You are here
Narrow and Vague Ethics Code Definitions of "Doing Business"
Monday, January 12th, 2009
Robert Wechsler
The Baltimore mayor's attorney has, only days after his client was
indicted, given a course to drafters of local government ethics codes
on how not to define "doing business" with a local government.
The mayor's attorney, in a press conference, pointed out that Section 2-5 of the Baltimore Ethics Code defines "business with the city" very narrowly, in terms of public officials' annual gift disclosures:
The term "business with the city" appears in the gift disclosure provision, Section 7-23 (as well as other disclosure provisions irrelevant to this case):
Section 7-23 adds the concept "person," without defining which persons would be considered to be doing business with the city, that is, whether just the entity, or also its owner or director or executive or shareholder (of how much stock), etc. This leaves it unclear whether a particular individual is doing business with the city. And it is usually individuals that give gifts.
This problem is dealt with in Section 7-1(d):
This is meant to provide public officials with an annual list of entities whose gifts to them must be disclosed. Such a list is very helpful. However, this provision does nothing to clarify which individuals associated with such entities, if any, are considered persons doing business, so that their gifts too must be disclosed. This leaves it open for public officials to not disclose gifts from individuals, especially those who are less than owners, or major partners, of such entities. By confirming that it is entities rather than individuals that are important for disclosure, this provision further narrows the scope of gift disclosure requirements.
In any event, according to the mayor's attorney, the Board of Ethics does not have such a list on file. He takes this as letting public officials off the hook, disclosure-wise.
There are some lessons to be learned from this. First, don't define doing business so narrowly, and recognize what it means when ethics codes do. Baltimore's definition is extremely narrow, to the point of absurdity. What does it matter to disclosing gifts if a long-term contract was entered into the year before or will be signed next month? Why leave it ambiguous whether or not gifts from individuals must be disclosed?
Such a narrow and vague definition undermines the purpose of the provision and sends a strong message that the code's drafters did not really care very much about disclosure, and cared nothing about officials taking gifts from those who do business with the city.
Second, when you require, in an ethics code, that information be collected and made accessible, there has to also be a way for an ethics program to ensure that this is done. The disclosure provisions depend on the availability of this information. And yet the information comes from the city administration. This leaves the ethics commission dependent on the administration that is supposed to be subject to its authority. There is an inherent conflict of interest in this setup.
In addition, such a list should be dealt with administratively rather than legislatively. If you must include the process in an ethics code, make it one of the ethics commission's powers, but not a duty, since it's out of the ethics commission's control.
One final note. The mayor's attorney emphasizes that the mayor is clearly innocent, because she has not been accused of bribery, which is the essential criminal act involving gifts to government officials. He's right and he's wrong. Bribery is the essential criminal act involving gifts, but it is not the essential act in government ethics. In government ethics, there does not need to be a clear relationship between gift and action. A gift from someone doing business is wrong on its face, because it creates the impression that government officials are being bought, and this undermines the public's belief in a fair, unbiased government.
This is why merely disclosing gifts from people doing business is of little or no value. It creates transparency, which might lead some people doing business not to give gifts directly to government officials, but gifts will still be given. In addition, information will be available for the news media to feed the public's skepticism concerning government officials. Better to limit or get rid of such gifts than to simply have them disclosed.
Robert Wechsler
Director of Research-Retired, City Ethics
---
The mayor's attorney, in a press conference, pointed out that Section 2-5 of the Baltimore Ethics Code defines "business with the city" very narrowly, in terms of public officials' annual gift disclosures:
(a) “Business with the City” means any
1 or combination of sales, purchases, leases, or contracts to, from, or
with the City or any agency that:
(1) is made or entered into during the
reporting period for which a disclosure statement is required by
Subtitle 7 {“Financial Disclosure”} of this article;
and
(2) involves consideration of $5,000 or more on a cumulative basis.
(b) Determining consideration. For purposes of this section, the
total consideration committed to be paid as of the award or execution
of a contract or lease, to the extent then ascertainable, is included,
regardless of the period over which payments are to be made.and
(2) involves consideration of $5,000 or more on a cumulative basis.
The term "business with the city" appears in the gift disclosure provision, Section 7-23 (as well as other disclosure provisions irrelevant to this case):
(b) In general. The [official's annual financial] statement
must include a schedule of each significant gift that was, at any time
during the reporting period:
(1) accepted by the public servant or
by any other person at the direction of the public servant; and
(2) given by or on behalf of, directly or indirectly, any person that was:
(2) given by or on behalf of, directly or indirectly, any person that was:
(i) a lobbyist;
(ii) a person regulated by the City; or
(iii) a person doing business with the City.
(ii) a person regulated by the City; or
(iii) a person doing business with the City.
Section 7-23 adds the concept "person," without defining which persons would be considered to be doing business with the city, that is, whether just the entity, or also its owner or director or executive or shareholder (of how much stock), etc. This leaves it unclear whether a particular individual is doing business with the city. And it is usually individuals that give gifts.
This problem is dealt with in Section 7-1(d):
(1) The Finance Director must annually
certify to the Ethics Board a list of all business entities doing
business with the City.
(2) The Ethics Board must keep this list on file and available to all persons subject to this subtitle.
(2) The Ethics Board must keep this list on file and available to all persons subject to this subtitle.
This is meant to provide public officials with an annual list of entities whose gifts to them must be disclosed. Such a list is very helpful. However, this provision does nothing to clarify which individuals associated with such entities, if any, are considered persons doing business, so that their gifts too must be disclosed. This leaves it open for public officials to not disclose gifts from individuals, especially those who are less than owners, or major partners, of such entities. By confirming that it is entities rather than individuals that are important for disclosure, this provision further narrows the scope of gift disclosure requirements.
In any event, according to the mayor's attorney, the Board of Ethics does not have such a list on file. He takes this as letting public officials off the hook, disclosure-wise.
There are some lessons to be learned from this. First, don't define doing business so narrowly, and recognize what it means when ethics codes do. Baltimore's definition is extremely narrow, to the point of absurdity. What does it matter to disclosing gifts if a long-term contract was entered into the year before or will be signed next month? Why leave it ambiguous whether or not gifts from individuals must be disclosed?
Such a narrow and vague definition undermines the purpose of the provision and sends a strong message that the code's drafters did not really care very much about disclosure, and cared nothing about officials taking gifts from those who do business with the city.
Second, when you require, in an ethics code, that information be collected and made accessible, there has to also be a way for an ethics program to ensure that this is done. The disclosure provisions depend on the availability of this information. And yet the information comes from the city administration. This leaves the ethics commission dependent on the administration that is supposed to be subject to its authority. There is an inherent conflict of interest in this setup.
In addition, such a list should be dealt with administratively rather than legislatively. If you must include the process in an ethics code, make it one of the ethics commission's powers, but not a duty, since it's out of the ethics commission's control.
One final note. The mayor's attorney emphasizes that the mayor is clearly innocent, because she has not been accused of bribery, which is the essential criminal act involving gifts to government officials. He's right and he's wrong. Bribery is the essential criminal act involving gifts, but it is not the essential act in government ethics. In government ethics, there does not need to be a clear relationship between gift and action. A gift from someone doing business is wrong on its face, because it creates the impression that government officials are being bought, and this undermines the public's belief in a fair, unbiased government.
This is why merely disclosing gifts from people doing business is of little or no value. It creates transparency, which might lead some people doing business not to give gifts directly to government officials, but gifts will still be given. In addition, information will be available for the news media to feed the public's skepticism concerning government officials. Better to limit or get rid of such gifts than to simply have them disclosed.
Robert Wechsler
Director of Research-Retired, City Ethics
---
Story Topics:
- Robert Wechsler's blog
- Log in or register to post comments
Comments
Carla (not verified) says:
Mon, 2009-01-12 20:46
Permalink
great article; most cities do not think this through and end up with ridiculous provisions. It is worse to have an ethics code that gives people the impression that there are guidelines, when there really aren't. That erodes trust even more.