making local government more ethical

Enforcing Ethics Laws Against Contractors: Quickest Is Not Always Best

It is important to bring contractors into an ethics program, requiring them to disclose gifts their employees make to officials, and to deal responsibly with possible conflicts they are aware of. Businesses tend to deal with such things internally. Bringing them into an ethics program requires them to recognize that dealing with conflict situations internally is not enough.

The fact is that most ethics programs do not place sufficient requirements on contractors. Often, ethics programs have no jurisdiction over them or no enforcement powers. This means that contractors have nothing to fear from dealing irresponsibly with conflict situations or even from making gifts to officials. Or it means that enforcement is left in the hands of officials, thereby politicizing enforcement.

The latter is what occurred in Chicago, according to an article in yesterday's Chicago Tribune. When, last week, the Tribune got hold of a letter mentioning an internal investigation of possible ethical misconduct by the employee of a company that has operated Chicago's red-light camera program since 2003 (the conduct involved a gift to the principal official overseeing that program), the city's chief procurement office quickly went to work, without handing the matter over the city's ethics board.

Why? Because there is currently a bid for another red-light camera program, and the company is bidding on this one, too. Putting off the bidding while the matter is dealt with by the ethics program might make it impossible to go ahead with the controversial program when the process is complete. The mayor does not want to take this chance.

The company's internal investigation determined that, two years ago, an employee had paid a $910 hotel tab for the official who oversaw the red-light program (he has since left government service). This is a clear but relatively minor violation of the city's ethics code. A more serious problem is that the company, despite being fully aware of what occurred, did not disclose the gift to the ethics board. And there is a question about a Chicago subcontractor, who is a friend of the official, getting $570,000 in commissions for installing red-light cameras.

So, rather than letting this matter go through the ethics enforcement process, the chief enforcement officer (apparently with the mayor's full support) decided to reject the company's bid for the new contract, while letting it manage the current program. He said, "I find that Redflex's failure to timely report this incident to the city is unacceptable behavior and is a failure by Redflex to act in the city's best interest." The good and unusual part of this quote is that the chief procurement officer recognized that a contractor, like an official, should act in the city's best interest, not solely in its own interest, which was keeping the matter under wraps.

Although the former Chicago official says that he inadvertently accepted payment for the hotel (he was attending baseball spring training), the company quickly admitted its responsibility for not reporting the illegal gift (referring to it as "a single isolated incident"). The problem is that it's hard to believe this. It's clear that the company takes these matters seriously; in fact, it also overhauled its expense reporting policies and sent the employee, an executive vice president, to "anti-bribery training." What the company doesn't take seriously is its responsibility to the governments it contracts with.

As with so much ethical misconduct, there is more to the story. The former official who accepted the hotel room left Chicago's government to be a consultant to the Traffic Safety Coalition (TSC). TSC is partially funded by the Chicago contractor and it is run by a "longtime political ally of the mayor." According to the article, TSC supported the mayor's successful push last year to expand the city's red-light camera program.

Punishing someone makes it look like you're being serious. But it is more serious to let an independent ethics program deal with situations such as this. The result might be the same, less strict or more, including a rebid of the current contract. Whatever the decision, it would not be seen not as politically motivated, but as the decision of an independent board (or it would if the board's members had not all been chosen recently by the current mayor, yet another reason why this was not a good thing to do).

Robert Wechsler
Director of Research, City Ethics