SANTA CLARA, Calif. - There are troubling allegations of abuse and mismanagement rocking the Santa Clara city Chamber of Commerce.
On Wednesday afternoon, the city manager fired off a letter, cutting ties with the Chamber of Commerce and canceling the existing contract effective March 2019.
“At any time during the term of the agreement, either party may terminate the agreement without cause, by giving the other party written notice,” wrote Deanna Santana.
The severing of ties could just be the start of problems for chamber managers charged with misuse of public funds. City council members say last February alarms bells went off when they noticed a spike in Chamber of Commerce management fees related to the convention center. What had been a routine $45,000 a year bill more than tripled, and kept growing, prompting an outside performance audit.
“There was financial mismanagement. Conflicts of interest. Unexplained expenditures. Co-mingling of funds. So, a lot of troubling concerns,” said city spokeswoman Lenke Wright.
The chamber manages the city’s convention center, with the goal of bring in events and stimulating the economic climate. Harbir Bhatia recently joined the board, and said she’s proud of the work the chamber does.
“I had the opportunity to work with other committed members like myself, who are non-profit members who are business leaders, who really care about creating a healthy economy that everyone gets to benefit from,” said Bhatia.
But auditor TAP International’s 60-page report finds dating back several years, the chamber allowed 353 fee-free events, discounting events at the convention center, costing the city and taxpayers millions; paid staff hundreds of thousands of dollars in bonuses without disclosure or authorization; and had board members engaging in self-dealing, using public assets for financial gain.
In a written statement, Santa Clara Mayor Lisa Gillmor said “The City missed out on approximately $18.9 million of convention center revenue over the past seven years. The council’s efforts to reform must now focus on fixing the situation, making sure this never happens again.”
“I think it’s really unfortunate, and I think quite frankly irresponsible that the chamber and city have not reviewed the contract and procedures for over 34 years,” said Nick Kaspar, the president of the Santa Clara Chamber of Commerce.
Kaspar worked in an interim capacity before being promoted to the top job in June. He says many of the contracts in question date back to the 80s, when deals were done with a handshake, not a signature and notary.
“Any businessperson knows you offer a certain amount of refunds and discounts depending on the competitiveness of that piece of business,” said Kaspar.
He says he’ll go into more detail on how business was handled here at the next board meeting Oct. 9.
Council members say the on-going investigation is being referred to the Fair Political Practices Commission, and Internal Revenue Service to see if there’s criminality involved.