San Diego City Councilmember Toni Atkins perhaps put it best Monday when she told Mayor Dick Murphy that she didn't like being caught off-guard by the controversy generated from his proposal to enter into a partnership with, “a city,” said Atkins, “or whatever it is we're talking about in Ireland.”
San Diego's 16th sister city, Shannon, isn't exactly a city. The signpost in the City Hall concourse that points out the direction and distance to each of San Diego's sister cities already has an arrow pointing to Shannon, Ireland-and there is indeed a Shannon Town (population 9,000)-but the Shannon in this case is Shannon Development, an economic development corporation that oversees roughly $5 billion in commerce in what's known as the Shannon region, an area that spans five counties, or roughly 10 percent of Ireland's total land mass. Shannon Development is the only economic development agency in Ireland and operates with a mandate from the Irish government to seek out foreign investors and hand out cash grants to outside companies interested in doing business in Ireland. Even the “Tourism” link on Shannon Development's website touts “great value” for travelers, “plus investment opportunities.”
A sister city, simply, is a formal relationship entered into by two jurisdictions to, as the umbrella organization Sister Cities International puts it, “promote cultural understanding and stimulate economic development.”
For the most part, San Diego has pursued relationships with cities that can benefit from the first-world resources the nation's seventh largest city can offer. Rotarians from San Diego, for example, have helped build schools in Jalalabad, Afghanistan.
But the most recent pairing, approved by the City Council on Monday on an 8-to-1 vote (Councilmember Donna Frye was the lone no vote) is a departure from the city-to-city paradigm that's defined the International Sister Cities program since President Dwight Eisenhower first came up with the concept in 1956. Unlike the traditional city-to-city, mayor-to-mayor pairings under the Eisenhower model, with San Diego and Shannon Development it's city-to-corporation, mayor-to-CEO.
David Edick, president of the nonprofit San Diego International Sister Cities Corporation (SDISCC), called the Shannon Development/San Diego pairing “definitely unorthodox.” But, he added, when he inquired with Sister Cities International as to whether a partnership with a corporation was acceptable, Sister Cities International executive director Tim Honey gave it an enthusiastic thumbs up. SDISCC's board of directors also approved the pairing, said Edick. But, he said, he doesn't see this becoming a new model for future sister city relationships, at least in San Diego. “I don't see this as something we in San Diego will encourage,” he said. “We're not going to prefer dealing with a community-development or economic-development organization.”
A Shannon Development spokesperson told CityBeat that it was the Irish Consul General to the Western U.S., Donal Denham, who first suggested to San Diego Mayor Dick Murphy a relationship between Shannon Development and San Diego. Prior to being appointed consul general, Denham worked for the government office that oversees Shannon Development. In March 2002, Murphy sent a letter to Shannon Development CEO Kevin Thompstone proposing a “twinning of Shannon Development and the City of San Diego”-an idea Thompstone welcomed in his reply letter.
Pat Flannery, a San Diego businessman and native of Ireland, met Denham in February 2002 at a San Diego State University event, where Denham told Flannery that the mayor would announce San Diego's plans to partner with an Irish sister city at the upcoming St. Patrick's Day parade-he didn't mention which city, however. Flannery told Denham he'd like to help out and was asked the join the sister-city organizing committee.
Now, three years later, Flannery opposes the mayor's proposal to enter into an official relationship with Shannon Development. For one, said Flannery, it's a departure from the sister-city model. He said he'd suggested to the mayor other cities in Ireland that San Diego might pair up with, but was told Shannon was it. Flannery also looked into Shannon Development's business activities and found that while the agency is considered an arm of the Irish government, it operates as a private company and is therefore not obligated to make public its business activities. Recently, Shannon Development came under fire for a questionable land deal that would have let a valuable piece of property go for less than a third of its market value.
Flannery believes that Shannon Development's interest in San Diego was solely financial. In August 2002, he received an e-mail from Rob Mullally, a representative of the consul general, in which Mullally pointed out that, “if we only come up with the traditional sister [city]/junket arrangement I doubt if Shannon Ireland would buy into that.” The “junket” the e-mail referred to was a planned trip to Shannon by a delegation from the organizing committee.
“I knew who Shannon Development were and I knew they would never be interested in entertaining ‘Sister City' people on a junket,” Flannery wrote in his weblog account of the San Diego/Shannon pairing. “I knew that Shannon Development was all about money, not people-to-people.”
Flannery said Shannon Development stressed to the organizing committee “that the primary purpose of this partnership was networking with CEOs, not San Diegans on vacation.”
More disturbing, though, is Flannery's assertion that the partnership between San Diego and Shannon Development was driven less by a desire for cultural exchange and more by the fact that Ireland has the lowest corporate tax rate, 12.5 percent, in the European Union. (The U.S. corporate tax rate, by comparison, is 35 percent.) The EU granted Ireland this special tax rate in 2003, after the country successfully argued that it was still a developing nation.
To support this latter charge-one which Shannon Development spokesperson Frank Larkin denied-Flannery points to an April 2003 seminar held in La Jolla and organized by Shannon Development West Coast representative Karl Mellon. According to an e-mail from Mellon, Shannon Development paid to fly two employees of the accounting firm Ernst & Young to San Diego for the event. Ernst & Young is currently under investigation by the IRS for aggressively promoting tax shelters to its clients. (Larkin likewise denied Shannon Development had any special relationship with Ernst & Young, saying only that the accounting firm was one of several the development agency is “in contact with from time to time.”)
Flannery, a prodigious record keeper, said Mellon kept a list of 243 San Diego businesses that he saw as potential investors in the Shannon region. When asked about that list by CityBeat, Mellon referred all questions to Larkin.
Flannery also has an e-mail sent by former Murphy staffer Ben Marchant to the San Diego/Shannon committee-Marchant was the mayor's representative on the committee-that included an article from the New York Times titled, “Musical Chairs on Tax Havens: Now It's Ireland.” The article includes this sentence: “Tax advisers are already selling the idea of Ireland as an alternative to Bermuda, the Cayman Islands and Panama....”
“I thought I'd pass along this very relevant article,” wrote Marchant in the e-mail.
Marchant, who's attending graduate school in Illinois, did not respond to an e-mail from CityBeat.
Larkin, the Shannon Development spokesperson, said that as far as he knows, “no San Diego companies have invested in the Shannon region.”
Tim Hushen, president of the San Diego/Shannon Partnership, a nonprofit corporation formed in 2002 preceding the sister-city agreement, said the April 2003 seminar was meant to inform San Diego businesses looking to expand into Europe that Shannon is an ideal point of entry. “It's definitely an advantage if they can do business [in Ireland] and bring additional profits back to the U.S,” he said.
Hushen said that as far as he knows, there are no plans for future seminars like the one held in April. He said efforts right now are mainly focused on education exchange, such as bringing groups of graduate business students from Limerick University (in the Shannon region) to San Diego for an annual weeklong workshop.
Flannery is also questioning the mayor's role in the Shannon Development partnership. Early on, said Flannery, mayoral staffer Marchant told the San Diego/Shannon organizing committee that all correspondence regarding the partnership was to be directed to the mayor's office. Marchant also, according to records kept by Flannery, was working out details of the partnership on city time. And it was the mayor who appointed San Diego/Shannon Partnership board members.
The San Diego/Shannon Partnership gained nonprofit status in 2004, according to IRS records. IRS filings give the mayor's City Hall office as the partnership's address. Hushen told CityBeat that was a “clerical error” and they've filed new paperwork with the IRS to correct it.
Frye, the only member of the City Council to question Monday's sister-city agreement, said she has a feeling there might be more to San Diego's relationship with Shannon Development than what's been made public. “This was one of those things that needed more discussion,” she said. The fact that Shannon Development isn't held to the same public-disclosure rules usually required of government agencies raises a red flag for Frye, given her push to make San Diego government more open and accountable.
“When you talk about open government and transparency, it seems like this is the antithesis,” she said.