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Elected Officials Doing Business Together
Tuesday, August 7th, 2012
Robert Wechsler
Should council members do business with each other or with the
mayor? Another way to put this question is, does their doing business together give rise to a
conflict of interest?
The situation that gave rise to these questions came out recently in Hoboken, NJ. According to an article in the Hudson Reporter, the then council president represented the mayor and her husband in a civil lawsuit, which was settled in late June. It is not clear whether the council president was fully paid for his services.
There is no doubt that acting as someone's lawyer creates a special relationship. And providing free legal services is a substantial gift. But are these the sort of relationships and gifts that government ethics programs are supposed to prevent?
The Law: Prejudicing Judgment
The relevant New Jersey law (N.J.S.A. 40A:9-22.5) reads, "No local government officer or employee shall undertake any employment or service, whether compensated or not, which might reasonably be expected to prejudice his independence of judgment in the exercise of his official duties."
According to this language (which is typical, but wrongheaded), it would appear that the council president, but not the mayor, violated the state ethics code. The fact that the mayor would not be in violation, even though, as the more senior official, he is even more responsible for creating the situation, shows that this provision was not intended to deal with this situation. The employment contemplated by the provision was not that between officials, but that between an official and someone seeking a benefit from the local government.
Special Relationships
Yes, the mayor may be seen as trying to prejudice the council president's independence of judgment by giving him a legal job, or if the council president provided free legal services, he could be seen as trying to prejudice the mayor's independence of judgment. But politicians are always trying to persuade each other, form bonds and factions, compromise, support, and attack. Conflict laws are intended to prevent the creation of special relationships between officials and those seeking benefits. Special relationships between officials at the same level (as opposed to supervisors and employees) are common and acceptable.
Well, they're acceptable except when individuals, usually from another party or faction, try to use poor conflict of interest language like New Jersey's to make it look like the officials are in violation of the law. Then people wonder if such relationships are indeed acceptable. Another Hudson Reporter article wonders aloud if this controversy might create enough of a crack to make the difference in the upcoming mayoral election, referring to the situation as "an accidental violation." In fact, it's not a violation at all. The politically advantageous raising of this issue turns out to have prejudiced the independent judgment of the reporter.
The Real Problem with Doing Business Together
Personally, I think it's best that council members and mayors not ask each other to represent them or provide other services or products to each other. It's best that they relate as representatives, and not as business partners, clients, or customers. One problem not mentioned in the articles and blog posts I read is that business relations between officials could be used to launder campaign funds, bribes, or kickbacks. If no money is supposed to pass between officials, any money that does creates a paper trail that makes it harder to criminally conspire.
Robert Wechsler
Director of Research-Retired, City Ethics
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The situation that gave rise to these questions came out recently in Hoboken, NJ. According to an article in the Hudson Reporter, the then council president represented the mayor and her husband in a civil lawsuit, which was settled in late June. It is not clear whether the council president was fully paid for his services.
There is no doubt that acting as someone's lawyer creates a special relationship. And providing free legal services is a substantial gift. But are these the sort of relationships and gifts that government ethics programs are supposed to prevent?
The Law: Prejudicing Judgment
The relevant New Jersey law (N.J.S.A. 40A:9-22.5) reads, "No local government officer or employee shall undertake any employment or service, whether compensated or not, which might reasonably be expected to prejudice his independence of judgment in the exercise of his official duties."
According to this language (which is typical, but wrongheaded), it would appear that the council president, but not the mayor, violated the state ethics code. The fact that the mayor would not be in violation, even though, as the more senior official, he is even more responsible for creating the situation, shows that this provision was not intended to deal with this situation. The employment contemplated by the provision was not that between officials, but that between an official and someone seeking a benefit from the local government.
Special Relationships
Yes, the mayor may be seen as trying to prejudice the council president's independence of judgment by giving him a legal job, or if the council president provided free legal services, he could be seen as trying to prejudice the mayor's independence of judgment. But politicians are always trying to persuade each other, form bonds and factions, compromise, support, and attack. Conflict laws are intended to prevent the creation of special relationships between officials and those seeking benefits. Special relationships between officials at the same level (as opposed to supervisors and employees) are common and acceptable.
Well, they're acceptable except when individuals, usually from another party or faction, try to use poor conflict of interest language like New Jersey's to make it look like the officials are in violation of the law. Then people wonder if such relationships are indeed acceptable. Another Hudson Reporter article wonders aloud if this controversy might create enough of a crack to make the difference in the upcoming mayoral election, referring to the situation as "an accidental violation." In fact, it's not a violation at all. The politically advantageous raising of this issue turns out to have prejudiced the independent judgment of the reporter.
The Real Problem with Doing Business Together
Personally, I think it's best that council members and mayors not ask each other to represent them or provide other services or products to each other. It's best that they relate as representatives, and not as business partners, clients, or customers. One problem not mentioned in the articles and blog posts I read is that business relations between officials could be used to launder campaign funds, bribes, or kickbacks. If no money is supposed to pass between officials, any money that does creates a paper trail that makes it harder to criminally conspire.
Robert Wechsler
Director of Research-Retired, City Ethics
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Comments
Mark Mathews (not verified) says:
Wed, 2012-08-08 08:21
Permalink
In your article you state "Special relationships between officials at the same level (as opposed to supervisors and employees) are common and acceptable.". Could you please elaborate on the comment as it relates to a council member providing professional services to city supervisors and employees? Also, what differences would it make if the Elected Official provided professional services to city supervisors and employees at a significant discount or free?
Robert Wechsler says:
Wed, 2012-08-08 09:31
Permalink
The problem is somewhat different if the elected official offers services or products at a significant discount. This is a gift rather than coercion, and there is also an issue of preferential treatment (putting candy out for all employees would not be seen as coercion or preferential treatment). The official would not be seen as trying to abuse his position to benefit himself financially, but rather acting more like anyone seeking to make an administrative official or employee feel obligated to him, so that he can directly or indirectly obtain a special benefit (the benefit does not have to be immediate, as with a bribe).
There might be occasions where a low-level employee has a problem which the official can acceptably help through special expertise. For example, she faints, and the official, a doctor, helps her. The particular situation and the employee's authority are factors in determining whether the free or discounted service or product is acceptable.