Correction: An earlier version of this story stated Nuru recommended that Recology under-report their 2017 earnings.
SAN FRANCISCO (KRON) – As part of an ongoing investigation dissecting alleged corruption by former Public Works Director Mohammed Nuru, City Attorney Dennis Herrera announced that San Francisco residents will receive $94.5 million for overcharges Recology made since July 2017.
Pending the approval from the San Francisco Board of Supervisors, payments to current customers will be made by September 1, 2021, with former customers receiving payments on a rolling basis.
An additional $6.1 million will get into customers’ hands through a 7% reduction in residential and commercial refuse rates from April to June.
Actual payment amounts will vary based on a number of factors, including the service level and
customer type. Customers will be notified of their payment amounts in the coming months.
“The ramifications of our work with the City Attorney on this investigation are not abstract—there are real financial consequences for San Franciscans,” Controller Ben Rosenfield said. “It’s only right that our residents are repaid for the unjustified rates they were charged, but going forward we need stronger regulations that leave no room for systemic problems to occur. How this anachronistic arrangement for setting garbage rates, which dates from almost a century ago, should be administered in the future will be the subject of the next Public Integrity Review that we will be issuing in coming days.”
Recology, the sole garbage collector in San Francisco due to a a 1932 voter-approved mandate that consolidated 97 independent garbage companies, will also pay an additional $7 million to the city under the California Unfair Competition Law.
According the lawsuit, while Nuru was the Director of Public Works in 2017, Recology failed to accurately report its revenues. That under-reporting led to a rate increase of more than 14% for San Francisco customers when the actual revenues only supported a rate increase of about 7%.
Despite Recology disclosing the error in 2018 to the Public Works Department, no action was taken by Recology or Public Works to publicly disclose or correct the error. According to the city attorney, Recology continued to overcharge customers for two years. Recology did ultimately report the rate error to the city attorney’s office last year, following a subpoena.
“We value our customers, and making them whole for this mistake is our top priority,” said Sal
Coniglio, Chief Executive Officer of Recology. “As soon as we learned of the mistake, we took
immediate action. We are grateful to the City Attorney for helping us reach a resolution that
benefits our San Francisco customers. We are reviewing our internal processes and working
with the City to ensure an issue like this never reoccurs.”
The city attorney also alleges Nuru regularly solicited funds from Recology between 2016 and 2020 totaling $60,000, which was used for meals, gifts and accommodations, with Recology complying to influence city decisions affecting it.
“With this legal action, we are making San Francisco ratepayers whole and sending a clear message that cozying up to regulators won’t be tolerated,” Herrera said. “Mohammed Nuru may have had his challenges keeping the streets clean, but he clearly excelled at cronyism, slush funds, and indifferent oversight. While ratepayers were taking a hit to their wallets, Mr. Nuru was soliciting money for lavish parties from the company he was supposed to be regulating. It’s outrageous. They say a fish rots from the head. Well, the head of Public Works was Mr. Nuru. He has disgraced all of the dedicated public servants at Public Works who go above and beyond every day for the people of San Francisco.”
While Recology appointed Coniglio and Steele at the start of the year, the company says other current senior leadership became aware of the mistake in Nov. 2020.
Recology maintains that the mistake was not intentional.
“We are confident in Recology’s current leadership and have implemented measures to improve
the company’s commitment to a culture of service and compliance. Today’s resolution is in
keeping with the actions we have taken over the course of the last year,” said Christa Steele,
Chair of the Recology Board of Directors. “At Recology, we are proud to serve our communities
and will continue to take seriously our responsibility to our customers.”
Nuru was charged with public corruption in Jan. 2020, upending City Hall as elected leaders scrambled to reassure the public that bribery and kickbacks would not be tolerated.
Nuru is also entangled in an allegation with Lefty O’Doul’s restaurateur Nick Bovis which focuses on an attempt to bribe the San Francisco airport commissioner for retail space in 2018.