Santa Clara University

“Quid pro quo never comes without a price.”

This comment, posted on the Orange County Register by reader Theresa Santoro, summarizes the ethical problems that can occur when business and corporate interests host an event for public officials.

According to the newspaper, the annual conference of the Coalition for Adequate School Housing (C.A.S.H) brings together corporations and employees of 500 school districts. “Bankers, lawyers, architects and companies hoping to profit from school construction are spending hundreds of thousands of dollars this week to court public education officials at a three-day gathering in Sacramento.” Some of the workshops deal with how to pass bond issues for new school construction.

How can the school’s decision makers be objective after enjoying meals, cocktail receptions, and rounds of golf (including a gift bag and “high quality golf shirt” paid for by the sponsors of the meeting)?

Tracy Westen, formerly of the Center for Governmental Studies in Los Angeles, said there is “a danger that the company that has handed out money will be looked at more favorably” when it comes to awarding contracts.

Santoro’s comments illustrate the fundamental issues of conflicts of interest: “Builders should not be allowed to endorse those running for school boards, and school boards should not be allowed to take fancy trips and be wined and dined by builders and bankers. It all starts with a nice free glass of Chardonnay on a golf course.”

When the Arizona Republic began looking into the thousands of pages of records filed with the Arizona State Board for Charter Schools, they uncovered contracts and arrangements “in which money from the non-profit charter school went to for-profit or non-profit companies run by board members, executives, or their relatives.”

According to the investigation done by the newspaper, the deals were worth more than $70 million dollars and covered transactions dating back five years. And while school districts in the state must follow strict purchasing laws, designed to make sure bidders offer the best price and quality in their products. Charter schools are largely exempt, leading some to make purchases that appear to create conflicts of interest.

Read the entire story here, and be sure to leave your comments.

Few people discussing rising health care costs are aware of the millions of dollars that are spent each year by health care districts—agencies supported by public funds. But a statewide investigation by The Bay Citizen shows apparent conflicts of interest between some board members and the firms they deal with, and the sums are staggering.

“In March, the California State Auditor found that the Salinas Valley Memorial Healthcare System had paid $21.6 million between 2006 and 2010 to businesses in which board members or executives had a financial stake.” The charges are under subject to investigation by both the Monterey County district attorney and the California Fair Political Practices Commission (FPPC).

Conflicts of interest are one of the most serious of the legal and ethical problems facing public officials and their agencies. It is critical that all special agency board members, executives, and their legal representatives follow the law. But they also must remember that the perception of wrongdoing is as damaging to public confidence as an illegal vote.

The ambulance business is big business, and local government agencies are charged with securing contracts for such service. Because the stakes are so high, there is a need for absolute transparency in the awarding of these lucrative contracts, and any other contracts related to the providers.

But full disclosure was not the way the Tulsa and Oklahoma City agency, known as EMSA, handled business. A story in the Tulsa World reports that for more than 20 years a law firm had a no-bid contract to provide legal and collections service. To make matters worse, the daughter of EMSA chief executive officer worked for that law firm. Steve Williamson, CEO, says he doesn’t believe it is a conflict of interest, to “negotiate and sign government contracts with his daughter’s employer.”

The paper quotes him as saying it might look like a conflict, “when you put it like that.” His daughter is a payroll clerk, a job Williamson said he didn’t believe would apply to the city’s ethics policy.

Michael Slankard, who is with the city’s ethics commission said that although the policy is written for board members, it was intended to cover the CEO. “If the citizens of Tulsa reasonably expect that there’s a conflict, well that’s enough. It doesn’t have to be a conflict, just the appearance of one.”

A loophole in the Maine state law has allowed public officials to benefit from millions of dollars going to private organizations where they have an interest.

According to a study by the Maine Center for Public Interest Reporting, nearly $235 million in state funds have been paid to various private and non-profit organizations either run by “legislative leaders or the spouses of high-level state employees.”

While some of the payments date back to 2003, there are significant examples of current conflicts of interest. For example, Senator Joseph Brannigan, chair of the Appropriations and Human Services Committes, was part of a deal to direct $98 million to Shalom House, where Brannigan was executive director. Brenda Harvey, stepped down from her position as a Human Services Commissioner in 2011, but not before $15.4 million was directed to Mobius, Inc., where her husband was executive director.

 Well-connected officeholders were not the only ones to benefit. Not included in the $235 million is some $60 million paid to employers of other legislators, to organizations ranging from group homes and daycare centers to a community counseling center.

“Each of the legislators or state officials say they did nothing wrong, and said their statehouse colleagues knew of the overlapping private and public roles, thereby, they claim, creating a ‘check’ on any possible conflicts of interest.”

But conflicts of interest are not the only issue. Due to another loophole in the state law, “lawmakers and executive branch officials who leave office between one year’s disclosure filing deadline and the next year’s deadline don’t have to file a disclosure for their last year (or portion of a year) in state government This leads to a complete lack of disclosure, especially when an executive leaves state employment.

Jonathan Wayne, executive director of the state’s Commission on Governmental Ethics summarized the “double dipping” in simple terms: “I think it’s good for the public to know if public officials or members of their immediate family have significant contracts with the state.”

Phil Lakin gives back to the city of Tulsa every day, serving as the head of the Tulsa Community Foundation. Now he wants to serve the community in an additional capacity: as an elected member of the city council, and some say this will create a conflict requiring frequent recusals.

The philanthropic foundation, according to Tulsa World, is worth $4 billion and is the largest of its kind in the nation. The city has been a beneficiary, receiving money for projects ranging from the travel budget for employees in the mayor’s office to buying a $25 million revenue bond to front the cost of a civic project. (The money will be repaid over a 30-year-period.)

The chair of the Ethics Advisory Committee believes Lakin will have to recuse himself from many votes. “Any official,” said Michael Slankard, “whether elected or appointed, has to be very careful about how their day job interacts with their public duties and the perception that will have on the public.”

Although Lakin could not speculate what might constitute a conflict of interest with his job, he has stated “I can guarantee you that if there are any conflicts of interest, I am going to recuse myself, but to sit here today and try to figure out what those are would be really difficult.”

However, the candidate has hinted that his professional affiliation could benefit Tulsa. “If I am elected and see holes in funding that could really advance our city, then yes, I would come back to the community foundation and let our donors know about them. I can't guarantee a dollar will come, but if we can make investments because of the knowledge I receive, then I think that's a benefit."

Please share your comments on the following questions:

•  How will the officeholder know what constitutes “crossing the line” prompting a recusal?

• Should Lakin take a “wish list” back to the Foundation?

• Do you think there should be a process whereby citizens can petition the councilmember for recusal?

Politicians who travel to exotic places “on business” are apt to draw negative attention, but in New York, the travel drew a $20,000 fine.

Brooklyn borough president Marty Markowitz took several overseas trips for official city business, but because he brought his wife the Conflicts of Interest Board found him guilty of an ethical violation. The fact that wife Jamie accompanied him was deemed to be “accepting travel expenses for his wife for each trip, using his position as a public servant for private or personal advantage. Simply put, his wife was able to travel with him abroad –for free.”

The trips in question were to Turkey (twice) and to the Netherlands. Markowitz argues neither he nor his wife received any personal benefit from the trips, saying, “when they bring you over it’s not vacation –they make you work.”

In making its decision, the board noted Mrs. Markowitz is not an official staff member, quoting a New York City Charter provision that states “no public servant shall use or attempt to use his or her position as a public servant to obtain any financial gain, contract, license, privilege or other private or personal advantage, direct or indirect, for the public servant or any person or firm associated with the public servant.”

Although he will pay the fine, Markowitz maintains he did nothing wrong, and called the ruling a “terrible decision.”

Reading the comments posted to the New York Times article show opposing reactions to this story. Several readers felt Markowitz was a hard-working public servant, and expressed support for “the option of bringing a spouse on international travel, particularly if it’s for more than a few days.”

The majority of the reactions were negative: “another politician who thinks that ethics laws apply to everybody but him.” A common thread was expressed by one reader who wrote “Is he serving his constituents in any way by taking these contrived missions of good will, which in essence are nothing more than ‘vacations?’ These kind of junkets are what sour people on politicians.”

What do you think? Is travel a perk or part of the job? Should a spouse or companion be allowed a “free ride” or be made to pay for the trip and accompanying expenses? Let me know by posting a comment here.

The patchwork of conflict-of-interest laws is a major stumbling block for public officials at all levels of government. From lax to stringent, the ethical interpretation of a “conflict” has largely been relegated to the affected jurisdiction. Until now.

The Supreme Court has just made it very clear – to legislators and city councilmembers—that they cannot vote on matters where there is a conflict of interest, and they cannot claim “governmental votes cast by elected officials are free speech protected by the First Amendment.”

Writing that conflict-of-interest rules “have been commonplace for over 200 years,” Justice Antonin Scalia argued the right to vote in a legislative body “is not personal to the legislator but belongs to the people. The legislator has no personal right to it.”

The unanimous decision overturned an earlier ruling by the Nevada Supreme Court, stemming from a censure of a Nevada councilman by the Nevada Commission on Ethics. Councilman Michael Carrigan cast a vote in favor of a hotel and casino project that was backed by his campaign manager.

It is encouraging is to see an Ethics Commission willing to tackle these types of violations. Far too many commissions lack the authority or will to move on ethics charges.

You can read more about conflicts of interest, including case studies, by visiting http://www.scu.edu

With the exception of Bell, California, the city of Vernon has garnered more headlines than most cities of its size. The latest news is the worst yet: the California Assembly voted today to dissolve the city of 112 persons.

If passed by the Senate, the town of 5.2 square miles would be the first “disincorporation” in 40 years.

The city has been mired in political controversy for years. Elections were uncontested for 25 years, and the former city manager was indicted last year for conflict of interest violations. Runaway salaries allowed Eric T. Fresch, the former city attorney and city administrator, to earn more than $1 million for four consecutive years.

Assembly Speaker John Perez, who sponsored Assembly Bill 46, called Vernon “a city in no 'normal sense of the word' with no parks, no libraries and residents nearly all connected to the local government. AB 46 ends the cycle of corruption and abuse in Vernon - while protecting the jobs of the thousands of people who work there." The vote was 62 to 7.

Control over the city would be transferred to Los Angeles County, but not without a fight from lobbyists who represent businesses and labor groups.

Few land-use decisions at the city council level make it up to the U.S. Supreme Court, but for Councilman Michael Carrigan, the trip to the high court takes place next week. It’s a case worth following.

When the Sparks, Nevada city council considered approval of a casino in 2006, Carrigan disclosed the personal friendship he had with Carlo Vasquez, the casino spokesperson and consultant. The councilman dutifully checked with the city attorney for an opinion on a potential conflict of interest and was given a “green light” to proceed in the discussion and vote.

The Nevada Ethics Commission, responding to complaints from casino opponents, ruled he should not have voted, given his relationship with Vasquez. They found that “a reasonable person in Councilman Carrigan’s position would not be able to remain objective,” and added that his friend had also served as his campaign manager.

Carrigan argued the law violated his First Amendment rights, and successfully sued to get the decision overturned by the Nevada Supreme Court. Now the Ethics Commission is headed to the U.S. Supreme Court, and the outcome of that decision is sure to reverberate across the country.

An editorial in the Las Vegas Sun urges the high court to overturn the Nevada court’s opinion, saying “the public’s interest in good government takes precedence over the elected officials’ rights.” The editors added, “If elected leaders don’t like that, they have a choice—they don’t have to run for office.”

Unfortunately it’s not that simple. The balance between transparency and the public’s interest and the rights of the individual elected official must be carefully considered.

Where do you stand on this issue? Post your comments here and I’ll follow up with a blog post after the Supreme Court rules.

What would you choose: serving on the city council for $6,400 or working as a consultant for a major architectural firm? This is the decision that faces George McGoldrick, a councilmember in Meriden, Connecticut.

The Board of Ethics advised McGoldrick he “could pursue the work, but would need to abstain from related City Council votes and refrain from appearing on the firm’s behalf before any city agencies, boards, or commissions.”

The problem lies in the description of his new job description. As a consulting architect he would be required to act as a liaison to public officials in Meriden. This conflict may prompt him to resign from the council.

But resigning may not solve the problem: the city ethics code prohibits former public employees and officials who are compensated for their work from appearing “for compensation before any City board or agency by which he was formerly employed, or which he provided service to, or was a member of, at any time within a period of one year after termination of his service with the City.”

McGoldrick has yet to make a decision, but one of his council colleagues offered this perspective. “If this was me, and a choice between paying my mortgage, my insurance and my livelihood meant that I might not be able to serve on the City Council because of those things, I would have to make sure my mortgage, my wife, my home was taken care of.”

Have you faced this dilemma? Do you know anyone who has had to choose between public service and a job in the private sector? What should McGoldrick do?

In government, “revolving door” and conflict of interest are almost always synonymous. And both present legal and ethical dilemmas for public servants.

A special investigation in the city of Port Angeles, Washington, has revealed that although city councilmembers who leave office and then work for city contractors may not be violating the law, they may be damaging public trust.

A report released by the state auditor shows former mayor Karen Rogers violated state law when she failed to disclose business relationships and did not recuse herself in voting on issues related to those ties. However, she did not violate any laws by working for a city contractor upon leaving office.

While the focus of the report is about Rogers, at least one councilmember is calling for a city resolution that could “legally prevent those who serve on the council from working for companies that do business with the city for certain period of time after they leave office.” Councilmember Max Mania said “the city could go a long way in gaining public trust by making it tougher for councilmembers to cross between these two worlds.”

In addition to drafting a resolution, the city staff will also consider holding more training sessions on state conflict of interest laws.

Conflicts of interest in government are often discussed from a strict legal perspective. Does voting on a particular item have a financial impact on the legislator? Are there real estate holdings that might influence a vote? Does a vendor or potential contractor employ a family member?

But there are also significant ethical issues to consider in determining whether or not a conflict of interest exists. And some believe that even the appearance of a conflict is sufficient grounds for recusing oneself from a vote.

A current case in Baltimore illustrates how many ways you can examine an issue and how reasonable people can disagree on the appropriate action. In this instance, the mayor of Baltimore has been voting on contracts involving Johns Hopkins Health Systems, although the company employs her husband. Since he began the new job in  December 2010, Mayor Stephanie Rawlings-Blake has voted on 12 items involving Johns Hopkins entities. The decisions involve $900,000 in contracts and services.

The mayor says she has not voted on any deals directly involving the division where her husband works. “I abstain from any vote directly related to Hopkins Community Physicians, where Kent works.” The city’s ethics code specifies: “a public servant may not participate in and must disqualify himself or herself from any matter if it involves a business entity in which…a disqualifying relative is a partner, officer, director, trustee, employee, or agent.”

The city attorney is investigating the issue, first brought up by the Baltimore Sun newspaper. He says that while “it appears acceptable for Rawlings-Blake to participate in decisions involving the university, it is less clear from an ethical standpoint whether she should be voting on issues involving the medical system.”

Proactive legal and ethical advice could have saved the city, the mayor, her husband, and the university from making headlines that impact public confidence in government. The threshold for looking at these issues is, simply put: the law is the floor, not the ceiling.