By: Ross JonesDETROIT (WXYZ) - When he started his run for city council, Charles Pugh made one thing clear to voters: he was going to be different.
"We need new leadership and a new vision," he said in August of last year. "Pugh and you, changing Detroit!"
Transparency would be job one in a Pugh administration, and he told that to nearly everyone would listen. He told the New York Times that the city needed "a higher standard of ethics and transparency.
He even took to the web, telling Detroiters: "We believe in a spirit of transparency, and keeping you fully informed."
But when the Action News Investigators pressed Pugh about a non-profit fund he started last March, the Pugh and You Fund, the council president changed his tune.
"You promised transparency when you were running for office, and yet your staff tells us that you don't want to disclose and won't disclose the donors or the specifics of where the money is spent," said Channel 7's Scott Lewis.
"Well, we're going to report the names to the IRS," responded Pugh.
"But not the public," asked Lewis.
"We are doing the right thing Scott," responded Pugh. "We're working hard everyday. This fund is gonna be used the way that other folks use their funds," he said.
Presumably, he's not talking about Kwame Kilpatrick and Christine Beatty. Kilpatrick set up the Kilpatrick Civic Fund, the same kind of non-profit as Pugh. Beatty was the treasurer.
Kilpatrick was supposed to use donations to educate voters and enrich neighborhoods. But federal investigators say Kilpatrick used the money to enrich himself, to pay his family, for personal travel and even yoga lessons. For that, Kilpatrick wound up getting indicted by a federal grand jury.
Which is why when Pugh held a fundraiser in July, it caught our attention: $500 per person, $5,000 per table to attend a breakfast at the post Roostertail Restaurant. What's the money used for?
"The fund is basically to take some of the burden off of the staff budget, which is city money, to do other things," said Pugh.
Things like traveling on city business, Pugh says. But again, he won't make public the names of donors or how the money is spent.
"Have you ever heard a good argument to not disclose everything," asked Lewis of George Smith, a CPA and non-profit exprt.
"No," responded Smith. "I don't believe there is one."
"These organizations are getting abused nationwide. There's a lot of political people who have set these up because it's a way to circumvent the rules," he said.
While a donation to a politician's campaign fund is, by law, publicly disclosed, donations to these non-profits are not.
"Theoretically, could this be a way for a politician to hide a kickback," asked Lewis.
"Absolutely, absolutely it's a way to hide a kickback," said Smith.
When you give money to a charity, there's an incentive. You get a tax write-off. But when people donate to a politician's non-profit, they don't get a write-off.
"If you're not getting a tax write-off, you better believe in your heart that you're getting something else that we don't know about," said Smith.
"Some of the people that came to your breakfast were owners of topless bars in the city," said Lewis.
"Um, I think so," responded Pugh.
"You don't find that troubling," asked Lewis.
"Why would that be troubling," said Pugh.
"Because they're in the middle of this big huge debate, their business is under fire by new rules, city council has control of their fate to a degree," said Lewis.
"We've already passed that ordinance," said Pugh.
"But it's still out there, and it was not as strong as it was originally intended to be," said Lewis.
"It was way stronger than some people wanted it to be," responded Pugh.
So who else paid $500 for bacon and eggs? Pugh won't say. But as my producer was leaving Pugh's office, he spotted a big birthday card signed by donors at the birthday bash, and others.
But the councilman who preached transparency wasn't feeling very transparent, and whisked the card away from our camera.
Charles Pugh says he plans to use some of his non-profit money for traveling because he doesn't have enough in his council budget after paying his staff.
It's worth noting that Pugh's annual budget is $876,000. Pugh's predecessor Ken Cockrel says he routinely ran a budget surplus, giving money back to the city's general fund at the end of the year. In 2007, he returned $117,000.
UPDATE: One-hour before this story was scheduled to air, and more than a month after we asked Pugh if he would disclose who donates to his fund and how money is spent, the council president reversed his course, saying:
"Every December, we will release an annual report disclosing the names of contributors and the amount of their donations. We will also disclose how funds are spent.
However, for legal purposes, any contributor who donated to past fundraisers, we will release only the names of those who have granted us permission.
Moving forward, as future fundraisers are planned, (prior to making a donation) contributors
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