making local government more ethical
It all started with the indictment, on charges of bribery and theft, of a Fats, Oil & Grease inspector back in November 2010. It led to an 83-page grand jury report in August 2013, which set out the misconduct involving the DeKalb County (GA) Department of Watershed Management (DWM) procurement process, and made recommendations not only for indictments, but also for an improved ethics program. The story that the grand jury tells in its report is a classic case of institutional corruption in a procurement context, relating to a division of the Public Works department and a large construction project. Just about every procurement-related ethics violation occurred, and many people were involved or knew what was going on.

There is usually another side of the coin, and that other side is often ignored in drafting a government ethics code. The other side of the nepotism coin came up recently in an ethics proceeding in Stamford, CT.

According to an article this week in the Stamford Advocate, a former finance board member filed an ethics complaint against a former colleague, who still sits on the finance board, for intervening to help a cousin, and member of her household (which in Stamford is considered "immediate family"), who is a city employee.

One piece of evidence provided by the complainant is that the respondent e-mailed the mayor after learning that the complainant, then a finance board member, was seeking to reorganize the department where the respondent's cousin worked, which might have meant the cousin losing her job. The e-mail included the following:
"It was like dandelions. You just accept them. They were there, something you've seen all your life."

Dandelions are a perfect metaphor for institutional corruption. In this case, the dandelions were extra payments (beyond those due to retirees) made by Detroit's two pension funds, to active employees (54%), retirees (14%), and the city itself (32%), the latter to lower annual contributions to the funds, according to a front-page article in today's New York Times. The extra payments totaled almost $2 billion over 23 years. The quote is from Detroit's former independent auditor general, Joseph Harris.

Why would pension boards hand out payments to active employees? May it have had something to do with the fact that the boards were controlled by government employee unions? Back in 2008, I wrote a blog post which dealt with this issue. The post talks about whose property a pension fund is:  that of the employees who will be paid from it or of the citizens whose money is being spent? In good times and when pension board trustees are acting responsibly, the citizens have little to lose. But in bad times and when pension board trustees are acting irresponsibly, not only is the citizens' money wasted, but they may find themselves paying extra money of their own.

Yesterday, a felony complaint was issued against William Rapfogel, the CEO of the Metropolitan Council on Jewish Poverty, a large nonprofit social service agency that received millions of dollars in grants and contracts from New York City, New York state, and the federal government. One of the charges is that the nonprofit made large campaign contributions to city and state candidates through its insurance company (and the company's officers and employees), using money from overcharges on insurance policies (part of this money also went, as kickbacks, to Rapfogel and others).

In New York State, nonprofits are not permitted to make campaign contributions. Nor is it legal for an individual or corporation to make campaign contributions through someone else (known as a "straw donor").

There is a great deal of misunderstanding concerning the difference between a conflict of interest and a gift. It appears that most people consider them two completely different things. In fact, they represent two kinds of conflicts, pre-existing conflicts and conflicts that are created by an event. The confusion between the two characterizes a situation that led to an ethics complaint in Los Angeles.

According to an article on the KPCC public radio site, from January to May this year, a son of interim general manager of the Los Angeles Department of Building and Safety had a paid internship (while in law school) with the lead law firm representing the developer of a huge project known as the Millenium Towers. The complaint against the general manager characterized the issue as a conflict of interest, and two published reports of the matter do the same (but a comment does suggest it was a gift). However, the general manager was involved in the matter several months before his son was hired by the law firm. There was no pre-existing conflict or relationship, only the hiring of a family member after the law firm and general manager were already involved in the matter.

This blog has been closely following cases where the legislative immunity defense has been used in government ethics proceedings. This week, the same issue arose with respect to an open records proceeding in Wisconsin. According to an article posted on the Madison Isthmus site yesterday, Wisconsin's attorney general has argued in an open records proceeding that a state senator is immune from a suit based on the state's open records law throughout her term in office, pursuant to state constitutional provision Article IV, Section 15, which provides that members of the state legislature "shall not be subject to any civil process, during the session of the Legislature."