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SF’s environmental agency under scrutiny after director asked Recology for $25k while awarding lucrative trash contract

Debbie Raphael, the director of San Francisco's Department of the Environment, asked Recology for a $25,000 donation while her department was finalizing a landfill contract for the trash-hauling giant. | Jesse Rogala

San Francisco’s top environmental official has been swept up in an anti-corruption investigation for soliciting a $25,000 donation from Recology at the same time her department was finalizing plans to award the trash-hauling giant a lucrative contract.

Debbie Raphael, director of the Department of the Environment, asked Recology for the donation in early 2015 to sponsor a series of climate change awareness events featuring the late Mayor Ed Lee, according to documents obtained through a public records request. Raphael solicited the donation as her department was preparing to award Recology a contract to haul the city’s waste to its landfill in Solano County.

While nearly seven years have passed since the donation was made, the payment is now facing scrutiny in the wake of a corruption scandal that has exposed the prevalence of “pay-to-play” politics at City Hall. The scandal, which first became public in early 2020 when federal authorities charged former Public Works head Mohammed Nuru for accepting bribes, has unfolded into a dozen criminal cases and a cascade of resignations by high-ranking officials who mixed business with pleasure.

Raphael solicited the donation from Paul Giusti, the same former Recology executive who pleaded guilty to conspiring to bribe Nuru. Giusti admitted to arranging a steady stream of donations from the firm that Nuru used to throw staff parties and events.

Charles Sheehan, the Department of the Environment’s spokesperson, said in an email that Recology’s donation did not influence Raphael’s role in awarding the landfill contract. While negotiations over the contract were ongoing at the time of the donation, Sheehan said, the “bulk of the terms” were settled before Raphael became director and that she was “never directly part of any active negotiations with Recology.”

Raphael has previously acknowledged she inappropriately accepted small personal gifts and meals from Recology, which she later refunded.

The $25,000 payment is now being reviewed as part of a broader investigation by the City Attorney’s Office and Controller’s Office into the relationship between the environmental department and Recology. In February, City Attorney David Chiu subpoenaed records from the nonprofit that facilitated the donation, Community Initiatives, for evidence of potential ethics violations.

“The issues around contributions made by Recology on behalf of the Department of the Environment, including a $25,000 contribution, are known to us and will be a subject of the review,” Controller Ben Rosenfield said in a statement to The Standard.

The Department of the Environment and Recology are inextricably linked. In addition to working closely with Recology to reduce waste, the department is largely funded by the rates San Franciscans pay the firm for trash collection. The department also plays a role in the process for setting Recology’s rates.

Raphael, who previously served as the director of the state’s Department of Toxic Substances Control, has led the Department of the Environment since her appointment by Mayor Lee in May 2014.

Awkward Timing

In March 2015, the Department of the Environment was closing out a decade of deliberations on where San Francisco should dump its garbage when Raphael solicited the $25,000 donation from Recology.  Raphael wanted Recology to help pay for a bus tour on Earth Day and a climate reception that summer, which coincided with Mayor Lee welcoming the U.S. Conference of Mayors to San Francisco.

A day after Raphael emailed Giusti asking him if Recology would consider sponsoring the events, Giusti replied that he was “trying to sell Recology to take one of the higher sponsorships as a business development opportunity during the Mayor’s [Conference].”

Recology chose to contribute the maximum $25,000 donation for the events, becoming a featured “Emerald Green” sponsor. The sponsorship ensured that Giusti and other Recology employees had seats on a Muni bus branded with the company’s logo in celebration of Earth Day. Other people who were reserved seats on the bus included a who’s who of the corruption scandal: Nuru; former San Francisco Public Utilities Commission chief Harlan Kelly; former City Administrator Naomi Kelly; and former Department of Building Inspection head Tom Hui. Nuru has since pleaded guilty to fraud and the four others have all resigned. Harlan Kelly is also facing charges.

Records show Recology officially cut the $25,000 check months later on May 19, 2015. At the time, its landfill proposal was making its way through the approval process at City Hall, which included a hearing two days later at the Planning Commission.

Instead of receiving the funding directly, the department had its nonprofit partner, Friends of San Francisco Environment, accept the check through its fiscal sponsor, Community Initiatives. Friends of SF Environment is staffed by department employees.

On July 22, 2015, Raphael signed a grant agreement with both nonprofits to disburse the funds from Recology and other sponsors to the city. That same day, records show, the department executed and approved Recology’s landfill contract, giving the company a key piece of San Francisco’s garbage business on top of its long-running monopoly on trash collection in the city. Raphael also signed the landfill contract.

When the department sought to use the donated funds to cover Mayor Lee’s travel expenses to visit the Vatican that summer for a climate change conference, Community Initiatives objected.

“We have concerns about whether it’s appropriate for the project to be paying for this trip because we don’t see how this activity furthers your mission to sustain a healthy SF,” a Community Initiatives program specialist wrote in an email.

‘Pay to Play’

While city law requires departments to obtain approval from the Board of Supervisors for gifts of over $10,000 and to disclose gifts of more than $100 on their website, no records could be found of the department doing either for Recology’s 2015 donation.

Sheehan, the department of environment spokesman, said sponsors to the events were “announced, acknowledged, and publicly thanked.” But he said the department did not have to disclose the $25,000 donation because Recology did not give the money directly to the agency.

“The department never received the $25,000 sponsorship,” Sheehan said. “It was received by Friends of SFE and therefore was not a gift to the Department.”

Recology did not respond to a request for comment, and an attorney representing Giusti in his criminal case also did not return a request for comment.

Previously, the Controller’s Office has found that city contractors donating to nonprofits on behalf of a city agency can “create a ‘pay-to-play’ relationship.” In a September 2020 report, the controller found that a nonprofit can serve as an intermediary when a contractor donates money to influence or attempts to influence city business.

Retired Judge Quentin Kopp, a former member of the city’s Ethics Commission, said the situation surrounding Recology’s donation on behalf of the Department of the Environment seemed unfair. He called for the company’s contract to be nullified, and for the city to put the landfill contract out to bid through a competitive process.

“If you are the donor to the charity, that gives you a favored position in terms of not only the contract, but also the terms and conditions of that contract with the city and county of San Francisco,” Kopp said.

Supervisor Aaron Peskin, who pushed legislation through the Board of Supervisors to ban officials from asking their contractors for donations in response to the Nuru scandal, said there should be both criminal and civil investigations into the donation.

“Having learned about this, it makes me sick to my stomach,” Peskin said. “If the contract was entered into under fraudulent pretenses, it may be invalid.”

But Supervisor Ahsha Safai had a different view. Safai said it was accepted practice for departments to ask their contractors to sponsor events until the Board of Supervisors changed the rules around so-called “behested payments” beginning this year.

“On its face it doesn't seem nefarious but it certainly seems like it’s something that should have been disclosed,” Safai said.

Privately, department employees have acknowledged in internal emails that its past fundraising efforts could open them up to public scrutiny.

When federal prosecutors charged Giusti in late 2020, the department was already preparing for a series of public hearings involving Recology. Records show the charges prompted the department to begin reviewing the company’s past donations.

“This timing is awkward,” Sheehan wrote in a flustered email exchanged with colleagues. “We are getting prepared on multiple fronts.”

The $25,000 check is not the only donation Raphael has solicited from Recology.

In 2019, Recology contributed $1,100 worth of wine and a $6,400 check for the department’s Earth Day reception, which featured Mayor London Breed. While the department disclosed the $6,400 check as a gift on its website, emails show it never actually received the funding because Friends of SF Environment received the check the following year—when the corruption scandal broke.

Sheehan told The Standard that the check was “refunded because there were questions about Recology’s conduct.”

Sheehan said the department no longer plans to ask Recology to contribute to its climate awareness events, in accordance with the reforms the scandal forced on City Hall. In addition to the city barring behested payments from contractors, Recology agreed last year that it will no longer contribute money on behalf of city officials as part of a $100 million settlement agreement for overcharging San Francisco customers.