What He Left Behind

From 2011 to 2013, Hayes collected more than $220,000 from private consulting contracts she landed while working as an adviser to Kitzhaber. Her dealings have sparked state and federal criminal investigations ("First Lady Inc.", WW, Oct. 8, 2014).

But before Kitzhaber's resignation and the investigations, Hayes had even grander plans for herself—in terms of influence and money—for the governor's final term in office.

Newly obtained emails reveal Hayes told Kitzhaber in late 2013 that she wanted to further leverage her access to his office into "lucrative work," including an official state position, paid speaking appearances and book contracts.

The first lady proposed her expansive plans to Kitzhaber, even as the governor's staff searched for ways to narrow Hayes' official role and make sure she wasn't violating state ethics laws.

Hayes' big plans and the staff's concerns are contained in emails that are among thousands of communications Kitzhaber's office sought on Feb. 5 to have destroyed. (See here for an analysis of this action.) Neither Kitzhaber nor Hayes agreed to be interviewed for this story.

The emails obtained by WW provide an extraordinary window into Kitzhaber's administration and the complexities Hayes' ambitions presented. 

The emails show that Kitzhaber's staff was especially alarmed by Hayes' role in the governor's office after she signed at least $85,000 worth of private consulting contracts with three nonprofit advocacy groups in 2013.

The contracts prompted Kitzhaber's then-chief of staff Curtis Robinhold in July and August of that year to get Hayes to sign conflict-of-interest forms that required her to abide by state ethics laws.

Those guidelines would have forced Hayes to change some of the ways she conducted her private business, including prohibiting her from using the title "first lady" when doing private work, and from holding client meetings at Mahonia Hall, the governor's mansion.

Hayes pushed back. As WW has previously reported, Hayes wouldn't go along with those guidelines until they were rewritten to allow her to continue operating as she had been.

The newly obtained emails show that, with Kitzhaber preparing for a 2014 re-election campaign, Robinhold suggested some ways to eliminate Hayes' conflicts of interests without depriving her of income.

In a Sept. 26, 2013, memo to Hayes and Kitzhaber, Robinhold outlined six options that would allow Hayes to continue working on issues she cared about while eliminating outside contracts and the potential conflicts of interest they presented.

The possibilities included finding her a job at a university, such as Portland State, letting her work for a state agency, hiring her to work for the Kitzhaber re-election campaign or having the state hire Hayes as a consultant.

Robinhold said in his email the goal was a position for Hayes that "maintains clear lines of authority in the Governor's Office and avoids confusion about Cylvia's supervisory and staff management responsibilities."

The ideal situation, Robinhold wrote, "avoids giving Cylvia responsibility for broad, overarching policy issues that cross over multiple policy advisors and state agencies" and "minimizes confusion around who Cylvia is speaking for."

It's not clear how Kitzhaber responded to the memo. Robinhold declined to be interviewed by WW.

Robinhold's memo and other emails make it clear that Kitzhaber's staff wanted Hayes out of the governor's office.

That's not what Hayes wanted.

On Nov. 29, 2013, she sent a memo to Kitzhaber titled "Cylvia Game Plan: Dec. 2013-Dec. 2018."

Hayes summarized her goal at the top: "Intended Outcome: Build my policy and professional credibility and desirability so that I land lucrative work making big positive impacts at end of term."

On the top of Hayes' list: getting more publicity for her work. Or, as she put it in the memo to Kitzhaber: "Claim the work that is mine."

That work included her role as "originator and one of the key authors of the Ten Year Energy Plan." She wanted to be recognized for the environmental and economic consulting work she had done for her private clients, which dovetailed with her state policy interests.

The first lady wanted Kitzhaber to lend the weight of his office to her accomplishments: "Have John develop specific message about my substantive roles."

Hayes' work plan was at times contradictory. She said she wanted to end her existing consulting contracts and "go to full-time volunteer status." In the next line, however, Hayes wrote that she intended to "explore opportunities for income from non-policy, non-Oregon, non-time-consuming work."

After the campaign, Hayes expected Kitzhaber to formally name her to a staff position that she could leverage financially.

Here's how she put it:

"Jan. 2015: Get appointed to official policy positions. Feb. 2015–June 2017: Work the policy areas hard. Develop paid speaking and outside Oregon income opportunities. Speak a lot. Get published a lot. Set foundation for book/s – me, John, John and me (outline, generate interest, sample chapters).

"June 2017–Jan. 2018: Transition Phase: Line up next big work and significant income. Write book (maybe get grant to do it). Move out of Mahonia."

The emails the governor's office sought to destroy also show the relationship between Kitzhaber's personal finances and Hayes' income.

The first lady's agreement to let her outside contracts lapse in early 2014 had financial consequences for the governor.

"Hey dear, well, I just paid bills with my own money for the last time in our current plan," Hayes wrote Kitzhaber on March 14, 2014. "Attached is my best estimated monthly and annual expenses."

Those expenses came to about $62,000 a year—and they would now be the governor's responsibility. Emails show Kitzhaber began making direct monthly deposits into Hayes' bank account so she could pay her bills.

There's been debate about exactly how Kitzhaber's and Hayes' finances intermingled. That's an important question because the answer sheds light on whether the governor benefited from Hayes' consulting work.

For four years, Kitzhaber stated on state financial disclosure forms that Hayes was a member of his household, which would suggest their finances were linked. But at a Jan. 30, 2015, press conference, the governor suddenly said he wasn't sure that was the case.

Kitzhaber's decision to begin monthly deposits into Hayes' account when her contract work lapsed, however, shows money she had been earning from consulting was money the governor didn't have to spend. Therefore, it appears that Kitzhaber benefited from her contracts.

Kitzhaber's shifting position on whether Hayes was a member of his household was part of a legal strategy devised by lawyers hired to defend the governor and the first lady against complaints filed with the Oregon Government Ethics Commission.

Kitzhaber and Hayes wanted to establish that neither was dependent on the other for money—a strategy intended to knock down the assertion that Kitzhaber benefited from Hayes' contracts.

The strategy is spelled out in an email exchange between the governor and Steve Janik, a Portland lawyer representing Kitzhaber and Hayes before the ethics commission.

"As I understand it," Kitzhaber wrote to Janik on Dec. 22, 2014, "we will make the case that: (1) Cylvia is not a public official, and (2) that she is not a member of my household — and therefore that the OGEC has no jurisdiction in the matter and that the complaints should be dismissed."

Janik agreed. "We will argue," the attorney wrote back that same day, "that because Cylvia is not a member of your household, her activities pursuing private income cannot be attributed to you."

But the email exchange reveals something else: Despite the defense they were mounting, the governor and first lady had no interest in a long fight with the ethics commission.

"We will convey that we are willing to take this all the way and have a strong case for prevailing," Kitzhaber wrote to Janik on Dec. 22. "But the end game is not actually to have the complaints dismissed but rather to negotiate a stipulated settlement agreement in which we might acknowledge some minor mistakes we may have made and have the matter resolved at the March [2015] meeting. Do I have that right?"

Janik’s answer: “Your summary of the strategy is correct.”   

Also in this week's paper:

"Hit the Delete Button": Kitzhaber's office's explanation for why it requested deletion of emails doesn't hold water.

"Relying On An Old Man's Money": After Hayes got nearly $40,000 from an octogenarian, Kitzhaber bailed her out.

"Ringing the Truth": Could Kitzhaber and Hayes benefit from spousal privilege if they married?

"Carbon Copy": A climate-change bill will test Gov. Kate Brown's independence.

WWeek 2015