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Conflicts and Money
Thursday, December 2nd, 2010
Robert Wechsler
According to an
Associated
Press article yesterday, a New York City school principal
"didn't think there was a conflict of interest because there was no
exchange of money."
According to an article in the Salmon Arm (B.C.) Observer yesterday, a town councillor argued against a relationship being a conflict as follows: "If I was taking a financial look at this, it would probably have a negative impact. It’s probably going to take [my business partner] away from our business, just as council takes me away from it.”
In other words, money is at the center of how many local government officials view conflicts of interest.
This isn't really their fault. Many ethics codes refer only to "financial interests," as if money was all that matters. And officials usually get insufficient ethics training, if they get any at all.
The NYC school principal hired his baby sitter as a parent coordinator and let her live rent-free in his home. So yes, there was no exchange of money. But there are two problems here: special consideration and, it appears, a financial benefit.
The principal showed special consideration in two ways, (i) by hiring someone who both worked for him and lived in his home, and (ii) by giving a school employee rent-free housing.
Second, the principal cleverly managed not to exchange money, and yet still get a financial benefit. The deal appears to have worked like this: the principal gave the baby sitter rent-free housing, which cost the principal nothing and gave him a live-in baby sitter, while the city paid the baby sitter's salary.
But even if there were no financial benefit through not having to pay a baby sitter, this would still be an instance of special consideration and of using one's office to get a job for someone in one's household, who is working for the official. In other words, even if all the benefits went to the baby sitter, and she earned every penny she got, it would still be an ethics violation.
The town councillor's situation is more complex. He co-owns a financial planning and insurance company with the site manager of a company seeking a permit to hold a big "motorcycle and music extravaganza" in Salmon Arm. The councillor fully participated in what appears to have been a controversial decision.
Not only does he say that allowing the event will hurt his business by taking his partner away from it, he also insists he has no relationship with the event company, that he doesn't have much to do with his partner socially, that his partner is promoting the event as an individual, separate from the insurance business, and that he's disappointed that people are questioning his integrity.
With all of this, nothing about how it appears to the public when a councillor is involved with an event involving his business partner's other business.
As it turns out, the councillor supports holding the event, but which side an official is on is irrelevant to whether there's a conflict that requires him to withdraw from the matter. If he supports it, it looks like he's helping his partner. If he opposes it, it looks like he's helping his own business at his partner's expense, which may not help relations with his partner much. In short, by participating, he threatens his relationship with the public or with his partner, depending on what he does. Why would anyone want to do this when he can simply withdraw from the matter and make everybody happy?
Conflicts are not about money, they're about trust. And trust is earned by dealing responsibly with an apparent conflict rather than defending your refusal to deal with it by saying no money was exchanged or that you don't have a financial interest in the company involved.
Robert Wechsler
Director of Research-Retired, City Ethics
---
According to an article in the Salmon Arm (B.C.) Observer yesterday, a town councillor argued against a relationship being a conflict as follows: "If I was taking a financial look at this, it would probably have a negative impact. It’s probably going to take [my business partner] away from our business, just as council takes me away from it.”
In other words, money is at the center of how many local government officials view conflicts of interest.
This isn't really their fault. Many ethics codes refer only to "financial interests," as if money was all that matters. And officials usually get insufficient ethics training, if they get any at all.
The NYC school principal hired his baby sitter as a parent coordinator and let her live rent-free in his home. So yes, there was no exchange of money. But there are two problems here: special consideration and, it appears, a financial benefit.
The principal showed special consideration in two ways, (i) by hiring someone who both worked for him and lived in his home, and (ii) by giving a school employee rent-free housing.
Second, the principal cleverly managed not to exchange money, and yet still get a financial benefit. The deal appears to have worked like this: the principal gave the baby sitter rent-free housing, which cost the principal nothing and gave him a live-in baby sitter, while the city paid the baby sitter's salary.
But even if there were no financial benefit through not having to pay a baby sitter, this would still be an instance of special consideration and of using one's office to get a job for someone in one's household, who is working for the official. In other words, even if all the benefits went to the baby sitter, and she earned every penny she got, it would still be an ethics violation.
The town councillor's situation is more complex. He co-owns a financial planning and insurance company with the site manager of a company seeking a permit to hold a big "motorcycle and music extravaganza" in Salmon Arm. The councillor fully participated in what appears to have been a controversial decision.
Not only does he say that allowing the event will hurt his business by taking his partner away from it, he also insists he has no relationship with the event company, that he doesn't have much to do with his partner socially, that his partner is promoting the event as an individual, separate from the insurance business, and that he's disappointed that people are questioning his integrity.
With all of this, nothing about how it appears to the public when a councillor is involved with an event involving his business partner's other business.
As it turns out, the councillor supports holding the event, but which side an official is on is irrelevant to whether there's a conflict that requires him to withdraw from the matter. If he supports it, it looks like he's helping his partner. If he opposes it, it looks like he's helping his own business at his partner's expense, which may not help relations with his partner much. In short, by participating, he threatens his relationship with the public or with his partner, depending on what he does. Why would anyone want to do this when he can simply withdraw from the matter and make everybody happy?
Conflicts are not about money, they're about trust. And trust is earned by dealing responsibly with an apparent conflict rather than defending your refusal to deal with it by saying no money was exchanged or that you don't have a financial interest in the company involved.
Robert Wechsler
Director of Research-Retired, City Ethics
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