Top Detroit official earned $1.8M at company getting city tax breaks

The Lear Corporation’s Detroit auto supply plant opened in 2022 with help from millions of dollars in tax breaks brokered by Detroit City Hall and a Detroit development nonprofit.

One man held – and still holds – leadership roles in all three organizations: Conrad Mallett.

Mallett is the top lawyer for Detroit City Hall, representing the City Council and departments that pushed for or approved a 12-year tax break for Lear. Before that, he was deputy mayor as the plant development came together.

Mallett is also board chairman of the nonprofit Detroit Economic Growth Corporation, whose staff recommended a tax break for Lear and worked on the broader plant deal.

And Mallett is on Lear’s board of directors, where he earns more than $300,000 a year in cash and stock awards to make decisions that help the company’s bottom line. Since 2020, he has received approximately $1.8 million in cash and stock awards from the Southfield-based auto supplier while holding top city government posts, according to a Free Press review of SEC filings.

Experts interviewed by the Free Press say the three roles raise ethical and conflict of interest concerns and that Mallett – a former Michigan Supreme Court justice – appears to be in violation of Detroit’s ethics ordinance, which bars public servants who exercise “significant authority” from taking money from companies and individuals doing business in the city.

“I think to any person looking at this situation, it just reeks of conflict,” said Peter Letzmann, a former city attorney in Detroit, Pontiac and Troy who has lectured on ethics compliance for the Michigan Municipal League. “It’s just inherently a cause for a conflict.”

Detroit Board of Ethics Executive Director Christal Phillips says her office has taken steps to initiate a review of whether Mallett can be paid by Lear while serving city government. Phillips was appointed to the post in 2022 and said she learned of Mallett’s lucrative private sector job from a June 1 Free Press article. On June 30, she said ethics board staff requested he formally disclose the role and seek the board’s opinion on whether he can keep it.

The ethics board has previously advised city employees that they cannot take paid positions on the boards of entities with business in the city or receiving tax breaks from it.

Mallett said his roles with the city, Lear and DEGC are not in conflict. He said he had no involvement in the plant deal in his position with the city and that the DEGC and Lear boards never voted on it. A City Hall spokesman said the company does not have current business with the city of Detroit.

Mallett said he disclosed his Lear role with former Mayor Mike Duggan, who, in 2020, instructed city department heads not to involve Mallett in business related to the company, according to a letter provided by the city. He said he disclosed it with Mayor Mary Sheffield upon his reappointment earlier this year.

Mallett also requested outside legal opinions from the Honigman Law Firm that found the city had “no general prohibitions” on for-profit or nonprofit board service for public officials.

“Lear had no business with the city when I was hired by Mayor Duggan in 2020 and there was no reason at that time to expect they ever would,” Mallett said in a statement issued in response to a list of detailed questions. “When Lear did choose to make an investment in the city, I was not corporation counsel or even with the law department. I was deputy mayor and had no direct management of the law department.

“Even still, because of my disclosed seat on the Lear board, everyone agreed, including me, that I should remain entirely out of the process of that development, which I did,” Mallett said. “It is clear that despite all of these facts, the Free Press intends to claim a conflict existed where none did and still does not.”

Mallett did not respond when asked whether he believed his paid role at Lear violates the city’s ethics ordinance, why he never sought the ethics board’s guidance on it, and whether he was aware of the board’s prior opinions against paid board memberships.

In 2020, the ethics board issued an opinion advising the city’s then-director of Public Safety and Cyber Security that he could not take payment to serve on Ford Motor Co.’s advisory board, as Ford receives tax breaks from the city. In 2022, it issued an opinion advising an unspecified city employee that he could not accept $20,000 to serve on the board of an entity described as doing business in the city.

Mallett earns nearly twice as much at Lear as he does with Detroit, where data obtained through a public records request shows he made $180,000 as top attorney last year.

The Lear deal and roles Mallett held

Mallett joined Lear’s board of directors in 2002, after serving as a former Michigan Supreme Court justice and working in the administration of former Mayor Kwame Kilpatrick.

He remained on Lear’s board as he built a career in hospital administration, and when he returned to city government after helping Duggan win reelection as his campaign chief in 2013.

Mallett was appointed by then-mayor Duggan to the Detroit Board of Police Commissioners in 2014, as deputy mayor in May 2020 and – with city council approval – as corporation counsel in April 2022.

He became chairman of the DEGC in March 2020.

Plans for the development where Lear would eventually become sole tenant began to take shape publicly that year. In November 2020, the Free Press reported that Missouri-based developer NorthPoint planned to build a 682,000-square-foot manufacturing facility at the site of a derelict, city-owned factory building that previously housed the Cadillac Stamping plant. Tenants at the time were not yet disclosed.

With Mallett as board chair of the DEGC, the nonprofit managed the approval of an $18.4 million Brownfield tax‑increment financing plan for NorthPoint, reviewed the Brownfield plan and negotiated with the developer, DEGC spokesman Lanard Ingram said.

In November 2020, with Mallett still serving as deputy mayor, Detroit City Council voted to give final approval to the tax break for the developer.

Lear was first reported to be the primary tenant of the NorthPoint development in August 2021. (The company later leased the remainder of space in the facility and became its sole tenant.)

After Mallett became Detroit corporation counsel – representing the city’s mayor, council, departments and boards – City Council voted in October 2022 to approve an additional $4 million, 12-year industrial facilities tax exemption for Lear to occupy the site. The Housing and Revitalization Department and the DEGC recommended that the city council approve the break.

In September 2023, the city council again voted in favor of Lear – this time allowing it to assume a speculative building designation that cleared the way for it to receive the $4 million break.

Lear has had business in Detroit beyond the plant; around 2016 and 2017, the company sought and received approvals or tax breaks from Detroit government agencies for two downtown development projects. It also sponsors the annual Chevrolet Detroit Grand Prix Presented by Lear.

Laws and widely adopted best practices in the nonprofit, corporate and governmental sectors require leaders to disclose potential conflicts and avoid them through measures ranging from recusals to leaving the room when the issue at the center of the conflict is discussed.

Such rules exist to avoid the appearance of impropriety and ensure an organization’s interests aren’t being undercut, as can happen when someone works multiple sides of the same deal.

JoAnne Speers, principal of consulting firm S2 Ethics Strategies and the former executive director of the nonprofit Institute for Local Government in California, called Mallett’s roles with the DEGC, City Hall, and Lear “a classic conflict of interest” as they relate to the plant deal.

“He’s trying to straddle too many constituencies,” Speers said. “Whether it’s the city, which includes the public or other businesses that may have wanted to get this public benefit and help for their projects; or the interests of the nonprofit economic development corporation which has its own mission … or the interests of the shareholders of the Lear Corporation, which, of course, are expecting him as a member of the board to put them first.

“It's just hard for any one group in that collection to feel like their interests are being put first,” Speers said.

She added that public officials, in particular, should avoid even the appearance of conflicts to ensure public trust, treating ethics laws as a “floor, not a ceiling” for ethical conduct.

“He should drop some of the roles,” Speers said. “When you’re in public service, you focus on putting the public’s interest first and that’s why you avoid roles that could be potentially incompatible.”

Experts say recusal not enough

Mallett recusing himself from Lear business would not fully resolve the appearance of bias in favor of the company, three ethics experts told the Free Press, because it would still allow city lawyers who report to him to do work related to the company.

“He may say, ‘Well I’m not going to get involved,’ but all the people that are working for him would be getting involved,” said Gerald Fisher, a municipal law attorney and professor emeritus at Cooley Law School who specializes in state and local governance and ethics. “It seems to be that if that situation arose, they would have to retain outside counsel to deal with it.”

In a statement, city media relations director John Roach said law department work on the plant deal was “purely procedural” and “purely for review and sign-off.”

The life of the tax break for Lear is 12 years and involves ongoing work by city departments, including annual determinations from the city assessor's office “as to whether the company is still operating in the manner that earned it the abatement,” Roach said. The city’s Civil Rights, Inclusion & Opportunity Department is responsible for tracking the company’s commitment to prioritize hiring Detroiters at the plant, he said.

Mallett's conduct could violate ethics ordinance

Letzmann, the former top city attorney in Troy, said it additionally appears Mallett’s paid role with Lear violated the city’s ethics ordinance provision preventing public servants exercising “significant authority” from receiving compensation from entities with business in the city.

“It would be my opinion that, based on the facts that have been presented, that that would be a violation,” Letzmann said. “Directly or indirectly, he had authority … over the approval of the tax abatement agreement.”

Lynn Helland, a former attorney with the U.S. Attorney’s Office for the Eastern District of Michigan and the former executive director of the Michigan Judicial Tenure Commission, said a Detroit deputy mayor or corporation counsel’s paid board service for a company doing business with the city would appear to be a violation, even if the official recuses themselves.

“It seems to me that the deputy mayor and corporation counsel both exercise substantial authority with respect to the business of the city of Detroit,” said Helland. “My understanding of prior decisions of the ethics board is that a person who has such authority cannot be paid for their activities on behalf of a company that gets tax abatements from the city or has other business with the city.”

Suspected breaches of Detroit's ethics code can spark investigations that lead to public admonishments or, in extreme cases, are forwarded for possible criminal prosecution.

The 2022 independent legal opinion Mallett requested when he became corporation counsel did not mention the specific ethics provisions raised by Helland and Letzmann. The opinion, from the Honigman Law Firm, said he could stay on the boards of the DEGC and Lear, where it acknowledged Mallett receives “significant fees.”

“In a letter to you dated May 26, 2020, I informed you that … we found no general prohibitions upon for-profit or non-profit board service and that you were free to continue service on the boards of Lear Corporation and the Detroit Economic Growth Corporation,” Honigman attorney Alex Parrish wrote, citing the firm’s review of the city charter, ethics ordinance, and a state law governing the conduct of public servants. “We are aware of no changes to these provisions since the date of that letter and we believe the same conclusions expressed therein apply to your acceptance of the Corporation Counsel position.”

The letter added that Mallett must file required disclosures and abstain from involvement on either side of matters between the city and Lear.

It’s unclear whether Mallett fully disclosed all of his positions as required.

Under the city charter, public servants who exercise “significant authority” are required to disclose to the Board of Ethics any financial interest “in any contract or matter pending before City Council” or “within any office, department or agency of the City.” A mayoral executive order meanwhile requires top mayoral appointees to list their income sources each year.

Detroit Board of Ethics executive director Phillips said Mallett failed to disclose his financial interest in the company with her office and that it was not reflected in two years of disclosures – in 2024 and 2026 – that she said were separately filed under the mayoral executive order and shared with her office.

Roach said Mallett disclosed his Lear role with Duggan in 2020 and in 2022, the year Lear sought city tax incentives for the plant. Roach said Mallett disclosed the role again this year with Sheffield’s deputy mayor, who made Sheffield aware of the conflict.

Roach said Mallett met every "legal and reasonable requirement for ethical disclosure." He did not elaborate when asked why Mallett never disclosed his financial interest in Lear with the Board of Ethics.

On the DEGC side, nonprofit best practices also require the disclosure of potential conflicts.

DEGC spokesman Ingram did not respond to a request for the nonprofit’s conflict-of-interest policy and did not say whether Mallett disclosed his position at Lear – only that the nonprofit was “aware” of it.

“However, it was irrelevant as the DEGC board had no voting authority relating to the Cadillac Stamping transactions,” Ingram said.

Roach said “the DEGC had no business related to the Lear deal, therefore there was nothing to disclose.”

Dana Thompson, a University of Michigan law professor who specializes in nonprofits, said Mallett “should have disclosed his Lear board position and the potential conflict to the DEGC board” even if it didn’t formally vote on the project, as he could have still participated in, discussed, or influenced the nonprofit’s work on it.

The DEGC’s board appoints the nonprofit’s leadership and, at times, discusses individual projects, but generally does not vote on them, board members told the Free Press.

Lear spokeswoman Juli Huston-Rough said Mallett disclosed his roles at the DEGC and city with the company, adding that Mallett “is a highly effective member of our Board who meets all qualifications for directors set forth in our Corporate Governance Guidelines.”

Ethics expert: Mallett sends message to other city officials

Mallett’s case carries added weight given that his role as Detroit corporation counsel includes advising city officials on how to follow the law, Speers said.

“It’s very damaging if it looks like a respected leader of an organization and an adviser on these issues is not prioritizing public trust and erring on the side of caution,” she said, as it could "mistakenly encourage people to walk too close to the line and do things the city doesn’t want them to that would harm public trust."

Last fall, Mallet told then-Council President Sheffield that accepting free concert tickets from Comerica Bank did not violate a city ban on gifts from entities with business or potential business before the city.

He also told her that her 2019 romantic relationship with the owner of a demolition company she voted to award millions in city contracts did not violate an executive order barring personal relationships between elected officials and contractors, saying executive orders do not apply to council members.

Sheffield was elected mayor in November and reappointed Mallett as corporation counsel after taking office in January.

Phillips’ office’s request that Mallett seek the board’s opinion on whether he can keep his Lear role now creates another potential conflict, as the ethics board is required to rely on the Law Department Mallett helms to draft those opinions.

“If there is [a request for advisory opinion] filed by Mr. Mallett, I believe we would need outside counsel to review it fairly,” Phillips said.

Mallett has previously clashed with the ethics board. In 2023, when Phillips learned that ethics disclosures submitted to Mallett’s office under the mayoral executive order far outnumbered those the board was receiving, Phillips requested them. Mallett, however, said her office would have to file a Freedom of Information Act request to obtain them.

Violet Ikonomova is an investigative reporter at the Free Press focused on government and police accountability in Detroit. Contact her at vikonomova@freepress.com.