The “Association of Bay Area Governments” or “ABAG” is a nonprofit lobbying group that many Bay Area local governments pay big annual dues to, in order to coordinate their efforts to get more funding from Sacramento and Washington, D.C. ABAG, based in San Francisco, is not exactly a government agency, rather, it is like a “trade association”, and therefore its operations are far more opaque than those of a real government agency subject to all the public scrutiny laws. Sometimes the government agency members of ABAG try to lay-off responsibility for some of their functions on this “trade association” for government. A secret benefit of doing so it that sometimes the activity can occur below the public’s radar screen and more-than-a-little outside the more ready enforcement mechanisms of the Brown Act and the California Public Records Act against ABAG’s members, which are the state’s key public integrity laws. One such situation occurred when San Francisco politicians and bureaucrats decided to deposit public bond monies meant for parks and other public improvements for ABAG to manage regarding the so-called “South of Market” fund, which also collects payments from developers pursuant to development agreements, in order to use the funds to enhance public facilities in a general effort to offset negative public impacts of a new development.
But the San Francisco Chronicle has reported trouble at ABAG, big trouble. News reports and a statement by ABAG itself, indicate that Clarke Howatt, who resigned late last week as Director of Financial Services for the nonprofit government advocacy agency, “executed a sophisticated scheme to defraud” ABAG of $1,300,00 of public funds entrusted to the agency for park improvements. The funds were found missing as a result of an audit of the South of Market Stabilization Fund, which is a pool of public bond funds and developer funds. Howatt, who is under criminal investigation, has issued a statement that he “will make every attempt to get the funds restored.” But no one seems to be able to account for them at the moment. The $1,300,000 million was wired out of a bank account at Howatt’s orders to a different bank account setup in San Diego county to the attention of a person who does not exist.
Thank God for audits! Let us hope they can find the money!
Reactions to the million dollar government embezzlement have been muted in California. While the Chronicle has reported the story, other news media outlets have ignored it. That is a shame, because the story is an example of how government agencies have mismanaged a public bond fund, by pushing authority for the bond funds outside the exclusive responsibility of a responsible and more accountable government agency. While our Sacramento politicians love to pass laws that make things like serving duck liver and shark fin soup in our state’s restaurants illegal, they really ought to better be spending their time on considering laws about things that are really serious problems, like improving the public’s confidence in how the billions of dollars in public bond funds are managed in the state, and making sure rogue employees in groups like ABAG, let alone ABAG itself, can’t and don’t steal our public’s bonds.