Questions Raised Over Cruise Ship Consortium Run by Aide to Cleator

The San Diego Cruise Industry Consortium, long hailed by City Councilman Bill Cleator as “an incredible San Diego success story” in which he played a major role, is slowly becoming a subject of controversy in Cleator’s mayoral campaign.

For weeks, the subject of the cruise consortium has, in the words of one city councilman, “been raising eyebrows” at City Hall, primarily because Donald Harrison, a top Cleator campaign aide, also is the consortium’s executive director and has spent nearly $200,000 in city funds in the past 2 1/2 years on the program.

In particular, much of the discussion in political circles has focused on the fact that even though Harrison himself spent much of his time on Cleator’s primary campaign, his firm, The Harrison Enterprises, continued to receive a monthly fee of $4,670 in public funds, plus expenses, for running the cruise ship program.

“One could reasonably ask . . . whether the City of San Diego has been indirectly subsidizing Don Harrison to run Bill Cleator’s campaign,” said another top city official, who, like most interviewed, insisted on anonymity.

Harrison disputes that hypothesis, saying that his work on Cleator’s campaign “didn’t cause me to give short shrift” to the cruise ship program.

With those questions and others serving as a backdrop, the City of San Diego earlier this month requested that the San Diego Convention and Visitors Bureau (ConVis) provide detailed records showing how Harrison’s consulting firm has spent that money since January, 1984.

While there have been no allegations that any money has been misspent, the city’s request has publicized the issue and raised questions about a topic that has been viewed as a major asset in Cleator’s campaign.

Cleator professes to be unconcerned that the cruise ship program is undergoing close scrutiny as his race against former San Diego City Councilwoman Maureen F. O’Connor enters its final five weeks.

“I hope people do take a close look at it,” Cleator said. “What they’ll see is a very positive picture--positive for the city and I guess you could say positive . . . for me.”

Harrison, meanwhile, blames the recent controversy on a “politically motivated fishing expedition” by pollster Ralph Todd, whose inquiries about the consortium’s financial records led to the city’s request to ConVis for more detailed documentation of Harrison’s expenditures.

“If politics isn’t a factor, I have to question why Mr. Todd didn’t raise this last year instead of a month before an election,” said Harrison, who has accused Todd of trying to damage Cleator’s candidacy.

However, Todd, who conducts polls for the San Diego Union and other clients, says that he is simply acting as a private citizen and that he became curious about the consortium’s finances while reviewing the city’s budget last year.

In response to the city’s request, Harrison has begun compiling receipts and vouchers detailing the consortium’s expenditures for the past two years. After ConVis reviews those records, they will be turned over to the city, which in turn will make them available to Todd--provided that the pollster is willing to pay for the staff time and photocopying costs involved. That cost could be considerable, because Harrison, whose normal hourly rate is $85, has estimated that nearly 80 hours of staff time may be needed to organize the financial records.

The consortium, established to promote San Diego as a home port and destination for cruise ships, is financed with both public and private sector funds. This year, the city has allocated $240,000 in hotel tax revenue for the program, while most of the private contributions are in the form of so-called “in-kind” services such as free hotel rooms, meals and tickets to plays or sporting events for visiting cruise company executives.

Under a contract with the city, ConVis acts as the cruise ship program’s fiscal overseer, while ConVis in turn contracts with Harrison to provide day-to-day management of the program. In essence, ConVis serves as a financial middle man between the city and Harrison’s firm, with the hotel tax funds being funneled from the city to Harrison via ConVis.

“Basically, we serve the function of a bank,” said ConVis spokesman Al Reese. “The consortium, through Harrison, submits its bills to us, and we in turn submit those bills to the city for reimbursement.”

The twice-monthly financial statements that Harrison submits to ConVis do not include copies of receipts or other documentation of the expenses listed on those bills, which often list hundreds, and sometimes thousands, of dollars in general categories such as “local contact,” travel and “publicity and promotion.”

“I never see the invoices,” said Jack Saniga, ConVis’ controller. “What we get from Harrison is a bill saying, ‘OK, we spent $5,000 this month on these things.’ But we don’t get all the specifics, like who goes on a trip and where they stay.”

Harrison, though, pointed out that his wife, Nancy, who handles the firm’s accounting, is in frequent contact with Saniga over how to list certain expenses on the statements submitted to ConVis. In addition, two top ConVis officials--President Dal Watkins and Chairman Allan Frostrom--also serve on the cruise industry consortium’s board of control (which Cleator chairs) and are routinely apprised of major expenses, Harrison added.

“When ConVis gets our bills, they’re not seeing these things for the first time and scratching their heads wondering, ‘Hmmm, what’s this for?’ ” Harrison said. “The bills may not list each and every detail, but

there’s a lot of discussion between our office and ConVis over what goes on the statements and what categories to use for certain expenses.”

Local contact expenses, Harrison explained, are costs incurred while entertaining cruise or travel industry officials who visit San Diego, expenses that totaled about $2,600 over the past eight months, according to city records. The records also show that more than $19,000 has been spent on publicity and promotion expenses since August, including, for example, the cost of items such as sun visors given away to passengers on visiting cruise ships.

Travel expenses during the same period totaled more than $14,000, covering the costs that Harrison and other consortium members spent while visiting cruise industry and travel industry conferences throughout the country. That category also includes expenses associated with the consortium’s promotional activities at those meetings, such as a breakfast for more than 1,000 people that the group co-hosted at a travel agents’ conference last fall in Miami.

The consortium’s bills, along with those of other programs administered by ConVis, are audited annually by an independent firm, Saniga said. The auditors do not check every receipt from every program, the ConVis controller explained, but rather select a statistical sample and then scrutinize invoices and other backup materials. That annual review, Saniga added, has not identified “anything that shouldn’t be going on” in the cruise ship program.

Both ConVis and city financial officials also emphasize that despite the city’s request for more detailed financial records, the record-keeping practices that have been used to date have satisfied all parties involved and are similar to those used in other programs.

While neither ConVis nor the city routinely examines the consortium’s receipts, many other city-financed programs also do not provide specific details on how funds are spent, according to Libby Watson, director of the city’s Financial Management Department. A receipt-by-receipt review of such programs, city officials added, would be costly and time-consuming.

“ConVis has fully disclosed everything they’re required to by the city, and ConVis says that The Harrison Enterprises has done the same for them,” said Watson, who wrote the letter to ConVis requesting more detailed information on the cruise program. “But the new factor is that we’ve had a citizen request for more detailed information, so we’re trying to provide it.”

Saying that he has “not even a dollar to hide,” Harrison says that he is willing to comply with that request, adding that the receipts will prove “that everything has been handled in an absolutely proper way.”

“It’s important to emphasize that the reason we didn’t provide these receipts before isn’t that . . . something funny was going on,” Harrison said. “The fact is we were never asked for this kind of backup before. But if ConVis wants it to satisfy the city, by gosh, they can have it because they’re my client.”

Harrison’s involvement with the cruise ship program began in the summer of 1983, when a group of local tourism industry officials and business leaders whose prior efforts to attract cruise ships to San Diego had met with only mild success enlisted Cleator to assist in that effort. Through Cleator’s work on the cruise industry consortium, Harrison, then a consultant in Cleator’s council reelection campaign, also was drawn into the project.

In January, 1984, Cleator successfully lobbied the City Council to allocate hotel room tax funds to help underwrite the consortium program, arguing that the cruise ship industry was a clean industry that could bring millions of dollars annually to San Diego. After the council’s unanimous approval of that budget request, Harrison, under contract with ConVis, became the consortium’s consultant--a contract that he readily acknowledges stemmed from his ties to Cleator.

“Before the city agreed to finance the program, I was serving as Bill’s deputy in contacting people and helping to get things moving in setting up the consortium,” Harrison said. “By the time the program was funded, I’d already been working on it for several months and knew most of the people involved. So it was natural that I’d be asked to take over the (consulting) job.”

The consortium’s track record has been an impressive one, resulting in a more than 250% increase in the number of cruise ship passengers who visited San Diego between 1983 and 1985. While about 29,000 passengers visited here in 1983, that number jumped to more than 104,000 last year.

Despite that performance, the fact that Harrison’s and Cleator’s relationship overlaps both a publicly-financed program and a mayoral campaign has raised some questions. As one council member put it: “Lately, we seem to be seeing a lot more of Don Harrison, political consultant, than Don Harrison, cruise consultant.”

In addition to the monthly fee that Harrison receives for managing the cruise program, he also has been paid $3,000 a month as Cleator’s campaign consultant since January.

Before the Feb. 25 primary, Harrison not only was Cleator’s press secretary but also served as campaign manager, despite the fact that he lacked the title. In addition to attending most crucial strategy sessions, Harrison also accompanied Cleator to many of his public appearances and helped organize a series of political parties at Cleator’s Point Loma home.

“There’s no denying that I put in some very long hours on the campaign,” Harrison said.

Cleator was even more emphatic on that point: “Don and I were together just about all of the time during the primary. I kept throwing him new balls and saying, ‘Here, handle this and handle that.’ We started out a lot of days together at six o’clock and often wouldn’t part until 11 in the evening.”

After the primary, Cleator hired Dan Greenblat, former administrative assistant to Rep. Bill Lowery (R-San Diego) and one of the city’s top political consultants, to become his campaign manager. That staff change was caused at least partly, Cleator said, because Harrison, who continues to serve as a campaign consultant, could not devote full time to the June runoff campaign because of his cruise consortium duties and his agency’s other accounts.

Harrison argues that the time that he has spent on Cleator’s campaign has not detracted from his publicly-financed responsibilities with the cruise industry program. In addition to occasionally serving as a guide to visiting cruise company executives in recent months, he also recently attended a four-day conference in New York City as the consortium’s representative.

“What happens in a case like that is you end up spending a lot of days burning the candle at both ends,” Harrison said. “I certainly didn’t ignore the cruise consortium. Besides, Don Harrison’s agency, not Don Harrison the individual, has a contract to run the cruise ship program. And the agency includes several other (staff members) who always were very, very busy with the cruise program regardless of what Don Harrison himself might have been working on at any given moment.”

The $4,670 monthly stipend that Harrison receives for his cruise program duties is based on a $3,670 management fee and $1,000 to defray clerical costs. Based on his normal hourly charge, Harrison noted, that fee figures out to only about 40 hours per month--much less time than Harrison says he spent on the consortium during the campaign.

“There’s nothing unusual about a consultant juggling several accounts at the same time,” Harrison added. “Anyway, since I’m on a monthly retainer, my contract doesn’t require that I spend a certain number of hours per week or month on the account. The important thing is that we stayed on top of things and didn’t slack off at all.”

Cruise consortium officials concur with Harrison’s explanation, arguing that he and his agency have continued to work hard on consortium matters throughout the mayoral race.

“I certainly didn’t perceive any letdown on Don’s part,” said ConVis President Watkins. “He was immediately available to me any time I needed him.”

Harrison noted wryly that the “recent inquiries and innuendoes, if you will” about his work on the cruise consortium “haven’t been a source of euphoria” at either his consulting agency or Cleator headquarters.

“But I’m positive things are going to turn out OK, because I know that there’s just no way for anyone to twist around what we’ve done to look bad,” Harrison added. “Anyone who takes the time to take a close look at this program is going to come away very impressed.”