Public Officials as Fiduciaries
The values behind government ethics laws
Government Ethics refer to the unique set of duties that public officials owe to the public that they serve. These duties arise upon entering the public work force either as an elected representative, an appointed official, or a member of government staff. (For simplicity’s sake, please know that when we refer to public officials, we are referring to all public actors, be they elected, appointed or hired.) Public ethical obligations exist in addition to general ethical obligations and sometimes government ethics may conflict with personal ethical duties.
The relationship between public officials and the public has been described by scholars as fiduciary in nature. (See e.g. Rave, 2013; Leib, Ponet & Serota, 2013; Ponet & Lieb, 2011; Natelson, 2004) So what is a fiduciary? Dictionary.com defines the term fiduciary as relating to, “a person to whom property or power is entrusted for the benefit of another.” There at least four factors that identify a relationship as a fiduciary one:
- The beneficiary has delegated authority to the fiduciary to act on its behalf;
- The fiduciary has discretionary powers over the beneficiary’s assets or interests;
- The fiduciary is in a position superior to that of the beneficiary due to specialized access, knowledge or ability; and
- The beneficiary trusts that the fiduciary will act in the beneficiary’s best interest. (Ponet & Leib, 2011.)
Examples of fiduciary relationships include those of the attorney/client, trustee/trust beneficiary, executor/heir, corporate director/shareholder, and principal/agent. You can see why the public official/citizen relationship is similar: The public delegates governing authority to public officials to exercise discretion over the public treasury and to create laws that will impact their lives. The public official, once elected, appointed, or hired, is in a superior position to that of the individual citizen due to specialized governmental knowledge and the ability to advise, deliberate, and participate in the representative process. And finally, the public trusts that the public official will act in the public’s best interest.
The concept that government officials have special ethical obligations to the public is actually quite old. In Ancient Greece Plato called for death for public officials who took bribes. (Laws, 12.955d) In 1215 King John of England signed Magna Carta, which promised among other things, “To no one will we sell, to no one deny or delay right or justice.” (Magna Carta, cl. 40) In 1254 King Louis the IX of France promulgated conflicts of interest rules for provincial governors in the Grande Ordonnance Pour la Réforme du Royaume. (Davies, Leventhal, & Mullaney, 2013)
In 1776, our Declaration of Independence acknowledged the concept of delegated authority,
"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed." (emphasis added. U.S., 1776)
According to U.S. constitutional historian Robert Natelson many delegates attending the constitutional convention of 1787 advocated for a fiduciary form of government, including James Madison and Alexander Hamilton. Madison argued, for example, that senators ought to be guardians of justice and the general good, while Hamilton envisioned that members of the House of Representatives would be guardians of the “poorer orders.” Natelson notes that the concepts of fiduciary government were also held by the states charged with ratifying the new convention. Maryland representatives literally declared themselves to be the trustees of the public. (Natelson, 2013)
Turning to present day government, what ethical duties flow from the public fiduciary relationship? As noted by legal scholars David Ponet and Ethan Lieb, “Because fiduciaries are difficult to monitor and have wide access to power over beneficiary resources and assets, fiduciaries are under rigorous obligations that ensure compliance with their role responsibilities.” (Ponet & Leib, 2011) So, what are those obligations in the government context?
- The duty of care;
- The duty of loyalty;
- The duty of impartiality;
- The duty of accountability (Ponet & Leib, 2011; Natelson, 2004); and
- The duty to preserve the public’s trust in government (Wechsler, 2013).
What do each of these duties require?
The Duty of Care
The duty care requires that the public official competently and faithfully execute the duties of the office. Under duty of care fall such obligations as the duty to manage assets competently and be good stewards of the public treasury, to use due diligence in the selection and supervision of staff, to follow the rules and to uphold the constitution and laws of the jurisdiction. Examples of breach of this duty include failure to attend meetings, failure to investigate, failure to engage in the deliberative process, and failure to vote.
The Duty of Loyalty
Public fiduciaries have an absolute obligation to put the public’s interest before their own direct or indirect personal interests. The public fiduciary breaches this obligation when he or she benefits at the public expense. Prohibited benefits can be financial (such as engaging in pay to play politics- or participating in decisions that favorably impact an official’s business, property, or investments), career related (such as using public office and/or public resources to obtain future employment or political position), or personal such as benefits to family members or close associates. Note that when general ethical duties to family or friends conflict with duty to the public, the public duty must prevail.
Duty of Impartiality
Public officials have a duty to represent all of their constituents fairly. This means that the public fiduciary cannot favor those of his or her own party over other constituents, or let the fact that someone voted against him or her impact the ability to act fairly. They must overcome any inherent bias that they possess. As stated by Natelson, public fiduciaries should avoid targeting particular constituencies for favor or for punishment. The Equal Protection Clause of the US Constitution is in essence a codification of the duty of impartiality. (Natelson, 2004)
Duty of Accountability
Without a duty of accountability, the public’s ability to monitor the behavior of public fiduciaries would be severely limited. From the duty of accountability flow the duty of transparency and the concepts of disclosure, open meetings, and accessibility of public records. In 2007 the California Supreme Court articulated the notion of public fiduciary accountability in International Federation of Professional and Technical Engineers, Local 21, AFL-CIO v. Superior Court, 42 Cal. 4th 319, 328 (2007). The Court opined that, “Implicit in the democratic process is the notion that government should be accountable for its actions. In order to verify accountability, individuals must have access to government files. Such access permits checks against the arbitrary exercise of official power and secrecy in the political process.” (Id. at 328)
In California, the people’s right to know what its government is doing has been enshrined as a fundamental right in the California Constitution. “The people have the right of access to information concerning the conduct of the people’s business, and, therefore the meetings of public bodies and the writings of public officials and agencies shall be open to public scrutiny.” (Cal. Const. article 1, section 3 (b))
Duty to Maintain Public Trust in Government
Without public trust, government doesn’t work. The public is willing to delegate authority and sacrifice some freedoms in exchange for an orderly and civilized society, but only if it believes that government is acting in the public’s best interest. When the public loses trust in government, public cooperation suffers, compliance with laws fail, and investors and consumers lose confidence, To quote President Obama, “If the people cannot trust their government to do the job for which it exists - to protect them and to promote their common welfare - all else is lost.” (Obama, 2006)
Trust in government is so important, public fiduciaries are charged with protecting and maintaining the public trust. Toward this end, as stewards of the public trust, public fiduciaries have a duty to avoid even the appearance of impropriety. That is to say, even if a particular course of conduct does not meet all of the elements necessary to constitute a violation of law, it nevertheless may be unethical if it creates the perception of wrongdoing that will harm the public trust. (Wechsler, 2013) For example, even if a public official believes that he can be impartial in spite of what might appear to be a potential conflict of interest, the official should be mindful that the public is not privy to all the facts, can’t know what is in the official’s mind, and may perceive that the conduct is not in the public’s best interest. The Institute for Local Government advises public officials to always ask themselves whether it would be a bad thing for a particular course of conduct to be reported on the front page of the local newspaper. (Institute for Local Government, 2013)
Notions of civility and respect towards colleagues and the public also help ensure the public’s trust in the efficiency and effectiveness of government. When animus is displayed by council members towards each other, it causes the public to wonder if private feuds are taking precedence over the common welfare. When constituents are treated with lack of respect, it causes the public to doubt the fairness of the proceedings. As nicely summed up by the City of Portland, Oregon, “Public service requires a continual effort to overcome cynical attitudes and suspicions about the people in government.” (City of Portland, 2009)
Ethics and Ethics Laws
Now that we understand the fiduciary duties owed by public officials, you may be asking, why is it necessary to learn the laws? The laws actually have evolved as a codification of the values necessary to fulfill public fiduciary duties. On this website is a chart in which we have identified some California ethics laws and have identified the values we believe underlie those laws. You may be able to identify more. The laws set very high standards for public conduct and are sometimes quite complex. Laws are necessary as they provide notice of what conduct is prohibited. However, the laws can’t cover every ethical dilemma and thus merely set the floor for ethical conduct, not the ceiling.
To give an example, we recently held a government roundtable asking whether an official’s discussions of public business on private emails should be disclosed pursuant to a Public Records Act request. The law has yet to give us an answer on this issue. Legally it might be acceptable right now to keep correspondence on your private email account private. However, if you recognize that you have a fiduciary duty of accountability and transparency regarding public business, you may conclude that it is unethical to withhold those private emails about public business from someone making a public record request. To do otherwise may give rise to the public perception that you have something to hide. This is an area where your ethics rather than the ethics laws guide your actions. As we like to say around here, just because something is legal, does not necessarily make it ethical.
City of Portland, OR (2009) Code of Ethics. Available at https://www.portlandoregon.gov/auditor/article/279370
Davies, M., Leventhal, S., & Mullaney, T. (2013) An Abbreviated History of Government Ethics Laws, Part 1. NYSBA Municipal Lawyer, Summer 2013 Vol. 27, No. 2. Available at http://www.nyc.gov/html/conflicts/downloads/pdf2/municipal_ethics_laws_ny_state/history_govt_ethicslaws_davies.pdf
Institute for Local Government (2013) Understanding California Ethics Laws. Available at http://www.ca-ilg.org/sites/main/files/understandingbasicsethicslaws_finalproof.pdf
Leib, E., Ponet, D. & Serota, M. (2013) Translating Fiduciary Principles into Public Law, 126 Harv. L. Rev. F. 91. Available at http://harvardlawreview.org/2013/01/translating-fiduciary-principles-into-public-law/
Natelson, R. (2004) The Constitution and the Public Trust, Buff. L. Rev. 1077. Available at http://scholarship.law.umt.edu/cgi/viewcontent.cgi?article=1018&context=faculty_lawreviews
Obama, B. (2006, August 28)An Honest Government, A Hopeful Future (Remarks at the University of Nairobi). Available at http://obamaspeeches.com/088-An-Honest-Government-A-Hopeful-Future-Obama-Speech.htm
Ponet, D. & Leib, E. (2011) Fiduciary’s Law’s Lessons for Deliberative Democracy, 91 B.U.L. Rev. 1249. Available at: http://ir.lawnet.fordham.edu/faculty_scholarship/93
Rave, D. T. (2013) Politicians as Fiduciaries, 126 Harv. L.Rev. 671. Available at http://harvardlawreview.org/2013/01/politicians-as-fiduciaries/
Wechsler, R. (2013) Local Government Ethics Programs: A Resource for Ethics Commission Members, Local Officials, Attorneys, Journalists, and Students, and a Manual for Ethics Reform. Available at http://www.cityethics.org/ethics%20book
Hana Callaghan is the director of government ethics at the Markkula Center for Applied Ethics.
May 31, 2016
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Hana Callaghan directs the government ethics program at the Markkula Center for Applied Ethics at Santa Clara University in California. The opinions expressed are her own.
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