making local government more ethical
According to an article in the San Francisco Chronicle last week, Oakland's council approved an amendment to the city charter, to go before voters in November, that would increase the authority of the city's ethics commission and provide it with the funds it needs to do its job. Congratulations to the council for what is, in some ways, an excellent reform package.

This ethics reform process began with a June 2013 civil grand jury report, which called for giving the city's ethics commission more authority to enforce ethics laws, and more resources with which to do it. Then, in May 2014, a working group of individuals mostly from good government-oriented civic organizations filed a report that made numerous ethics reform recommendations (see my blog post on it). The council quickly got to work on a charter amendment that contains some of the working group's recommendations.

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).

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.

Ethics reform can take the oddest forms, especially when those doing it put on blinders and consider nothing but the situation before them, thereby failing to consider best practices or, in fact, the practices of any other jurisdiction.

This is the kind of ethics reform that recently happened in Park Ridge, IL, a suburb of Chicago with 37,000 inhabitants. According to an article in the Chicago Tribune, someone filing an ethics complaint must henceforth cite a law that the respondent has violated. This is a good change. In the past, apparently, one need only say that certain conduct created an appearance of impropriety.

However, the other part of the ethics reform took the enforcement program from bad to worse. Simply focusing ethics reform on enforcement — rather than training, advice, and disclosure — is a problem. But giving high-level officials more involvement in enforcement is seriously problematic.

Another day, another grand jury report recommending government ethics reform. This report (attached; see below) comes from Orange County, NY, a county northwest of New York City, whose biggest town is Newburgh and whose most famous towns include the very different Tuxedo and Kiryas Joel.

The report criminally exonerates the county legislator who is its subject, because he did a couple things right:  he sought ethics advice from the ethics board, and he disclosed his employment with a county contractor to the county legislature's attorney (who responsibly told the legislator to seek an ethics opinion from the ethics board) and other county officials, and in his annual disclosure statement. But the report does recognize that there are still problems which should be considered by the ethics board, including (1) the legislator's vote on a project when he was in talks about employment with a contractor working on the project, and (2) the legislator's signing in to a meeting, which was chaired by a county official, as a county legislator, and then soliciting business for the contractor he had been employed by.

Despite its exoneration of the legislator, the grand jury — like many grand juries and unlike most local legislatures — took a look at the county's ethics program as a whole, making recommendations that went beyond those that would prevent the particular misconduct it was considering. However, it still made piecemeal recommendations, without any research into best practices (there is mention only of some state and nearby practices, and government ethics programs in New York state are not, on the whole, very good). Here is a list of its most important recommendations:

According to an article this week in the Sun-Sentinel, the Broward County, FL commission is discussing changes to the countywide ethics program, focusing on gifts and ethics advice.

Gift Bans
Conversations about the problems with gift bans are like Hollywood monsters:  they never die (see my 2010 blog post on the last such discussion I covered). In Broward County, the monster's roar hasn't changed.

The principal complaint is that a gift ban is just a way to trap elected officials into ethics violations. But, according to the article, no official has been charged with accepting a de minimis gift. The entrapment argument is a phony one.