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Conflict of Interest

This is the place to discuss what a conflict of interest is, and how close or what type of a relationship an official or employee must have with an individual or entity that has an interest, for that interest to be seen as conflicting with that official or employee's obligations to the public interest.

This is also the place to discuss certain conflict provisions missing from this code (such as outside employment), which are discussed in the comments to this subsection.

100(1). Conflict of Interest.

An official or employee* may not use his or her official position or office, or take or fail to take any action, or influence others to take or fail to take any action, in a manner which he or she knows, or has reason to believe, may result in a personal* or financial benefit*, not shared with a substantial segment of the city's population, for any of the following persons or entities:

  1. himself or herself;
  2. a member of his or her household*, including a domestic partner* and his or her dependents, or the employer or business of any of these people;
  3. a sibling or step-sibling, step-child, parent or step-parent, niece or nephew, uncle or aunt, or grandparent or grandchild of either himself or herself, or of his or her spouse or domestic partner, or the employer or business of any of these people;
  4. an outside employer or business* of his or hers, or of his or her spouse or domestic partner, or someone who works for such outside employer or business;
  5. a customer* or client*;
  6. a person or entity from whom the official or employee* has received an election campaign contribution of more than $200 in the aggregate during the past election cycle (this amount includes contributions from a person's immediate family or business as well as contributions from an entity's owners, directors, or officers, as well as contributions to the official or employee*'s party town committee or non-candidate political committee);
  7. a substantial debtor or creditor of his or hers, or of his or her spouse or domestic partner; or

  8. a nongovernmental civic group, union, social, charitable, or religious organization of which he or she (or his or her spouse or domestic partner) is an officer or director.

Comment: The central point of an ethics code is that city officials and employees should not prefer, over the public interest, their own interests or the interests of their family or business associates. There are other relationships that should be included in the above list, but cannot due to problems of defining them. These include romantic relationships short of domestic partnership, and close friends and associates.

The general rule is: If it looks to others as if you might be giving someone special treatment, or if it would look that way to others if they knew about the relationship, then you should not act with respect to that person or entity, and instead recuse yourself under subsection 3 below. It is important to give city residents confidence that their officials and employees are treating everyone the same, even when you believe that you can be totally impartial.

The most common way to define conflict of interest is as follows: No person subject to this code shall have any interest, financial or otherwise, direct or indirect, or engage in any business, employment, transaction or professional activity, or incur any obligation of any nature, which is in substantial conflict with the proper discharge of his or her public duties or employment. However, most government officials and employees do, on occasion, have conflicting interests. The important thing is not for them to prevent them, but rather to manage them honestly and responsibly, that is, to disclose them and to not act where there is such a conflict, no matter how impartial they feel they can be. What matters is not whether one can still act with integrity, but whether one will be perceived that way. It should be noted that even voting or making a decision against a friend or relative, in order not to seem partial, is not acting impartially, because the reason for the vote or decision is wrong: it might actually be better or more fair to vote or decide in favor of the friend.

The one thing the common approach contains which does not appear in this model code is a prohibition of outside employment where there is not a conflict with a particular government interest, but instead with the general government interest in "the proper discharge of an employee or official's duties" (a term that, by the way, is too vague to allow for enforcement). Outside employment does not only lead to conflicts of interest as defined in this code, but also interferes with doing one's job by affecting the official or employee's time, energy, and focus. Volunteers are expected to have other jobs, and it is not fair to prevent low-paid employees from having evening, weekend, or holiday jobs, but many cities have rules limiting the amount and type of outside employment. Please contribute outside employment provisions which you feel are just (or unjust), enforceable or unenforceable, and explain why. Such provisions should include procedural requirements, for example, applying for formal, written permission from one's supervisor or department head (including disclosure of any officials, employees, or contractors involved), and the written acceptance of limitations on time and place of outside employment.

There is also nothing in this model code about incompatible positions in government and parties, that is, holding legislative and administrative positions, for example, especially where one office has the power to remove or affect the other's budget; or multiple administrative positions that stretch an official or employee too thin; or non-governmental positions that can have a great effect on government, for example, a department head who is an officer of a local political party, posing a question about his or her responsibility to all citizens vs. to party members, as well as putting him in a position of affecting who his boss will be, come the next election. Often such rules do not appear in ethics codes (often they appear in the city charter), but because they do involve conflicts of interest, they should at least be included by reference. Please say how your municipality deals with this problem, or how you think it should be dealt with.

Another common conflict provision is as follows: No person subject to this code shall accept other employment which will either impair his or her independence of judgment as to his or her public duties or employment or require or induce him or her to disclose confidential information acquired by him or her in the course of and by reason of his or her official duties. What does it mean to have a job that impairs one's independence of judgment, or a job that induces or requires one to disclose confidential information? And how could it be proven that particular employment could do this? Again, this sort of provision focuses on the conflict rather than on the improper management of the conflict. It is true that a developer should not be on a zoning board, nor should a contractor be in charge of a city's purchases, at least in the relevant area. But in and of themselves, these are not violations of the public trust (so long as they recuse themselves when appropriate; but if that is very often, they are not fulfilling the obligations of their position); they are examples of seriously poor judgment on the individual's part as well as on the part of those who nominated or appointed that individual. In addition, when a developer sits on a zoning board, it is a sign of a poor ethics environment, whose leaders have not spoken out against so severe a conflict. Cities may want to add a provision like the following to deal with this situation:

The recusal provisions of 100(3) do not permit an official or employee to make use of recusal on a regular basis. If recusal occurs with such frequency as to give the appearance of impropriety, the official or employee is deemed to have violated the provisions of this code.

Comment: An official or employee who is forced to recuse himself or herself on a regular basis should resign from his or her position. This should also be taken into account when a position is accepted.

Another approach to conflicts of interest is to deem something a conflict only to the extent that an interest is not disclosed and the official or employee participates in the matter. This approach recognizes that ignoring a conflict is the principal problem. Such an approach can be combined with defining "conflict of interest" as doing or not doing much of what appears in 100 of this model code, as it is, for example, in Kings County (Seattle), Washington. This makes it clear that the central concept of a conflict of interest takes many forms, but it also limits conflict to particular instances, in effect, saying that all other conflicts are acceptable.

New Haven, Connecticut enumerates several examples of conflicts of interest, as well as several exceptions. This is unusual, but if done thoughtfully and responsibly (being careful not to make the examples exclusive), it can provide clear guidance. The best place for such examples is, however, not in the code itself, but in explanatory guidelines on the city website or in pamphlet form. Here is what New Haven lists:

Sec. 12 5/8-6. Exception to the conflict of interest provisions.

The following situations shall not constitute a conflict of interest under section 209 of the Charter of the City of New Haven:

  1. Where a municipal employee or public official is employed by a person who enters into a contract with the City of New Haven, where said employee or public official is not directly involved in the procurement, preparation, or performance of such contract and whose remuneration is not, directly or indirectly, derived from said contract;
  2. If the municipal employee or public official is employed by any newspaper which publishes any municipal notice, resolution, ordinance or other proceeding where such publication is required or authorized by law;
  3. If the municipal employee or public official is employed by a public utility that furnishes public utility services to the City of New Haven when the rates or charges therefor are fixed or regulated by the public utilities control authority;
  4. If the municipal employee or public official is employed by a person or business which has a contract with the City of New Haven if the total consideration thereunder, when added to the aggregate amount of all consideration payable under contracts in which said employee or public official has an interest during a calendar year does not exceed five hundred dollars ($500.00).

Sec. 12 5/8-7. Examples of an interest requiring disclosure.

In accordance with article XXIII, section 210, of the Charter of the City of New Haven, interests requiring disclosure shall include, but not be limited to the following:

  1. Where a member of the immediate family of a member of a board, commission or task force is employed by the City of New Haven;
  2. Where a member of a board, commission or task force is employed by a nonmunicipal agency the funding of which is, in part or in its entirety, provided by funds authorized by the City of New Haven;
  3. Where a member of a board, commission or task force serves on the board of directors or governing board of a nonprofit organization when said organization is engaged in the application of federal, state or local funding authorized by the City of New Haven;
  4. Where a member of a board, commission or task force serves on the board of directors or governing board of a nonprofit organization when said organization is lobbying for specific legislation before the City of New Haven or when said organization is lobbying for specific State of Connecticut legislation which will result in the city receiving funding which is controlled by the city board, commission or task force of which the individual is a member;
  5. Where a member of a board, commission or task force serves on the board of directors or governing board of a nonprofit organization when said organization is engaged in litigation against the City of New Haven;

  6. Where a member of a board, commission or task force accepts an offer of employment, whether paid or unpaid, by the City of New Haven or by a program recommended by said task force but has not yet resigned or retired from said board, commission or task force to accept said offer of employment;
  7. Where a municipal employee or public official has a financial or personal interest in a contract which was entered prior to the time of his nomination, appointment, election or employment to said position, so long as said contract is not renewed, amended or modified subsequent to his assuming public office;
  8. Where an employee or public official seeks or obtains employment with a person, company or corporation engaged in business with the City of New Haven but has not yet resigned his position assume said employment;
  9. Where an employee or public official applies for a city program or benefit over which he has control, influence or discretionary authority.
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Robert Wechsler says:

A recent conflict of interest dispute in Pueblo, Colorado (as covered in a Pueblo Chieftain article)shows why it is important not to restrict conflicts to those involving financial interests.

In this dispute, council members will soon be voting to fill a council vacancy. Two candidates each work with council members. One candidate supervises a council member at the local community college. Another candidate is an independent real estate agent, but her team leader is a council member.

According to the article, the City Attorney takes the position that neither relationship involves a financial interest. He calls the council member at the community college a civil servant who works for the state, not the applicant-supervisor. We aren't told what he says specifically about the realtors, but it appears that he accepts that there is no financial interest involved.

The community college council member says he feels the situation "puts me in a tight position." but he doesn't plan to abstain. The realtor-council member insists he has no control over the realtor-applicant, and that his relationship would not bias his decision.

Of course it will bias his decision. And not only that, it will look to town residents as if getting appointed to the council is a matter of who you know. And if the council members decide they shouldn't look biased and decide to vote against their co-workers, it wouldn't be fair to the candidates.

There is no question that they should recuse themselves and not participate in the discussion, for the sake of their work relationship, and for the sake of preserving the public trust.

But the Pueblo ethics code is typical in limiting conflicts to those between financial interests, so that, as here, it can be legally argued that there is no conflict, when at least one of the council members even reveals his feeling of being conflicted. Limiting conflicts to financial interests goes against the gut reactions of the public and of municipal officials, as well. It replaces our sincere feelings with the distortions of legal argument where legal argument does not belong.

Robert Wechsler
Director of Research, City Ethics
[email protected]

Robert Wechsler says:

I did not include an incompatible positions clause in the model code because it is a provision that is often included elsewhere. But it may, at least in some instances, belong in an ethics code.

One instance came up recently in Shelton, Connecticut, not far from where I live. According to an article in the Shelton Weekly, the Board of Alderman president is preparing a complaint for the Board of Ethics against an alderman who became Democratic registrar of voters. The argument is that this alderman, when he runs for office, will have an advantage over other candidates, because he has access to voting machines and absentee ballots, and can be in polling places, whereas other candidates have to stay outside. But the town charter clearly excepts aldermen from the rule against holding two positions.

Should an ethics code prevent this sort of political conflict? And how would this reasoning apply to other positions conflicting with one another?

Robert Wechsler
Director of Research, City Ethics
[email protected]

Robert Wechsler says:

Too much emphasis is put on whether an official or employee gains personally from a transaction or decision. A financial interest does not have to be that direct.

Take an example from Franklin, Tennessee. According to a recent article, the mayor, who works for a developer, approved a public road that would benefit that developer. He said he didn't see any conflict, because he didn't gain personally. Only his employer gained.

I see this all the time. To argue this, even if the city or state's law does not explicitly make it a conflict, is to ignore the principal purpose of an ethics code: to instill trust in government, to make its decisions seem impartial, so that people do not believe the government is run for the benefit of those who run it, rather than in the public interest. Because when people believe government is not for the people, they will turn their backs on government, and our cities will be that much less democratic.

Robert Wechsler
Director of Research, City Ethics
[email protected]g

Robert Wechsler says:

In my comments to this section, I wrote, 'An official or employee who is forced to recuse himself or herself on a regular basis should resign from his or her position. This should also be taken into account when a position is accepted.'

Here is language to deal with this problem: 'An official or employee may not have an interest that will create a continuing or frequently occurring conflict with his or her governmental obligations.'

This issue often comes up with respect to developers and contractors, or those who represent them. But it can come up in a number of contexts, especially where someone is chosen for very specific expertise. For example, in Naples, Florida, according to an article in the Naples News, some people have questioned having the owner of an airport-based business on the Naples Airport Authority, even though he sometimes recuses himself. The local ethics rule does, however, allow him to participate otherwise in discussions.

Some council members like having him on the airport board because he understands the issues and stands up to the law firms that some say run the Authority and profit from its business the most.

This is understandable. But someone with such expertise who is willing to offer his services as a volunteer can serve in other capacities, such as an adviser to the council or to individuals on the board. He can also speak out as a private citizen, stating, of course, his particular interests.

The bottom line is that someone who runs for or accepts a position does so as a representative of the community. An official who must recuse himself or herself on a regular basis, cannot effectively represent the community, and should resign. There are many other positions in which an individual can serve without there being a conflict.

Robert Wechsler
Director of Research, City Ethics
[email protected]

Visitor (not verified) says:

we have a County Commissioner who is now running for Commissioner President who is a lawyer.
He practiced with a law firm that most of its business was development and land issues.
After one ethics compliant he was advised to separate from that law firm.
Now he 'rents' space in the same office suite, shares the same PO box, secretary and staff. The developers and builders go in and out of this law firm constantly.

Isn't this an ethics violation?

Robert Wechsler says:

What you have described is, essentially, what is known as a "firewall." A firewall is a setup whereby an official separates himself from activities that would give rise to conflicts of interest that would prevent him from participating in certain matters or, if there are many such matters, holding the government position at all. Usually, with respect to lawyers, a lawyer-official will say that he will have no communication with his colleagues dealing with such matters and will receive no compensation from such matters.

In this case, the lawyer has apparently gone further. He has left the firm in the legal sense, but stayed in the same physical space, making use of the same staff. If he was a partner, he will likely not receive any compensation from the firm's clients anymore, which is good. But will he continue to represent the clients? Representing clients, even in matters that do not involve the government, can give rise to conflicts of interest.

The terms of the arrangement with the firm are important, with respect to current money and work, and with respect to the future (is there a guarantee that he will come back as a partner, which would mean expectations of representing the same clients and sharing in profits made from them?).

Another important question is, will he still be involved in, including as an advisor or consultant, in any of the matters, and will he share any of the confidential information he will have as a government official? It doesn't matter that the clients are visiting the same space. What matters is whether he talks to them or to lawyers who represent them.

I don't like firewalls because they're based on trust. Government ethics is about gaining trust, not assuming that an official deserves to be trusted. The public can only go by what it sees, and what it sees is a lawyer who has only partially separated himself from his colleagues. Even if people believe that the lawyer is talking to no one involved with matters that come before him, will people trust that the lawyer is not using his position and confidential information to help his firm (and therefore his future self) and his former and possibly future clients (and therefore his future self)?

Better than a firewall is the withdrawal of a lawyer-official from any matter involving one of his firm's clients. If that means too many important matters, the lawyer should not be holding that government position.

For more on firewalls, see the section of my book Local Government Ethics Programs on this topic.

inquirer says:

I am curious what the forum thinks about an instance where a conflict is quite remote due to the presence of a parent corporation and a subsidiary.

For instance, if a member of a municipal board votes to approve a purchase from a parent company while that board member's spouse serves as an officer in a subsidiary of that parent company, could it be said that the conflict is too remote and the connection is too tenuous to impair the board member's judgment? Specifically, if the purchase is presented to the board member as being from the parent company only, how could the member know whether this would even benefit the subsidiary- and in turn the spouse (except perhaps in the abstract)?

Robert Wechsler says:

This is the kind of situation where it is important to seek ethics advice or a waiver.

Parent-subsidiary situations vary greatly. Some can be very remote and require no withdrawal, while in other situations the parent-subsidiary relationship is very close, say, for a local developer who creates a different subsidiary (or other sort of related company) for each project. Considerations include how local the parent and subsidiary are, how related their businesses are, what their legal and de facto relationships are, and whom the spouse reports to.

In any of these situations, it is best to seek ethics advice and disclose the relationship, explaining that a neutral ethics officer, if possible (a city or county attorney may be seen as biased to one of its "clients"), has said that the relationship requires withdrawal or is too remote to require withdrawal.

It doesn't matter whether the spouse's subsidiary would directly benefit from the transaction. What matters is the spouse's relationship with the contractor, which would certainly benefit.

What is unusual about your hypothetical is that, in most cases, it is subsidiaries that bid for contracts, not parents. If the spouse works for a different subsidiary, the relationship is likely to be more remote than in the hypothethical. But if the spouse works for the parent, the relationship may be less remote. In fact, if the subsidiary is local, there is a likelihood that the local spouse has a closer relationship with it than most parent employees.

Donna (not verified) says:

Should the city manager/municipal clerk (which is a paid position) also fill the position of treasurer? We are a small city population 485.