Slog

Why the Public Has a Right to Know About Jenny Durkan's Subs

Jul 11, 2018

That's sub-<em>vendors</em>, people. Get your mind out of the gutter.
That's sub-vendors, people. Get your mind out of the gutter. Paige Vickers

It was the kind of public meeting that virtually no one would pay attention to unless money was somehow involved.

Phil Lloyd, the treasurer for Seattle Mayor Jenny Durkan's 2017 election campaign, was at the meeting because political cash was being discussed. The people who regulate Seattle's elections were there because it's their job to show up. And because there are still a few journalists left who can earn a paycheck while sometimes reporting on events with zero virality, I later watched a full hour of the meeting's dry proceedings. Twice.

Which was a good thing because, as it turned out, something important happened on the fluorescent-lit 40th floor of the Seattle Municipal Tower during the June 6 gathering of the Seattle Ethics and Elections Commission.

It wasn't exactly an entertaining something. But as former President Barack Obama recently said, "Governance is work, and we shouldn’t expect it to be entertaining all the time." (Covering small acts of governance is work, too, and when fewer people do that work, according to academics, we get "less informed voters, lower voter turnouts, and less engaged local politicians.")

So it was good to be watching these proceedings, even if they featured a retelling of a Monty Python joke that immediately fell into a bottomless void of bureaucratic silence. The commissioners, a diverse and deeply serious bunch, were not there to laugh. They were occupied with an intense "textual" analysis of Seattle election rules.

At issue: subs.

The June 6 meeting of the Seattle Ethics and Elections Commission.
The June 6 meeting of the Seattle Ethics and Elections Commission. Seattle Channel

"You could call it a sub-vendor, or you could call it a sub-sub vendor," said Commissioner Hardeep Singh Rekhi at one pivotal moment during the meeting. "I don't know if there's a distinction between those two things. There's a vendor at the top, and then there's everybody underneath the vendor—I think everybody underneath the vendor is a sub-vendor."

It doesn't matter whether or not you followed any of that.

Just know that Lloyd, Durkan's treasurer, profoundly disagreed.

He tried a joke: "This reminds me of the credits from the Monty Python movie."

The reference was to the credits of Monty Python and the Holy Grail, which offers a faux-real-time narration of how many people had to be fired along the way to getting the credits wrong, wronger, and maybe, finally right: "Those responsible have been sacked... Those responsible for sacking the people who have just been sacked, have been sacked."

Noting barely one laugh in response to his reference, Lloyd said: "Can't have levity at a commission meeting, I guess. Sorry."

What Lloyd wanted from the commission, bottom line, was to only have to disclose limited information about the path traveled by the Durkan campaign's payments.

What the commissioners made of his argument will have significant consequences for all Seattle campaigns going forward.


* * *


To understand those consequences, one must first understand that when people say running a major election campaign in America is somewhat like running a business, they're not wrong.

For the Durkan campaign, for example, the business of being elected Mayor of Seattle cost just over $1 million. (With nearly $880,000 in additional spending done on Durkan's behalf by a business-backed independent expenditure campaign.) Along the way, a lot of people were paid a lot of money for their various roles in Durkan's victory, and in the language of campaign finance disclosure, all of those people were known as "vendors."

But we have made a very complicated world, and so it is not enough anymore for a mayoral campaign like Durkan's to merely have vendors.

For the Durkan campaign, as with other serious campaigns, some vendors had their own sub-vendors, and sometimes those sub-vendors would have their own sub-sub-vendors, and on, and on.

You know how journalists have now spent years trying to trace the path of money into and out of The Trump Organization, which is a maze of subsidiaries and sub-subsidiaries and sub-sub-subsidiaries and more?

Well, this is somewhat like that. And on June 6, the question before the commission was whether the path of money through a Seattle campaign can be shielded from public view using strategies similar to those employed by privately-held entities like The Trump Organization.


* * *


Lloyd, Durkan's treasurer, was there to argue that yes, money can be shielded in this manner, because disclosing vendor and sub-vendor information is "all that the law requires." (Information on sub-sub-vendors and beyond? Not required by law, he argued.)

This was only an issue in the first place, Lloyd noted, because of "an inquiry by a reporter for The Stranger."

The backstory is a long one, but to make it short: I've now spent more than seven months trying to bring legally-required daylight to the online ads purchased by local campaigns.

Along the way, it became important to me to figure out exactly how much the Durkan campaign spent on Facebook and Google ads in 2017. This should be easy to do. But, as it turned out, it was far from easy to do.

And while I was learning how difficult it would be to get an answer to this simple question, I also came to learn that Facebook and Google were not vendors to Durkan's campaign.

Nor were they sub-vendors.

They were—gasp—sub-sub-vendors.

"I'm all for the transparency," Lloyd told the commission.

But in his mind local transparency law did not require him to file a public disclosure form showing how money from the Durkan campaign flowed first into the local political consulting firm Kully Struble (motto: "We move public opinion"), and then onward into a Kully Struble sub-vendor named Audience Partners ("the leading provider of data-fueled, audience-based addressable advertising solutions"), and from Audience Partners onward into the coffers of Facebook and Google, the companies that displayed so many of the pro-Durkan ads seen by voters.


* * *


It did not take long for the commissioners to determine that Durkan's treasurer was promoting a dangerous interpretation of the law.

As Commissioner Hardeep Singh Rekhi pointed out, under Lloyd's interpretation a candidate could funnel all of her spending through a vendor called "XYZ Corp.," which could then funnel it through a sub-vendor called "ABC Corp." After doing this two-step, any money spent by "ABC Corp." on sub-sub-vendors would, according to Lloyd's view of things, not have to be disclosed.

Commissioner Singh Rekhi was not interested in this kind of camouflaging of money trails in Seattle. "We don't care how many different entities it went through, we want to know those people," he said.

The entire commission soon made it clear: Lloyd needed to a file a disclosure form for the Durkan campaign that included sub-sub-vendor information (and beyond, if necessary).

Lloyd responded by asking whether he could "negotiate a fine" instead of filing a new disclosure report. It seemed his calculation was that a fine would be less expensive than the cost of his time in doing the new work.

The answer from the commission: No.

"So can I amend the report in January 2020 when I'm able to get paid by the Jenny Durkan reelection campaign?"

Again: No.

"Ugh," Lloyd said at the end of the hearing. "That's my reaction. Sorry."


* * *


The Durkan campaign would not comment on the record about Lloyd's arguments, nor would Lloyd.

But Ethics and Elections Director Wayne Barnett said Lloyd still has not filed the required report. Barnett said he's expecting to see it.

It's also worth noting that the Durkan campaign is not alone in failing to fully daylight the path its money traveled through vendors, sub-vendors, and sub-sub-vendors.

The campaign of failed Seattle City Council candidate Jon Grant did the same money-trail-obscuring thing with its digital advertising buys. So did People for Moon, the independent expenditure group backing failed Seattle Mayoral Candidate Cary Moon.

It remains to be seen whether Barnett will demand those campaigns disclose their sub-sub-vendors, too. But whatever happens, all future Seattle campaigns should be on notice:

You must disclose the entire money trail when it comes to paying vendors that help a candidate get elected.


* * *


If you're still with me, one more thing.

The Seattle Ethics and Elections Commission, in all its dull glory, is a lot like, say, the federal advisory committee on climate change (disbanded by the Trump administration) or the Interior Department's many advisory committees on public lands (put into deep freeze early in the Trump administration).

It is in the rooms of such publicly-funded committees, commissions, and panels that people accomplish some of the fundamental work that makes a complex democracy function (or malfunction).

It can be excruciatingly dull to watch. Sometimes it's made intentionally dull for the purpose of obscuring chicanery, self-dealing, or other ugly schemes. Which is to say nothing of how dull and difficult it can sometimes be to participate in or run these kinds of gatherings. But without them, and without people to tell you what happened at them, what do you have?

Something more like The Trump Organization, an opaque scrim behind which "XYZ Corp." passes money to "ABC Corp." in order to hide it from the public, and no one is there to ask why or tell them no.