Conflicts of Interest

While on the topic of ex parte communications, it's a good time to mention a very special ex parte communications provision, Miami-Dade County's renowned "code of silence" provision. It's also a good time because, according to an article in the Miami Herald, the provision was reconsidered earlier this month by the Budget and Finance Committee of the county commission.

One way to deal with possible conflicts is to nip them in the bud by not allowing any personal communications between officials and interested parties ("ex parte communications"). All communications must be official, either documentary or at formal meetings or negotiations.

What stronger personal interest is there than family relationships? And yet so many people don't get the problems nepotism in government poses, at least until it takes a chunk out of their wallets.

I've written a few times about the ways local government officials misuse charitable organizations (1, 2, 3, 4, 5). But there are still charities-related issues I've missed.

There are two principal ways of dealing with gifts to government officials and employees, and both of them are unsatisfactory, although certainly better than ignoring them completely. One approach is prohibition, the other disclosure.

In Saybrook, IL, two members of both a sportman's club and a village board of trustees resigned their sportman's club membership so they would have no conflict voting on annexation of the club by the village. According to a letter to the editor of the Bloomington Pantagraph, the two members reserved their right to rejoin the club after the annexation issue was dealt with. Does resigning like this negate any conflict of interest?

Gift disclosure and limitations are an important part of government ethics. But rarely do we think of what gifts mean. Usually this goes little further than politicians saying, "I can't be bought."

Most ethics codes effectively define a conflict of interest as a conflict between an official's personal financial interest and an official's obligation to the public interest. But this leaves out an enormous number of personal interests, many of which are themselves financial, including the financial interests of family members, business associates, and favorite charities.

Last month, I wrote about the conflict of interest that led credit agencies to ignore the risk inherent in mortgage-backed securities. A front-page article in today's New York Times shows how a different sort of conflict of interest at Citigroup allowed the risks involved in these securities to be ignored. No crimes, no politics, just plain old conflict of interest. With an extremely big price tag for our society.

A controversy currently going on in Fairfield, CT reminded me that one of the more easily misunderstood provisions of an ethics code is the special consideration, preferential treatment, or favoritism provision. The version in the City Ethics Model Code reads as follows:

An official or employee may not grant or receive, directly or indirectly, any special consideration, treatment, or advantage beyond what is generally available to city residents.