How banquet for ex-PUC head Peevey went sour for UC Berkeley

San Francisco Chronicle (2015-03-29) Jaxon Van Derbeken

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How banquet for ex-PUC head Peevey went sour for UC Berkeley

By Jaxon Van Derbeken March 29, 2015 Updated: March 29, 2015 7:21pm

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Photo: Paul Chinn, The Chronicle

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California Public Utilities Commission president Michael Peevey makes his way through a crowd of reporters and onlookers after testifying before the Senate Energy, Utilities and Communications committee at the State Capitol in Sacramento, Calif. on Tuesday, March 18, 2014.

At first, Goldman Dean Henry Brady seemed stunned at the reaction to the dinner for Peevey — a large donor and member of the school’s advisory board. But his views appeared to change when a top official at the commission the 77-year-old Peevey ran for 12 years portrayed his former boss as an arrogant autocrat whose ethical lapses made his fall “inevitable.”

It was mid-December when Peevey suggested the Goldman school receive any unspent money raised in a charitable dinner in his honor, an event organized by Susan Kennedy, a former member of the PUC, and Don Solem, a San Francisco public relations executive.

“I’m really hoping I can make this,” Brady, who has declined to comment publicly on the dinner controversy, said in an e-mail. He then quickly approved a note on the gala program thanking “all who attended for supporting the programs of the nation’s leading graduate school of public policy analysis.”

Before the search

While Brady later told university officials he was happy to take part in the dinner, he stressed that was before state agents searched Peevey’s home in a widening corruption probe of the agency.

Michael Picker, Peevey’s successor at the PUC, was an official sponsor of the affair. As such, commission lawyers said he had to disclose any contributions of $5,000 or more for the event. As the sponsor, such payments, under state law, are considered to have been made at his behest.

Picker wondered if a per-person average contribution might negate the state disclosure rule, the e-mails show, and whether he had to disclose contributions from donors he did not actually contact himself. “You will have to do the reporting,” Christine Hammond, the commission’s lawyer, stressed.

“I’m not sure that I’ll win any fights about the behesting and will report whatever totals you get from different sources,” Picker said.

Meanwhile, as news of the arrangement spread, calls and e-mails denouncing “tainted money with suspicious timing” began to arrive. By Feb. 10 Goldman Assistant Dean Annette Doornbos complained in an e-mail that “we are being inundated with abusive and abrasive phone calls.”

“There’s not much you can do, unless you want to acquiesce and pull out of the event, which I do not recommend,” replied Claire Holmes, a university communications official. “How did you get involved in this?”

Brady was not “inclined to withdraw,” Doornbos said, as Peevey had been a six-year member of the advisory board. Besides, he and his wife, state Sen. Carol Liu, had been “significant donors,” with Peevey funding an economics professorship and Liu endowing a post in graduate economics.

“Peevey is on our board and he is a distinguished public servant,” Brady added, but the e-mails continued.

“There is no honor in this sordid affair!” one critic said. Another decried the school’s role as “totally unacceptable and you should be personally mortified by (Peevey’s) actions.”

When Brady stressed the school neither sponsored nor organized the event and would only get limited proceeds, one of the critics, Joe Holtzman, dismissed the response as “absolute total nonsense, and you know it.”

Hill voices stance

State Sen. Jerry Hill, D-San Mateo, a harsh Peevey critic, also got involved, but Brady told a university colleague he had “no intention” of engaging the senator’s “false premise.”

“I do not want to get into a battle with him in any way (and anything I send him will be put out on the web),” Brady told the official.

Meanwhile, Brady sought to assure his own staff and students about the dinner. “There are lots of misconceptions and false rumors about tonight’s Mike Peevey event,” Brady wrote in a mass e-mail just hours before the Feb. 12 gala.

After 250 people dined at the Julia Morgan Ballroom in San Francisco, Brady went to New Zealand.

But the negative e-mails continued in the days that followed. One came from an unusual source — the utilities commission’s acting chief administrative law judge.

Peevey saw himself as a “benevolent dictator” rather than consensus builder, David Gamson, a Goldman school alum, told Brady, adding that Peevey ended up equating his views with the public interest.

“This is a recipe for corruption and not surprisingly led to a disregard of fair process, a lack of concern of public perception, a cast of sycophants, and an air of untouchability,” Gamson said. Peevey’s fall was “inevitable.”

He urged Brady not to accept the money and to distance the school from Peevey, who Gamson said had “lost his way regarding ethical behavior.”

“This is an opportunity for the Goldman School to 'speak truth to power.’ It will be difficult, but you must succeed for the good of the institution,” Gamson said in his e-mail.

“The story you tell makes sense to me and it will help me a lot as I move forward,” Brady replied that Sunday, Feb. 15.

The week after the dinner, a Chronicle editorial damned the school’s role as “shameful.” Still in New Zealand, Brady instructed his staff to issue the “standard response” to e-mails, saying that the school did not sponsor nor organize the event. At the same time, he asked his staff for Peevey’s number.

'No precedent’

When university officials suggested there was “no precedent” for refusing the cash, Brady said in a Feb. 18 e-mail to his staff that he was resigned to “simply grin and bear it and leave it the way it is. My guess is that most of the storm has passed.”

But less than a week later, Brady was drawing up an exit strategy. He stressed he would like to maintain his “innocent until proven guilty” approach, but had to think of protecting the school and the university.

In a March 10 e-mail, Peevey lamented the “media frenzy” his idea to donate to the school had touched off. By this time, the school had renounced the cash.

“I have truly enjoyed my time with the Goldman School,” Peevey told Brady. “This sorry episode has led me to question my value to the school going forward. Hence, I am resigning from the board, effective immediately, a decision I know you support.”

Jaxon Van Derbeken is a San Francisco Chronicle staff writer. E-mail:jvanderbeken@sfchronicle.com

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