A Contentious Conflict Situation in Kansas City, KS

Some very interesting issues arise out of a past (and present) conflict situation that has become an issue in this week's mayoral primary in the Unified Government of Wyandotte County and Kansas City, KS ("UG").

The conflict situation appears simple at first glance, but it is not. In 2007, a UG commissioner became the paid executive director of the Argentine Neighborhood Development Association ("ANDA"), a nonprofit Community Development Corporation and Community Housing Development Organization that has received funds from the UG. The executive director was paid, at least partially, out of those funds.

Ethics Advice
The commissioner did the right thing by quickly seeking ethics advice. The UG has an ethics administrator who provides written advisory opinions, which are public, by request. A copy of the advisory opinion is attached (see below). Its conclusion is as clear as can be:

While serving as a member of the Unified Government Board of Commissioners it would be a violation of the Code of Ethics for [the] Commissioner ... to be personally compensated as part of a contract with the Unified Government.

I advise the officials of the Unified Government against executing the proposed contract.

According to an article in the Kansas City Star on Thursday, the commissioner said that in 2007 she "voted for budgets that allocated those dollars. She said an opinion from the Unified Government’s ethics administrator at the time said she could." Unless there is another advisory opinion, her voting wasn't the issue; it was her compensation from UG funds. Therefore, her portrayal of the advice is not accurate.

According to the article, the commissioner says that she also sought ethics advice from the state ethics agency. This advice "concluded that [the commissioner] must abstain from acting on any contract between the Unified Government and ANDA, although she could participate in 'legislative and administrative decisions' affecting the community organization. Even though the state ethics panel said she could legally vote on some matters involving ANDA, it said doing so could 'foster an appearance of impropriety.'"

I do not believe that a local official should be permitted to forum shop for ethics advice. In a local government that actually has a professional, independent, and highly knowledgeable ethics adviser as the UG did at the time, an official should accept that adviser's opinion or appeal it to the ethics commission, if that is permitted. She should not go looking for better advice.

As for the state advice, it appears to have made clear to the commissioner that her involvement with funding of ANDA would foster an appearance of impropriety, even if some aspects of participation may be legal. When the impropriety of her conduct is raised, an official who acted solely on the issue of legality has no right to raise an objection. She knew that her participation would appear improper, and yet acted anyway.

In addition, the county attorney "cleared" the commissioner and ANDA to get state funds. Too many people were involved in providing ethics advice, all of it contradictory.

The best way to look at the commissioner's conflict situation is presented in the Star article by a former commissioner. She said that at times it was confusing whom the commissioner was representing at meetings — ANDA or the Unified Board of Commissioners. That simply cannot be allowed.

The Other Conflict
Before I get into the aspects of the conflict situation that both the local and state ethics advisers dealt with, I want to speak to the other aspect of the situation:  the fact that a district representative manages a development association for a neighborhood that does not appear to be co-extensive with her district. In other words, it is her job to bring funds into one area of her district. Therefore, her two roles conflict on an ongoing basis. A district representative is expected to represent all the areas of her district.

This is the sort of conflict that most ethics codes ignore and that it can be difficult for an ethics administrator to provide advice on. The reason is that it is essentially a political conflict, a conflict involving representation, not a conflict that involves only personal interest. But it is an important conflict, and an elected official who puts herself in this conflict situation should discuss it openly at a public forum in her district, asking people from various parts of her district what they think. If there is opposition, she should not accept the job.

I should add that it would take an unusual politician to do this. I am talking about best practices, not what actual officials ordinarily do.

Removing the Conflict
Although I do not consider it a best practice (see below), the UG ethics code, like many ethics codes, prohibits conflicts:

(a) Except as provided in this section, no unified government representative shall have a substantial interest in or engage in any of the following activities: . . .

(3) Any business entity that is receiving public grant money or funds directly from the unified government or as a pass through from state or federal agencies;

Apparently, due to the commissioner's situation, the definition of "business entity" was broadened in 2009 to include nonprofits. But it would have been reasonable for the ethics administrator to include nonprofits in this definition back in 2007, since it makes no sense to distinguish between officials paid by profit-making or nonprofit corporations for the purpose of determining their personal interest.

In his advisory opinion, the ethics administrator recognized this prohibition of conflicts of interest, as well as the ethics code's prohibition against using the prestige of one's office for one's private gain. However, instead of telling the commissioner she should resign either from the commission or ANDA in order to remove her conflict, he told the government not to execute the contract with ANDA.

Which of these is the best way to handle the conflict situation? Cutting off the funds to ANDA puts the commissioner in an uncomfortable position. If she retains her ANDA job, there won't be sufficient funds to pay her (but she could continue to serve as a volunteer). If she resigns from her ANDA job, then ANDA can get the grant. So far, so good.

But let's say the commissioner keeps her job and finds another source of funding that would be said to pay her salary, and then she goes back to the city for funds, which would be said not to pay her salary. The problem is that everyone knows money is fungible, and that in effect the city would be paying at least part of the commissioner's salary. The result would be a possibly legal, but unacceptable fudge. In fact, this is effectively what happened (see the next section of this post). The ethics administrator's advice, wise as it appeared, left an open loophole.

None of these problems would arise if the commissioner was required to choose between her position and her job. If she resigned from her position, she could participate in the matter only as the ANDA director. If she resigned from her job and could not accept it later, she could participate in the matter as a commissioner who has sacrificed her job to remove the conflict.

This latter means of curing the conflict is made more attractive by considering the "other conflict," that is, the fact that the commissioner's hats do not cover the same constituents, that she serves people outside the Argentine neighborhood. This problem is not cured by cutting off funds from the city to ANDA.

Legal Solutions to Ethics Problems
What actually happened was a clever way of taking advantage of the loophole left by the local ethics advice. According to the Star article, "the commission pass[ed] a new ethics policy that barred [the commissioner] from voting on budgets benefitting her nonprofit group. The new policy forced ANDA to create a separate entity to receive Unified Government money to pay for an office manager. [The commissioner] cannot be part of that new organization."

This is fudging at its worst. The reason for the fudging is the limited view of conflicts that considers only direct financial gains. This is a common problem in government ethics programs. It is part of a bigger problem, that is, the problem of not taking into account public perceptions.

The public sees it like this. An individual becomes a commissioner and quickly becomes the paid director of a community development company that depends on government funding, which comes from her commission. Whether the company is profit-making or not makes no difference. It is seeking government funds and its director is on the commission that approves them. Whether the company breaks into two or twenty different corporations doesn't matter. In fact, breaking up for the express reason of allowing the commissioner to keep her job and keep helping the company(ies) get funding looks like a sneaky way to accomplish what the law prohibited.

In other words, it is a legal solution to an ethics problem. The conflict is not removed, and the public's trust is not improved the way it would have been if the commissioner had been required to remove the conflict entirely.

Withdrawal
Another important question with respect to this conflict situation is whether to treat the conflict situation as illegal and remove it, or whether to treat the conflict situation as curable through the commissioner's partial or complete withdrawal from participation in matters involving ANDA.

I believe that ethics codes should not prohibit most pre-existing conflicts. It is important to recognize that officials have other relationships and obligations, and that instead of ending these relationships and obligations, the principal goal of government ethics is to get officials (1) to deal responsibly with conflict situations that arise from them, usually through withdrawal from participation, and (2) to prevent new relationships that give rise to conflict situations, such as gifts or new jobs.

However, when a conflict situation involves a high-level official — a mayor, legislator, manager, department head, or member of an important body, such as a planning commission or contract approval board — withdrawal is often insufficient. A high-level official's influence over her colleagues and subordinates is seen as too great to allow withdrawal to allay the public's suspicions that she is pulling strings behind the scenes or that her colleagues are sympathetic to her needs, due to personal relationship or because governing involves exchanging favors. This is especially true when the conflict involves the official's business or job.

It's important, in the UG case, to acknowledge that the commissioner did not have the conflict when she entered public service. She took the job soon after (she had been a volunteer before), creating the conflicting obligations of a leader and a paid employee. It is much easier, and more fair, to prevent such new conflicts from existing than it is to require officials to totally abandon old relationships or jobs.

Therefore, I believe that in this case withdrawal was and still is insufficient. And yet, despite the advice of the ethics administrator, much of the talk in the Star article is about whether or not the commissioner should have been permitted to vote. There is also talk of transparency and honesty, which are irrelevant. This talk misses the point altogether. The issue is the same as it was in 2007: removing the conflict.

Robert Wechsler
Director of Research-Retired, City Ethics

---