The widening Mohammed Nuru/DPW/City Hall corruption investigation is now looking into why the City Administrator and SFPUC General Manager directed $8 million in contracts to the woman who sold them their house.
This week’s news that three more city departments have been subpoenaed in the widening Justice Department public corruption investigation also shined a light on a prominent romantic relationship at City Hall. Not Nuru and London Breed, nor Nuru and Mayor’s Office director of Neighborhood Services Sandra Zuniga, but instead city administrator Naomi Kelly and her husband SF Public Utilities Commission (SFPUC) general manager Harlan Kelly. Their relationship has never been a secret. But they are both now ensnared in the Nuru scandal, husband Harlan because he was named in the FBI subpoenas this week, and wife Naomi because she’s the one who tipped off the FBI that Nuru was violating his cooperation by alerting his colleagues to it.
But wife Naomi may not be in the clear here, as now the Chronicle reports the FBI is investigating possible sweetheart City Hall deals awarded to a contractor who sold the Kellys their house. Harlan Kelly owned a 50% share in a fixer-upper property in the Inner Sunset with a Melanie Lok, whom the Chron describes as a “longtime family friend,” and their real estate group bought the property for $540,000 in 2002, according to property records. The Kellys then bought out Lok’s share in 2011 for $282,000 and eventually moved in themselves. Seems like Melanie Lok did not get much of an appreciation or a return on that investment!
But as the Chronicle informs us, her software consulting company Mlok Consulting was awarded about $8 million in SFPUC contracts following that real estate deal. One of her company’s bids, in which there was only one other bidder, Lok wrote in her proposal that “Perhaps the most important advantage we can offer (the) SFPUC is peace of mind.” Ask Harlan Kelly how that “peace of mind” is working out for him right about now.
Harlan Kelly would probably not answer that question, though, because currently only his attorney is talking. “Mr. Kelly plays no direct role in the competitive bidding process for city contracts,” his lawyer Brian Getz told the Chron. “The SFPUC has a fair and transparent process for the hundreds of contract opportunities that an agency of its size and scale must extend every year.”
Kelly has an alibi, in that he was not SFPUC general manager yet when most of the original contracts were awarded to MLok. But he signed numerous amendments to the deal that raised payment ceilings, so there is at least a whiff of quid pro quo. The SFPUC maintains that those pay raises were consistent with the language of the original contracts, and approved by a five-member oversight commission.
But these days, it’s a bad sign when the name Walter Wong comes up in a City Hall employee’s personal financial dealings, as that fellow has been indicted on fraud and money laundering charges. The consultant and contractor has apparently been singing to the feds in hopes of reducing a possible 40-year sentence. And Wong’s construction business did some work on the Kellys' Inner Sunset house during renovations, which sound innocuous enough, except nothing seems innocuous in this affair anymore.
“Mr. Wong was a prominent construction contractor and community leader, and like countless others in this city, Mr. Kelly had known Mr. Wong for nearly three decades,” Getz told the Chron. “Mr. Kelly paid fair market value for this work — if anything, he may have been overcharged by Mr. Wong’s firm.”
Whoa, that shade almost sounds like the Kellys are turning against Wong. But Wong may have already turned on them, hence the FBI scrutiny of this house deal, and all of MLok Consulting's contracts with the SFPUC rendered since. The FBI is looking into sweetheart deals at City Hall, but as we see with the Kellys or Nuru and “Girlfriend 1,” some of these sweetheart deals involve actual sweethearts.
Related: Mayor London Breed Says Nuru Situation Is 'A Learning Experience' [SFist]
Image: (Left) SFPUC via Facebook, (Right) SFGSA.org