Financial Disclosure Requirements Are Minimal

Update: May 14, 2011 (see below)

An ethics controversy in Hartford presents a perfect opportunity to show the difference between ethics and law, and the right way to approach financial disclosure requirements.

Here are the facts, as reported in two Jon Lender columns in the Hartford Courant Sunday and Monday. Since the mayor became a council member in 2006 (and even before that), his spouse has collected about $2,000 a month in federal Section 8 rent subsidies as the landlord for low-income tenants under a "housing choice voucher program" administered locally by the city.

The money is all federal money. The city's role is only to determine whether the apartment meets the standards of the Section 8 program and to give the money to the landlord.

An ethics complaint has been filed by a state representative who is apparently planning to run against the mayor in an election this year. His principal claim seems to be that the mayor should have disclosed this income. The mayor says he will amend his disclosure statements to reflect these payments, and that he will ask that an attorney under retainer with the city's ethics commission write an opinion on whether a violation has occurred.

Besides embarrassing a mayor who has spoken of the transparency of his administration, is there anything more here?

First, there is a basic lesson in government ethics. If you have doubt about whether a transaction is covered by an ethics code, disclose it or seek a formal opinion up front. Don't wait until a rival makes it public.

As the mayor says, there is no reason why he would want to hide these payments. He could not have misused his office to get the city's approval, because the apartments were apparently approved before he joined the council. If there is no reason to hide something, then disclose it. If the city is involved in any way, that should be enough to disclose.

On the other hand, the state representative who raised this issue is equally wrong in saying, "By amending his city ethics filings, Mayor Segarra has conceded that he has violated the City Ethics Code." There is a difference between ethics and law. It is right for the mayor to amend his filings, but that has nothing to do with whether or not his failure to disclose violated the ethics code. The state rep is not helping anyone but himself by falsely conflating ethics and law.

The legal issue is whether the Section 8 subsidies arise under a "contract with the city," since such contracts are to be disclosed. A HUD spokesperson said that there is a contract. But the mayor says it never occurred to him that there was a contract, and there is no reason to doubt him. I would have thought the same thing. And there is nothing in the ethics code that requires disclosure of the payments themselves.

If I were the mayor, I would save the city the cost of an attorney and pay the ethics commission the top fine possible, which is $2,000. And I would use this occasion for educational purposes. I would say that although I did not realize this was a contract, I should have either asked or assumed it was a contract and reported it. I would have pointed out that a lack of knowledge or intent does not prevent an ethics violation, although it might mitigate the fine. And I would tell other city officials that what they should learn from this is that the best way to ensure the public trust is by going beyond the minimal requirements of the disclosure provision of the ethics code, as well as its other provisions. I would say that ethics is what matters, not the mimimal requirements of the law.

I would also make sure that the city's ethics commission had a presence on the city's website. In fact, more than a presence. It should include training materials, forms, advisory opinions, decisions, etc. An invisible ethics commission suggests that it is not very important to the city.

Update: May 14, 2011
The attorney's analysis was sent to the corporation counsel on May 5. Unfortunately, he concluded there was no violation because there was no evidence that the omission of the contracts with the city from the mayor's annual financial disclosure statements was done knowingly or intentionally. I would agree with this, except that there is nothing in the ethics code that says there is a violation only when an omission is knowing or intentional.

I argued above that, because the omission was likely not intentional, it should mitigate the fine. It is important to recognize that an ethics law is not a criminal law. There is no need to prove intent. An omission is a violation, and intent is only an issue in determining the fine. I still believe that the mayor should pay a fine. It is even more important now, because this would make it clear to other city officials that ethics is not a matter of intent.

Robert Wechsler
Director of Research-Retired, City Ethics

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