Total Gift Bans and Legal Defense Funds

Anonymous

Wed, 03/06/2013 - 09:33

Advisory Opinions

A February draft advisory opinion from the <a href="http://www.colorado.gov/cs/Satellite/DPA-IEC/IEC/1208597599325" target="”_blank”">Colorado

Independent Ethics Commission</a> (attached; see below) raises two
different issues. One is the problematic nature of a total gift ban,
that is, a ban on all gifts from anyone, accompanied by a whole
host of exceptions. The other is the important differences among gifts,
campaign contributions, and contributions to an official's legal
defense fund. 
 
The draft advisory opinion relates to the solicitation of contributions to the
secretary of state's legal defense fund. The defense involves a
criminal investigation.

Total Gift Bans 
A total gift ban misses the point involved in restricting gifts to officials
as part of a government ethics program. Gifts are restricted because they
create and deepen (and appear to create and deepen) relationships and obligations between government officials and those
who seek benefits from the official's government ("restricted
sources"). If someone making a gift has nothing to gain from the
government, then the obligation that is created or deepened is
purely personal, and there is only one reason to restrict it:
it may be an indirect gift from a restricted source. 
 
A total gift ban with numerous exceptions opens up many loopholes in order to prevent indirect gifts. The possibility of indirect gifts can be better dealt with by a
requirement that officials inquire about the original source of
questionable gifts, that is, any substantial gift that is not from
someone
who would normally give them a substantial gift (and how many people
is that?!). If the official is not certain that the gift is not from
a restricted source, she should refuse the gift. If she accepts the gift and it is an indirect gift from a restricted source, then she is responsible for accepting it. 
 
You can also see the weakness of a total gift ban by looking at another sort of indirect gift, that is, a gift to an immediate family member. The law cannot place a total gift ban on these gifts, and yet they are a great way to give something to an official's household or someone very important to the official. A gift provision based on restricted sources can prohibit gifts from restricted sources to an official's family, business, and even a pet charity. A total ban cannot. 
 
The many exceptions required by total gift bans also have unintended consequences, requiring
numerous requests for interpretations and waivers. For example, a total gift ban in
Alaska has a compassionate gift
exception, but this only applies to gifts up to the gift limit of
$250. A few
years ago, a state representative needed a kidney transplant. But
the law
wouldn’t let him have one. That’s ridiculous because gifts should only be banned from
people and
entities that have something to gain by making a gift. 
 
Also, officials see total gift bans
as intrusive into their personal life, and their anger at gift
bans can
fuel their opposition to an ethics program. 
 
Finally, total gift bans are hard to remove because it can be argued
that they're the toughest. But the toughest doesn't always mean the
best or most responsible. 
 
In the Colorado situation, the secretary of state is forced to argue
that contributions to his legal defense fund aren't gifts to an
official, because the fund has a trustee and the secretary of state
does not solicit contributions directly. If this argument was
accepted, it would be considered by the public an unethical
interpretation of the gift ban. Contributions to an official's
defense fund are clearly gifts made in the official's interest. 
 
A ban on gifts, directly or indirectly, from restricted sources
would allow an official's legal defense fund to solicit
contributions from others. 
 
How to Deal with a Total Gift Ban 
The ethics commission is put in an uncomfortable position by the
total gift ban, especially since the ban is in the state
constitution. The EC has little choice but to allow the secretary of
state to have a legal defense fund. The problem is that the EC has
to do this consistent with a wrongheaded law. So the draft advisory
opinion forces the situation into one of the many exceptions, the
"special occasion" exception, which reads, "The prohibitions in ...
this section do not apply if the gift or thing of value is: ... (g)
Given by an individual who is a relative or personal friend of the
recipient on a special occasion." 
 
As the commission chair says in his dissent (included with the
attached draft opinion), "it is doubtful that the people of
Colorado, in adopting <a href="http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=applica…; target="”_blank”">Article
XXIX</a> [of the state constitution], intended that term ["special occasion"] to
include criminal indictments or informations. Moreover, even if a
criminal prosecution can be shoe-horned into the special occasion
exception, the section specifically limits the exception to gifts
from relatives and personal friends of the recipient. All other
contributors must be limited to gifts of $53." The total gift ban
allows gifts up to $53 from anyone. 
 
Of course this exception was not intended for this situation. It was
intended for birthdays and anniversaries. But then, allowing legal
defense funds to which only relatives and friends who are not
restricted sources could give (with others limited to $53) would
effectively mean that such funds could not be formed, unless one has rich family and very devoted friends who would not be seen to be seeking financial benefits (that is, for the most part, other politicians). 
 
So the draft opinion tries to square this circle:<blockquote>

To avoid questions of improper influence, donations may only be
accepted from persons who: 
 
Are individuals, not legal “persons” such as corporations,
government agencies, partnerships, or any other legal entity; 
 
Are not regulated by the Secretary of State; (including candidates
for public office and registered agents): 
 
Do not have any matters currently pending or expected within the
next two years before the Secretary of State; 
 
Are not employed by the Secretary of State’s Office. 
 
Are not professional lobbyists, because they are prohibited from
giving any gift to a public official or employee.</blockquote>

In addition, since there would be no limit on these gifts, the draft
opinion recommends that the gifts be disclosed to the public and
that a limit be placed on these gifts. 
 
This is a well thought out, responsible solution to the problem. But
since the idea of restricted source is not part of the law, there
are big holes in the solution. Let's say X Co. is seeking a big IT
contract from the Secretary of State. It cannot make a contribution
to the legal defense fund because it is a company and expects to
have a matter pending before the Secretary of State. But what about
the company's executives? And their wives and children and siblings?
And anyone else through whom the company may want to make
contributions indirectly? 
 
Remember. It isn't just a matter of evil X Co. bribing its way to a
contract. It is more likely that the word will get out that if you
want to stay in an official's good graces, you will make
big contributions to his legal defense fund, in a way that is legal. No coercion, quid pro quo arrangement, or even an e-mail is required. 
 
The Difference Between Gifts and Contributions to Legal Defense
Funds 
The draft dissent to the draft advisory opinion begins, "It is
beyond reasonable dispute that contributions to a legal defense fund
for a public official will inure to the personal benefit of the
public official. Therefore, the gift ban of Article XXIX precludes
such contributions." 
 
Let me make a reasonable dispute. A contribution to a legal defense
fund sometimes is expressly excepted from a gift provision,
sometimes treated in a separate law, or sometimes both. This is the
same case with campaign contributions, except that they are always excepted
from gift provisions and almost always have their own laws. 
 
Contributions to a campaign committee do not go directly to an
official any more than contributions to a legal defense fund. They
are different animals from gifts, and yet also different from each
other. 
 
They are similar in that there appears to be a reason for the
contributions: the election of a candidate, which helps both
the candidate and, presumably, the public; and the defense of an
official which, if the official is not guilty, also helps both the
candidate and the public. The public does not presumably make
contributions to the defense fund of an official they feel is guilty
(more cynically, no one is going to support someone whose political
career they think is finished). 
 
Campaign and legal defense contributions can be justified with
arguments that have nothing to do with personal benefits to an
official. On the other hand, it is hard to justify a new kitchen or
a week in Hawaii (except when a government-oriented seminar is being held
there, because it's so convenient) without recognizing the personal
benefit to the lucky official. 
 
More simply, there is nothing lucky about an official under criminal
investigation. And everyone has the right to defend himself
(although those without the necessary status, which means the great
majority of government officials and employees, lack the ability to
set up a legal defense fund). 
 
Contributions to a defense fund differ from campaign contributions
in that there is no campaign, that is, no argument that the
contributions are being made because the contributors want the
candidate to win. Those who give to a legal defense fund generally
are doing it for a reason other than supporting a candidate who
shares their views. They tend to be people who are politically
connected to the official (and want his support) or who seek special
benefits from the government in areas where they believe the
official has influence to help their cause (and are concerned that,
if they do not give, the official will not provide them with any
help). 
 
In other words, while a campaign committee is often employed for
influence, pay to play, and mutual political backscratching, it is
also a central element of our democracy, even in
jurisdictions that have a public campaign financing program. A legal
defense fund is not a central element of our democracy, but it is a perfect vehicle for influence, pay to play, and
mutual political backscratching. 
 
Legal defense funds are a very special thing, and should be given
their own laws and oversight process, although the oversight office
or body need not be different. It may be an ethics commission or a
campaign finance board. 
 
Conclusion 
The Colorado ethics commission is stuck with a total gift ban and no
special laws for legal defense funds. Therefore, it has to fudge and
do the best it can. 
 
What it could do is openly state the limitations of the total gift ban, and admit that the problem is not best
solved by fudging and doing the best it can with what it has.
It could point out the better alternative: (1) a change in the gift
ban to one based on restricted sources and gifts given directly or
indirectly, and (2) special laws for legal defense funds that
recognize the right of defense, the likelihood of abuse, and the
inability of the great majority of officials and employees to set up
such a fund, and what this says about legal defense funds. 
 
For more on legal defense funds, see: 
 
<a href="http://www.cityethics.org/files/lgep1-0%20-%20Robert%20Wechsler.htm#Leg…; target="”_blank”">the section in my book Local Government Ethics Programs</a> 
 
my blog post <a href="http://www.cityethics.org/content/local-government-legal-defense-funds&…; target="”_blank”">Local Government Legal Defense Funds</a> 
 
Robert Wechsler 
Director of Research-Retired, City Ethics 
 
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