An Indirect Benefit to a State Official Regarding a County Contract

According to an article in today's New York Daily News, an investigation by the U. S. Attorney for the Southern District of New York has found that the son of the NY State Senate majority leader was a consultant for a company that won a county stormwater treatment contract in the majority leader's district, despite not being the low bidder and, according to a New York Times article, despite creating a need for state legislative approval due to the company filling a duel role in the project (it is unlikely now that approval will be provided).

According to the Times, the U. S. Attorney is trying to determine whether the senator tried to influence the bidding process and whether the senator's son was hired by the contractor as "part of a scheme in which the senator, in exchange, would take official action that would benefit" the contractor or a real estate developer with ties to it.

This is a classic case of an indirect benefit that most ethics codes do not deal with. The contract is not a state contract which the senator could directly influence, nor would the county ethics program have jurisdiction over the senator or the state program have jurisdiction over the son or the contractor. The son is not a government official and, therefore, has no fiduciary duties and is subject to no revolving door or other employment limitations, state or county.

However, a state senator usually has strong influence over city and county officials in his district, due to personal and political relationships as well as power over state grants and other benefits to particular municipalities in the district (this is especially true of a member of the legislative leadership). But local ethics codes do not take this into account, because the power is external to the municipality.

Nor do most ethics codes take into account the very important benefit of providing family members of an official with a job or with legal, consulting, or other work (real or made-up).

This matter should be dealt with at the state level, via a gift rule that includes under the definition of "gift" any payment for work by restricted sources to immediate family members. What would need to be done, however, is to include under the definition of "restricted source" anyone seeking special benefits not only from the state government, but also from the local governments in a state legislator's district. But it is unlikely that any state has such a rule or will pass one. Although state officials have a great deal of local power, it is hard to imagine that they would acknowledge this in the form of an ethics provision.

So the only alternative is a federal criminal investigation. It is unlikely that this situation will lead to a conviction. It is on this that state legislators depend.

Robert Wechsler
Director of Research-Retired, City Ethics

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