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An Obligation Not to Be Complicit in Misconduct at Other Governmental Levels
Tuesday, June 10th, 2014
Robert Wechsler
An
investigative piece in yesterday's New York Times raises
an interesting issue regarding complicity in ethical
misconduct: is there an obligation not to be complicit with
misconduct at a different governmental level when, arguably, that misconduct
financially benefits one's own government?
According to the article, when Bayonne, NJ was in deep financial trouble in 2010, with the state talking about bailing it out the way it had bailed out Camden in 2002, the Port Authority of New York and New Jersey purchased a piece of land from the city (1) that the port authority had no use for and (2) at a price substantially higher than it was worth (in fact, the year the purchase was made, the port authority wrote down the value of the property). This apparently fraudulent purchase meant that the city would be in solid financial shape, at least for the short run.
The apparent purpose of this purchase was not only to help the city of Bayonne, but to solve a dilemma for New Jersey's governor, who "was confronting a huge deficit in New Jersey’s budget, while trying to keep a campaign promise to not raise taxes." The purchase shifted the problem from the state to the port authority.
The governors of the two states appoint the members of the port authority board, and have an unspoken agreement to trade projects. That is why there was apparently no opposition by the New York members of the board or the New York appointees on its staff.
The land was actually owned by a city redevelopment authority, not by the city itself. But it was the mayor who, according to the article, directed the redevelopment authority's attorney to contact the port authority. And the mayor was involved in the secret negotiations, in which the price of the property kept going up until it went far beyond its appraised value, even though the port authority had no use for it (almost nothing has been done with it in the four years since the purchase). The negotiations went on at the same time as the state takeover of the city was moving forward; the deadline for takeover was put off while the negotiations continued.
The question is whether the mayor and the redevelopment authority board members had an obligation not just to help their city keep its head above water, but also to refuse to engage in the sale of land for a price far beyond its value to an authority that had no clear use for it, in order to help the governor's short-term desire to keep taxes from rising his first year in office.
The city would have been bailed out one way or the other. But this way was fraudulent, secret, and for political purposes rather than to fulfill the mission of either the port authority or the redevelopment authority (which had been given the property by the army, with limitations on what it could do with the property).
The Public Interest
This situation is valuable in considering what "the public interest" means. Many people say that the term is extremely vague and, therefore, of little meaning or value. With respect to local government, many say that it involves what is best for the community (this is an ends-based, "consequentialist" ethics approach).
But in this situation, it is clear that even though the land sale was good for Bayonne, in the short-term financial sense, it was wrong in many ways. It was not in "the public interest" in the greater sense. This shows that "the public interest" involves more than the financial good of the community; it also involves doing what is right in an ethical sense. After all, if the transaction had been in the public interest, officials would have been done it in the public eye, the army would have been included in the transaction, and the port authority would have proudly begun work on expanding New York's port. This is not what happened.
Ends-Based vs. Rules-Based Thinking
One reason a government ethics approach is so important in government is that it does not take an ends-based, consequentialist approach, but rather a rules-based, "deontological" approach. This approach enables government officials to determine that, even when a transaction is financially valuable, if it is fraudulent, if it must be kept secret (unless national security or private matters are involved), and if its motives are questionable, government officials should not be involved, even if all the bad stuff involves other agencies and governments. Complicity with ethical misconduct, even if financially beneficial to one's community, is wrong.
However, even an ends-based approach to this situation should have led officials to determine that it was not the best solution to a serious problem. Bayonne may have been saved financially, but the state would have bailed it out. This solution meant that the city would lose a valuable piece of property that it may have developed for the benefit of the community, and that its reputation would be harmed if the truth came out. Certainly, the reputations of the mayor and of the redevelopment authority, and of all those who worked with them and supported this effort, have been seriously harmed. If they had sacrificed their reputations for the good of the community, to save it from bankruptcy, there would be an ends-based argument in favor of what they did. But had they refused the transaction up front, the community still would have been bailed out, and it would have had the property to build on (it was supposed to be turned into "a 430-acre residential community, with shopping, entertainment and park destinations, and links to downtown Bayonne, light rail, and New York City," according to NJ Future).
The Devilish Duo
As in so many situations, a principal problem here is the influence and involvement of high-level elected officials in transactions that should be handled independently by authorities. The mayor got involved with the redevelopment authority, and the governor's office apparently got involved with the port authority. When development decisions are politicized, bad things can happen, especially if the decision-making and negotiations are done secretly.
High-level official involvement and a lack of transparency are a duo that often leads to ethical misconduct and scandals. Any government official who encounters a situation characterized by this devilish duo should recognize her obligation not to be complicit in the misconduct and that she will be held responsible for any damage and scandal that occurs.
Robert Wechsler
Director of Research-Retired, City Ethics
---
According to the article, when Bayonne, NJ was in deep financial trouble in 2010, with the state talking about bailing it out the way it had bailed out Camden in 2002, the Port Authority of New York and New Jersey purchased a piece of land from the city (1) that the port authority had no use for and (2) at a price substantially higher than it was worth (in fact, the year the purchase was made, the port authority wrote down the value of the property). This apparently fraudulent purchase meant that the city would be in solid financial shape, at least for the short run.
The apparent purpose of this purchase was not only to help the city of Bayonne, but to solve a dilemma for New Jersey's governor, who "was confronting a huge deficit in New Jersey’s budget, while trying to keep a campaign promise to not raise taxes." The purchase shifted the problem from the state to the port authority.
The governors of the two states appoint the members of the port authority board, and have an unspoken agreement to trade projects. That is why there was apparently no opposition by the New York members of the board or the New York appointees on its staff.
The land was actually owned by a city redevelopment authority, not by the city itself. But it was the mayor who, according to the article, directed the redevelopment authority's attorney to contact the port authority. And the mayor was involved in the secret negotiations, in which the price of the property kept going up until it went far beyond its appraised value, even though the port authority had no use for it (almost nothing has been done with it in the four years since the purchase). The negotiations went on at the same time as the state takeover of the city was moving forward; the deadline for takeover was put off while the negotiations continued.
The question is whether the mayor and the redevelopment authority board members had an obligation not just to help their city keep its head above water, but also to refuse to engage in the sale of land for a price far beyond its value to an authority that had no clear use for it, in order to help the governor's short-term desire to keep taxes from rising his first year in office.
The city would have been bailed out one way or the other. But this way was fraudulent, secret, and for political purposes rather than to fulfill the mission of either the port authority or the redevelopment authority (which had been given the property by the army, with limitations on what it could do with the property).
The Public Interest
This situation is valuable in considering what "the public interest" means. Many people say that the term is extremely vague and, therefore, of little meaning or value. With respect to local government, many say that it involves what is best for the community (this is an ends-based, "consequentialist" ethics approach).
But in this situation, it is clear that even though the land sale was good for Bayonne, in the short-term financial sense, it was wrong in many ways. It was not in "the public interest" in the greater sense. This shows that "the public interest" involves more than the financial good of the community; it also involves doing what is right in an ethical sense. After all, if the transaction had been in the public interest, officials would have been done it in the public eye, the army would have been included in the transaction, and the port authority would have proudly begun work on expanding New York's port. This is not what happened.
Ends-Based vs. Rules-Based Thinking
One reason a government ethics approach is so important in government is that it does not take an ends-based, consequentialist approach, but rather a rules-based, "deontological" approach. This approach enables government officials to determine that, even when a transaction is financially valuable, if it is fraudulent, if it must be kept secret (unless national security or private matters are involved), and if its motives are questionable, government officials should not be involved, even if all the bad stuff involves other agencies and governments. Complicity with ethical misconduct, even if financially beneficial to one's community, is wrong.
However, even an ends-based approach to this situation should have led officials to determine that it was not the best solution to a serious problem. Bayonne may have been saved financially, but the state would have bailed it out. This solution meant that the city would lose a valuable piece of property that it may have developed for the benefit of the community, and that its reputation would be harmed if the truth came out. Certainly, the reputations of the mayor and of the redevelopment authority, and of all those who worked with them and supported this effort, have been seriously harmed. If they had sacrificed their reputations for the good of the community, to save it from bankruptcy, there would be an ends-based argument in favor of what they did. But had they refused the transaction up front, the community still would have been bailed out, and it would have had the property to build on (it was supposed to be turned into "a 430-acre residential community, with shopping, entertainment and park destinations, and links to downtown Bayonne, light rail, and New York City," according to NJ Future).
The Devilish Duo
As in so many situations, a principal problem here is the influence and involvement of high-level elected officials in transactions that should be handled independently by authorities. The mayor got involved with the redevelopment authority, and the governor's office apparently got involved with the port authority. When development decisions are politicized, bad things can happen, especially if the decision-making and negotiations are done secretly.
High-level official involvement and a lack of transparency are a duo that often leads to ethical misconduct and scandals. Any government official who encounters a situation characterized by this devilish duo should recognize her obligation not to be complicit in the misconduct and that she will be held responsible for any damage and scandal that occurs.
Robert Wechsler
Director of Research-Retired, City Ethics
---
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