making local government more ethical
One of the great things about discussions of the conflicts of interest of people in the securities world is that "fiduciary duty" is considered the basis for the rules that govern their relationship with government officials and others. In discussions of the conflicts of interest of those whom they deal with in municipal governments and those who provide other sorts of advice or products to municipal governments, "fiduciary duty" often goes unmentioned.

I say this as an introduction to a discussion of the Municipal Securities Rulemaking Board's (MSRB) draft Rule G-42, entitled "Duties of Non-Solicitor Municipal Advisors" (the MSRB's text webinar on the draft rule is attached; see below). "Municipal advisors" are the people who advise municipalities with respect to their issuance of bonds and related transactions (the definition is complex and outside the bounds of this post).

It all started with a private meeting among three members of the Orlando-Orange County Expressway Authority board, according to an article last week in the Orlando Sentinel. The subject of the informal meeting was the ouster of the executive director, which took place at the next formal meeting.

But after an investigation into the private meeting, a grand jury indicted one of the three members for bribery and soliciting compensation for official behavior. Lesson:  open meeting act violations are sometimes related to government ethics and criminal misuse of office violations.

There are three interesting issues in this one minor matter, involving a Louisiana sheriff's purchase of a house at a foreclosure sale handled by the sheriff's office.

The Application of Ethics Laws to Foreclosure Purchases
The first issue involves the transaction itself, the particular law in Louisiana, and how more common conflict laws may be interpreted in such a situation.

Louisiana has an unusual law that deals with this sort of transaction:
§1113. Prohibited contractual arrangements
A.(1) No public servant ... or member of such a public servant's immediate family, or legal entity in which he has a controlling interest shall bid on or enter into any contract, subcontract, or other transaction that is under the supervision or jurisdiction of the agency of such public servant.
One of the especially good aspects of this language is that it is not limited to situations where an official was personally involved in a transaction. The rule acknowledges that, to the public, it doesn't matter if the sheriff's deputy had handled the auction. What matters is that it was the sheriff's office. Similarly, a deputy should not be allowed to purchase property at an auction run by the sheriff or by another deputy.

Many government ethics professionals don't like waivers. I think they're valuable. Basically, they are requests for an advisory opinion in which the official recognizes that certain conduct would constitute an ethics violation, but wants a determination that he can engage in the conduct due to special circumstances. The result of such a determination is the creation of a new, narrow exception to a rule. This is a good way of preventing bad unforeseen consequences of a rule. But waivers must be given only after a public hearing.

The value of a government ethics waiver is completely different when it is not an independent ethics officer or commission who makes the determination, and when there are no special circumstances that require a new exception. In fact, a waiver given by one or more officials without a very good reason sends the message that officials won't apply ethics rules when they don't feel like it or will favor certain of their colleagues (and, if they are in need of a waiver in the future, themselves). This makes a mockery of an ethics program and undermines the public's trust.

According to a post in the Crain's Insider blog last week, the New York City council hired as deputy general counsel a lobbyist whose firm recently had been the council speaker's campaign consultant (the speaker is the leader of the NY city council, elected by its members). This raises an interesting conflict issue relating not only to hiring, but also to firms that both provide campaign services and lobby local government officials.

When a firm advises a local government official with respect to a campaign, this creates a special relationship — personal, business, and political — that creates the impression that anything that is done for the firm, its members, or its clients involves some level of preferential treatment based on this relationship. It can appear that an official owes her election to such a firm, and she can feel this way about it, too.

There is nothing more natural and, in most circumstances, ethical than a mother doing her best to help her son when he is in trouble. And yet, in most jurisdictions, there are multiple government ethics laws that prohibit this very conduct when the mother is a government official. This is as good an example as there is of the fact that government ethics is not about ethical conduct in general, but rather about government fiduciaries dealing responsibly with their conflicts of interest.

According to an article in the Eagle Tribune last week, a hearing was held by the Massachusetts ethics commission regarding a complaint against a member of the Groveland, MA board of selectmen (its governing body). She was alleged to have used her position to try to help her son, a Groveland police officer who had been placed on administrative leave.

According to the EC's press release, this otherwise commendable conduct might have violated four different ethics provisions: