The ethics of Ethics

The ethics of Ethics: Campaign finance watchdog growls at a grassroots treasurer while cutting deals with professional handlers

Part one in a Guardian series

Back in 2002, Carolyn Knee did what many other citizens of San Francisco were doing — she volunteered her time and energy campaigning for a ballot measure she hoped would pass.

Five years later the retiree living on a fixed income has found herself threatened with $26,700 in fines levied by the Ethics Commission enforcement staff, who turned up several alleged violations of campaign finance laws during a random audit of San Franciscans for Affordable Clean Energy, the committee for which Knee was a volunteer treasurer.

At a June 11 probable cause hearing before the Ethics Commission, investigator Richard Mo itemized several infractions, including failure to report $19,761 in contributions on time, in addition to another $9,500 that came in right before the election but wasn't reported until afterward; failing to notify two organizations that they were major donors who needed to file as such (one of which was the Guardian); not providing all the required information about two donors; and disparities between bank account statements and campaign finance reports.

Mo alleged Knee had "cooked the books," saying she "takes no responsibility" and "claims she was ignorant of the law, passes the blame on to her personal accountant. She cites her inexperience as a treasurer when in fact she served as treasurer for one prior committee."

It sounds like a litany of campaign crime, with Knee as the linchpin, but she maintains that none of it was intentional and that many of the reporting mistakes were made by her accountant, Renita Lloyd-Smith of the Simon Group, a company she'd hired to handle the complicated ledger of campaign finance reports. "Perhaps I was wrong in placing confidence in someone I had to hire because I didn't know the rules," Knee told the Ethics Commission. "It was all in good faith. It was all done in love of my city. But I'll never do it again."

Those words have a dual meaning: Knee hopes never to make another financial mistake, and she'll never again take on the risk of steering the financial helm of a grassroots campaign.

Ethics Commission hearings such as this are usually held in closed session, but this one was opened at Knee's insistence because she suspected she's not the only one who's had difficulties handling campaign finance laws or negotiating fair settlements. It was the first publicly aired probable cause hearing in the commission's 13-year history, and both commissioners and attendees walked away with questions after issues of perceived bias and a lack of timeliness in the investigation were raised, as well as the possibility that the fines being threatened are inflated and arbitrary.

"There's only one department in the city and county of San Francisco with no oversight — Ethics," Joe Lynn told the Guardian. Lynn is a former Ethics commissioner and staffer who still watchdogs the agency and has been openly critical of the laxness he perceives there.

His question is one of many about the commission: How does the staff conduct its investigations? Should smaller campaigns staffed with volunteers be handled differently than larger, more professionally managed operations? If resources are tight, should Ethics be more focused on going after the big guys? If the commission had more resources, would the public benefit from both a greater understanding of campaign laws and a more open, honest, and just government?

SFACE raised a little more than $100,000 during the 2002 election season (including about $29,000 from the Guardian and editor and publisher Bruce B. Brugmann), but the measure it supported — Proposition D, which would have allowed the city to set up its own public power system and break ties with Pacific Gas and Electric Co. — failed.

PG&E spent more than $2 million defeating Prop.