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‘Tone at the top’ led to fraud, bribes at Department of Building Inspection, report finds

The Department of Building Inspection (DBI) cultivated a culture of cronyism and corruption that festered for years ahead of the indictments of high-level department officials, according to a new report, enabling preferential treatment and “routine” conflicts of interest at the department.

A report published on Thursday by the Controller’s Office found major flaws in DBI’s protocols for building permitting and inspections, including the absence of any system for monitoring “red flag” activities such as improper approvals of project plans or inspections that fell outside of an employee’s purview. Former DBI director Tom Hui further encouraged the abuses, the report said. 

Those weaknesses, combined with a negative “tone at the top” during Hui’s tenure, led to several alleged instances of bribery and favoritism. As part of a local corruption probe last year, the City Attorney found that Hui abused his position to help his son and his son’s girlfriend obtain city jobs and accepted bribes from Walter Wong, a “permit expediter” who regularly worked with DBI.  

“We welcome this review and appreciate the Controller’s recommendations which we intend to fully implement as part of our larger, ongoing Reforms Initiative,” said Patrick O’Riordan, interim Director at DBI. Hui resigned last year following accusations that he took bribes in exchange for preferential treatment of Wong's client, Li Zhang, developer of a mixed-use project at 555 Fulton Street.

The Controller’s report noted that Hui, and possibly other DBI employees, had the ability to unilaterally assign specific staff—including themselves—to specific inspections, opening the door for preferential treatment and even bribery. DBI has more than 200 employees who issue permits and conduct inspections. The department conducted more than 118,000 inspections of building, electrical, plumbing and housing construction, and issued more than 50,000 permits last year. 

Hui appears to have rationalized preferential treatment of Wong by labeling it “good customer service,” according to the report. The report also noted a friendship between Wong and former Mayor Ed Lee, who appointed Hui as head of DBI, that may have created pressure to give favorable treatment. Lee passed away in 2017. 

Two other officials connected to DBI, Rodrigo Santos and Bernard Curran, were criminally charged with building permit fraud as part of a federal corruption probe in August. Santos, an engineer and former Building Inspection Commission president, was accused of stealing more than $400,000 from clients at his engineering firm. Curran, a former building inspector at DBI, was accused of giving favorable treatment to Santos’ clients in exchange for payments to favored nonprofits. 

More recently, local policymakers have linked DBI’s practices to dangerous code violations. 

At one apartment complex at 2861-2899 San Bruno Ave., a developer was found to have illegally crammed 30 units into a building intended to have no more than 10. The building was rife with fire and safety violations, including an illegal and hazardous “temporary” scaffolding that remained in place for two years. That housing project was inspected and approved by Curran under the direction of Hui, O’Riordan testified at a Board of Supervisors hearing on Monday. 

“We at DBI have a long ways to go to earn the public’s trust,” O’Riordan told the Board of Supervisors Land Use & Transportation Committee. “We have reforms in place, we have a lot of work to do, and this is going to take time.” O’Riordan said the department had begun auditing projects that may have been impacted by unethical practices.

Shortly after the report was published, Mayor London Breed issued an executive directive requiring DBI to prevent further misconduct. 

“The Controller’s report issued today documents an unacceptable pattern of misconduct and systemic failures under the previous leadership of the Department of Building Inspection,” said Breed in a statement. “The people of San Francisco deserve better.”

The directive requires DBI to more regularly disclose conflicts of interest, make technical changes to its permitting and inspection processes, and to retain a third-party entity to weed out further fraud risks. 

The mayor’s directive was consistent with a number of recommendations issued by the Controller’s office as part of the report. Those recommendations included creating a strong compliance program, using data to monitor fraud risks, and better educating the public on proper and improper practices within the department.