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Preferential Treatment - Fairness and Process
Tuesday, September 22nd, 2009
Robert Wechsler
Preferential treatment is one of the most difficult ethics provisions
to deal with, because it seems on its face so open-ended. Every time a
decision is made, someone is preferred over someone else, whether it's
a hiring decision, a contract award, or a zoning change. But if these
decisions are made fairly and through the appropriate legal process,
there is no preferential treatment.
Preferential treatment involves acting unfairly and outside the appropriate legal process to give an advantage to an individual or firm. For example, allowing a company to write the specifications for a contract bid, or writing a job description so that only a friend's resume would fit.
Often there is some sort of quid pro quo tied to preferential treatment. Rarely does an official favor a company without getting something for it, whether helping a family member or obtaining a promise of future employment or representation. It's often hard to show a quid pro quo, which would make the transaction criminal. But such a quid pro quo does not have to be shown in order to prove an ethics violation.
An excellent example of preferential treatment, with a possible quid pro quo, has come out of a federal Interior Department investigation into former Interior Secretary Gale Norton, according to an article this week in the Los Angeles Times.
The short form of the story is that the Interior Department awarded Shell Oil three shale oil leases and then, a few months after resigning from her position, Norton took a job with Shell. But it's the details that make it a clear preferential treatment matter.
The purpose of the leases, six in all, was to allow companies to try out experimental processes to extract oil from shale. Shell filed its first application the day after the call for applications in June 2005. Then in August legislation, pushed by Shell, allowed companies to hold multiple shale leases. Shell quickly filed two more applications, and the other companies, not alerted about the new law or Shell's applications, did not file multiple applications.
The purpose of the leases was to experiment with methods, but Shell was awarded half the leases to try out just one method, in contradiction to the express purpose of the program. And, according to an independent expert, Shell was given the best land. Future profits from these leases are estimated to be in the hundreds of millions of dollars.
Each of these steps shows preferential treatment to Shell. One could say that it was a reward for Shell's persistence in lobbying. It worked harder and deserved to get more. But all bidders should be given the same information at the same time, and an experimental program should not be changed due to the persistence of one participant. No one should be given multiple leases if the rules were changed in the middle of the bidding, and all bidders did not know they could file multiple applications. It is the failure to be fair and follow an appropriate legal process that makes this situation so clearly preferential.
See another blog post on preferential treatment.
Robert Wechsler
Director of Research-Retired, City Ethics
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Preferential treatment involves acting unfairly and outside the appropriate legal process to give an advantage to an individual or firm. For example, allowing a company to write the specifications for a contract bid, or writing a job description so that only a friend's resume would fit.
Often there is some sort of quid pro quo tied to preferential treatment. Rarely does an official favor a company without getting something for it, whether helping a family member or obtaining a promise of future employment or representation. It's often hard to show a quid pro quo, which would make the transaction criminal. But such a quid pro quo does not have to be shown in order to prove an ethics violation.
An excellent example of preferential treatment, with a possible quid pro quo, has come out of a federal Interior Department investigation into former Interior Secretary Gale Norton, according to an article this week in the Los Angeles Times.
The short form of the story is that the Interior Department awarded Shell Oil three shale oil leases and then, a few months after resigning from her position, Norton took a job with Shell. But it's the details that make it a clear preferential treatment matter.
The purpose of the leases, six in all, was to allow companies to try out experimental processes to extract oil from shale. Shell filed its first application the day after the call for applications in June 2005. Then in August legislation, pushed by Shell, allowed companies to hold multiple shale leases. Shell quickly filed two more applications, and the other companies, not alerted about the new law or Shell's applications, did not file multiple applications.
The purpose of the leases was to experiment with methods, but Shell was awarded half the leases to try out just one method, in contradiction to the express purpose of the program. And, according to an independent expert, Shell was given the best land. Future profits from these leases are estimated to be in the hundreds of millions of dollars.
Each of these steps shows preferential treatment to Shell. One could say that it was a reward for Shell's persistence in lobbying. It worked harder and deserved to get more. But all bidders should be given the same information at the same time, and an experimental program should not be changed due to the persistence of one participant. No one should be given multiple leases if the rules were changed in the middle of the bidding, and all bidders did not know they could file multiple applications. It is the failure to be fair and follow an appropriate legal process that makes this situation so clearly preferential.
See another blog post on preferential treatment.
Robert Wechsler
Director of Research-Retired, City Ethics
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