Gov. John Kitzhaber Used His Authority to Aid First Lady Cylvia Hayes' Client, New Records Show

Hayes also directed state employees to benefit her client's political agenda.

Newly released emails show Gov. John Kitzhaber gave First Lady Cylvia Hayes extraordinary influence over the highest levels of state government, allowing her to promote the agendas of her private consulting client.

The emails, released to WW and other media on Friday by the Oregon Department of Administrative Services, are important for a number of reasons: 

First, Oregon law prohibits public officials from using their public position for private benefit, or for the benefit of a member of the public official's household. The emails show that Kitzhaber advocated for policies and decisions that would aid Hayes' private consulting work for Demos, a New York advocacy group.

Second, the emails show Kitzhaber handed Hayes sweeping power to direct senior state employees and influence state government policies. Without disclosing to those employees she was working for private clients, Hayes then promoted her clients' agendas in written communication and at meetings. 

Third, the emails provide evidence of something that Kitzhaber and Hayes have sought to deny—that she herself is a public official and thus subject to Oregon government ethics laws.

The newly released documents begin to lift the curtain on aspects of the Kitzhaber administration the governor has long tried to conceal. 

In October, WW first reported Hayes' conflicts of interest as she served as first lady and policy adviser to the governor and used those positions to land private consulting contracts for herself (First Lady, Inc., WW, Oct. 8, 2014).

WW first filed public records requests regarding Hayes' private contracts on July 10, 2014. After months of failing to comply with the Oregon public record law, Kitzhaber's office produced a small fraction of the requested documents in the first week of October. 

The resulting story reported on three consulting contracts worth $85,000 that Hayes obtained in 2013. She has also since acknowledged receiving an additional $118,000 in 2011 and 2012 from another client interested in shaping state policy, the now-defunct Clean Economy Development Center.

The Oregonian first reported the new emails Friday evening.

The new documents focus on Hayes' work on the genuine progress indicator, an alternative measure of economic output promoted by her client, Demos. Demos' position is that traditional measures such as gross domestic product encourage inefficient and sometimes harmful choices, such as the exploitation of fossil fuels. Using different measurements, Demos says, would yield different policy choices, such as greater spending on public infrastructure.

Lew Daly, a Demos executive, explained to WW in an October email how he came to know Hayes. "Ms. Hayes and I have been engaged in discussions about developing new measures of progress since 2012," Daly wrote. "Beginning in the summer of 2013, Demos was moving to expand our work in this area."

In April 2013, Kitzhaber, Hayes and Daly all traveled to Bhutan for a conference involving the genuine progress indicator and related concepts. The novelty of a governor flying to a small Himalayan nation during the middle of a legislative session to study economic theory made national news—it was the kind of publicity a wonky non-profit such as Demos couldn't buy.

The next month, in May 2013, Hayes began a $25,000 consulting contract with Demos. 

She immediately called a meeting of top state officials, including Ben Cannon, then the governor's education adviser, and Michael Jordan, who as director of the Oregon Department of Administrative Services is the state's chief operating officer and Oregon's top state government administrator.

The May 13 meeting Hayes set to promote Demos' approach was set for the state-owned governor's mansion, Mahonia Hall. Holding a meeting in a public building to benefit a private client violates state ethics law. 

Nowhere in Hayes' email calling that meeting, or in any of the dozens of other Demos-related emails she sent state employees, does Hayes disclose to recipients that she's a paid consultant for Demos.

As WW reported earlier, when Kitzhaber's chief of staff and general counsel tried to get Hayes in the summer of 2013 to comply with state laws regarding conflicts of interest, she balked. Kitzhaber, who is legally responsible to ensure his staff complies with ethics laws, failed to intercede. 

On May 7, 2013, Jordan emailed Hayes to tell her that he and a top deputy, Sarah Miller, would miss the Mahonia Hall meeting Hayes was convening to "brainstorm the developing Oregon Genuine Progress Indicator."

"Hi Cylvia: Unfortunately, Sarah Miller and I will not be able to attend on Monday. We are in an all day session with the policy staff," Jordan wrote. "Sarah and I are leading significant parts of the agenda. Let us know how we can “catch up” and contribute to the effort.”   

That displeased Hayes. 

"Not good," Hayes wrote to Jordan on May 7, 2013. "We went forward with this date because you had committed to attending."

Hayes signed her email to Jordan "Cylvia Hayes CEO, 3EStrategies," which suggested she was acting in her capacity as a private consultant. Yet she was requiring senior state employees to drop their state work to attend a meeting to benefit Demos. 

It took Jordan just 22 minutes to email back that he'd change his plans. He canceled his participation in the state meeting.

"Hi Cylvia: I apologize," he wrote on. "I'll work out the conflict and be there on the 13th, Sarah will cover the retreat. Sorry for the confusion. Totally my fault."

Throughout the rest of 2013, Hayes pushed Jordan to adopt the genuine progress indicator, convincing him to begin incorporating it into how the state planned budgets and measured outcomes. 

In October, WW reported that she'd pitched Jordan on a $125,000 pilot project that included hiring Demos—and Hayes—for implementation.

That project didn't get funded but, also in October, Hayes introduced Jordan to an associate of hers named Sean McGuire, who'd worked on GPI in Maryland.

After relocating to Oregon, McGuire worked with Hayes and Demos to pitch the GPI to Washington state. Now, McGuire needed a job and Hayes wanted the state to have a GPI director on staff. Hayes arranged for Jordan and McGuire to meet.

When Jordan didn't immediately hire McGuire, Kitzhaber himself got involved, sending Jordan an email with an unmistakable message.

"The best person to do this [GPI] work is Sean McGuire and we need to find a way to bring him on,” Kitzhaber wrote in a Dec. 30, 2013 email to Jordan.        

McGuire soon joined the state payroll at a $65,000 salary.

When Kitzhaber ran for governor in 2010, he pledged to shift state government away from short-term thinking and budgeting every two years. He proposed instead to establish 10-year plans. 

Emails show that Hayes was heavily involved in developing that 10-year plan framework, even writing much of the draft language for the plan developed in 2014.

She also at times addressed Jordan and the state's Chief Financial Officer, George Naughton, as if they were subordinates.

A March 28, 2014 email shows Hayes' frustration with the preparation of the 10-year document. "As you know I already sent my rather minor edits of the various sections drafts. Here are my larger concerns and comments," she wrote. "I want the intro language to reflect our prosperity frame and the concepts of fiscal, human and natural capital. I am happy to help with that [and] what actually happened to developing a ten year BUDGET?”  

Hayes also wanted the 10-year plan to include direct references to work she had been doing for her private consulting clients.

Her first question involved the genuine progress indicator. "How will we add GPI/triple bottom line metrics?" Hayes asked Jordan and Naughton in a March 28, 2014 email.

She also wanted the plan to incorporate references to the Pacific Coast Collaborative, a consortium of West Coast states and British Columbia that another Hayes client, Resource Media, paid her to promote. "I would like to discuss integrating our PCC work into some of these recommendations," she emailed Jordan and Naughton.

Hayes pushed state employees to produce drafts of the document, and on June 10, 2014, she provided edits of the introduction to a Department of Administrative Services communications staffer.

"This 10-Year Plan is not a report meant to be glanced at and placed on a shelf to collect dust," Hayes wrote in the intro. "The outcomes identified here are ambitious but attainable. The framework established here is crafted to guide the way in every policy and budget discussion or decision."

Since last fall, Hayes has tried to portray herself as simply an unpaid volunteer advising the governor on issues she cared about, such as clean energy and sustainable economic development.

But her roles in directing state employees and shaping public policy help establish that she meets the legal definition of a public official. That's important because it means Hayes is subject to Oregon ethics laws, which say it's illegal for her to use her position as first lady and adviser to the governor to benefit herself financially.       

WW also reported last fall that Hayes—who wanted a spokeswoman of her own—pressured an advocacy group, the Oregon Business Council, to provide her with a personal $35,000 to promote her and one of her projects, the Oregon Prosperity Initiative. That $35,000 could violate state ethics laws, which prohibit gifts of more than $50. 

The newspaper also reported Hayes used public employees to run her private business out of the governor's office and traveled at public expense to meet her private clients.

The new records should provide more pressure for a thorough investigation of Kitzhaber and Hayes. They are already under investigation by the Oregon Government Ethics Commission, a state agency with few resources that only handles civil matters and whose seven members are appointed by the governor.

Multiple sources have told WW that the FBI is also investigating, however that agency's activities are opaque and not subject to Oregon's public records law.

Hayes' attorney is challenging the release of her emails, which WW and other media have requested. And Kitzhaber's office still has not released emails WW requested as long ago as July. 

The greatest opportunity for transparency is a state-level investigation. Kitzhaber, however, has refused to appoint a special prosecutor. And Oregon Attorney General Ellen Rosenblum has so far ignored a mandate in state law that says she "shall" investigate public corruption, although her most recent comments suggest she may be moving in that direction.         

Neither Kitzhaber's spokeswoman nor Hayes responded to questions.

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