was charged in November — has flatly denied all allegations against him.

Wong has also provided the U.S. attorney’s office with evidence that he gifted Kelly the 2016 trip to China, as well as free meals and personal car service (with Wong as the driver), with the expectation that "Kelly would in return use his official position to benefit Wong's business ventures," including securing a contract with the SFPUC to install LED lights in street lamps across the city, according to the federal complaint against Kelly.

Revealing Texts

In July, following the public records request from the person labeled “anonymous,” the SFPUC released more than 50 pages of text messages between Wong and Kelly, sent from 2015 through 2018.

Per California law, communications on city employees’ personal accounts or devices, including text messages on personal cellphones, may be obtained through public records requests if they pertain to public business.

But the messages were heavily redacted, with blacked-out text the agency didn’t want the public to see. The SFPUC then almost immediately asked the requester of the documents — “anonymous” — to destroy the leaked document, because the redactions were made in Microsoft Word, allowing anyone to simply delete the blacked-out lines to reveal the hidden text — a method the agency later deemed "insufficient."

This wasn’t a lower-level staffer goof-up, however. The redactions were made by Harlan Kelly himself.

on the philosophy of scandal

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.

Willie Brown reflects on SF corruption

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."

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He noted, however, that "it's unclear if Naomi was aware of this, or what role she actually played in it."

But, Haney said, "it certainly raises more questions," and "definitely" warrants investigation.

‘Happy Valentine's Day!’

While it isn't a crime to have pals, the text messages obtained show what appears to be a deep personal friendship between Wong and Harlan Kelly.

In one text message from 2017, Kelly wishes Wong a "Happy Valentine's Day!" before asking if Wong fixed a leak in his home. In another 2018 exchange, the two discuss plans to practice playing ping-pong. They also plan a lunch, throwing around different preferred restaurants, including the R&G Lounge in Chinatown, on Kearny Street, where Wong had previously wined and dined another city official, an instance later found to be in violation of city ethics rules.

Screenshot of a 2017 text message exchange between former SFPUC General Manager Harlan Kelly (on the right) and permit expediter Walter Wong. (Courtesy SFPUC)

"There was a personal element. They were friends," said Getz, Kelly’s attorney. "I think Walter Wong attended the wedding between Harlan Kelly and Naomi. I think they've been friends for a long time."

Wong and Harlan Kelly also discussed attending a birthday party for the late Mayor Ed Lee, in which Wong reveals it will be held "in Citi center" and adds, "ps do not tell anyone." Citi Center is a building owned by Wong — and long used to host events for big-wig city politicos, including former mayors, like Willie Brown. Wong’s offices were raided by the FBI early last year.

While none of these texts necessarily raise eyebrows on their own, they offer a view into the depth of the relationship between Wong and Kelly. The personal bridge-building that led to the allegations in San Francisco’s corruption scandal was built day by day, brick by brick, undergarment by undergarment.

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