Questions raised over council members’ expense-paid travel

Two Menlo Park City Council members, Kirsten Keith and Catherine Carlton, have reported receiving contributions from US Asia Innovation Gateway, a Palo Alto-based trade organization that may not be legally authorized to pay for local elected officials’ travel.

In April, The Almanac reported that Keith had traveled to Chengdu, China, for a three-day trip, from March 25 to 27, with US Asia Innovation Gateway, as part of a personal vacation. She said she expected to have her travel expenses reimbursed by the US Asia Innovation Gateway.

The event is not without precedent. Between Nov. 12 and 21, 2016, Carlton had also traveled with the same organization, and reported receiving $8,500 in contributions from US Asia Innovation Gateway on a mandatory “statement of economic interests” form.

Generally, according to the state’s Fair Political Practices Act, elected officials are not permitted to accept gifts larger than $470. Some exceptions exist if the travel is funded by a 501(c)(3) nonprofit organization, or a foreign government, for specific travel purposes, such as public speaking or public business.

However, US Asia Innovation Gateway is not a 501(c)(3), according to federal records – it is a 501 (c)(6), a different legal classification designated for trade organizations.

Ethics violations?

Whether accepting these trips constitutes a violation of the state’s political ethics law for these council members is a complicated question.

Typically, it comes down to the purpose of the trip and the relationship between the official and the entity paying for the travel, said Jay Wierenga, communications director of the Fair Political Practices Commission (FPPC).

“Public officials do often travel, to give speeches, to attend conferences, things that generally fall under the Political, Legislative or Governmental purposes. Sometimes that travel does not have to be reported, other times it does but is not subject to the gift limits,” he explained in an email to The Almanac.

“We aren’t going to say something is or isn’t a violation, or is permissible or isn’t, as that would obviously be making an accusation or pre-judging something that may in fact not be the case when the specifics are known,” he wrote.

Wierenga pointed to a July 2015 opinion letter by the FPPC, in which Emeryville Mayor Ruth Atkin asked for advice about whether it was permissible to accept an all-expense-paid economic development trip to China. At the time, the trip was coordinated by US Asia Innovation Gateway, but the organization provided no funding for the trip. Instead, it was funded by a 501(c)(3) organization called US-China Innovation.

FPPC legal counsel said in a letter that it was permissible for Atkin to go, but the payments would still be reportable and could form the basis of a conflict of interest. Any expenses other than travel, lodging and subsistence were subject to the maximum gift limit, the letter noted.

Ann Ravel, former FPPC chair, wrote in an email to The Almanac, that “council members may accept a gift of travel from a 501(c)(4) – a category of organization that is permitted to lobby – or any other entity, but it would be subject to the $470 limit.

But, if they are giving a speech, they can accept travel and lodging for the day before, the day of and the day after the speech is given. This is not a gift and so is not reportable.

“There may be legislative and governmental purposes in the travel. So if the trade organization is affiliated with the foreign government, it is reportable but not subject to the limits,” she wrote in an email to The Almanac.

“If there is no government connection and no money coming from a government entity or a domestic governmental agency, the receipt of the travel would be considered in the law to be inappropriate,” she wrote.

Travel purposes

Carlton said in an email that the purpose of the trip she went on was “getting to know each other, developing positive international relations, and exchanging general ideas about innovation and business in Silicon Valley.”

She said she traveled with the following Bay Area elected officials: Lisa Gautier from East Palo Alto, David Haubert from Dublin, Ruth Atkin from Emeryville, Sue Chan from Fremont, Robert Gottschalk from Millbrae, Mike Kasperzak from Mountain View, Carol Dutra-Vernaci from Union City, Carmen Montano from Milpitas, and Jeff Gee from Redwood City.

She said she believed that the only person who gave a presentation from the group on her trip was the leader and spokesperson, Brian Peck, deputy director for international affairs and business development for Gov. Jerry Brown’s California Office of Business and Economic Development.

Keith said that her 2018 trip was her first journey to China, and during the trip, she talked about “what makes Menlo Park a great place to live and work and invited their delegation to visit.”

In an interview, she said she purchased the fares herself and expects to be reimbursed by US Asia Innovation Gateway. When asked about the organization she traveled with, she said, “I know Cat went with them as well, and other council members from other cities have gone with them in the past.”

“I’ll report it, as I said, when we have all the information,” she said. “Just like everyone else in the past has done.”

Keith traveled with Dublin Mayor David Haubert and Mountain View Mayor Lenny Siegel.

They were joined by former Mountain View councilman Mike Kasperzak, who was acting as CEO of a group called HIM Holdings. During that trip, a signing ceremony was held with Keith and the two mayors present; the ceremony appeared to signal support for a partnership between HIM Holdings and the Chengdu Hi-Tech Industrial Development Zone, which Kasperzak described as an office park that is run as a government agency in China.

The US Asia Innovation Gateway lists on its website Huawei, a Chinese telecommunications equipment company, as one of its main sponsors, along with Colliers International, a real estate services company; Stronkin, an electronics company; Launching Pad, described as a “new Silicon Valley Off-shore Incubator”; and Silicon Valley Global.

Huawei, it was reported June 5 in the New York Times, has a data-sharing partnership with Facebook and has been flagged by American intelligence officials as a national security threat. Facebook planned to “wind down the Huawei deal by the end of the week,” the Times reported.

The Almanac was tipped off to the legal questions surrounding the travel reimbursements by George Fisher, a Menlo Park resident, attorney and watchdog, who said,”I got into this because I’m concerned. Why is the Menlo Park council taking so may trips, and what’s happening on them?”

“It’s that the mayors are taking advantage of these trips, and not paying attention to what the rules are that allow them to do it,” Fisher added.

Representatives from the US Asia Innovation Gateway did not respond to requests for comment.

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