Conflicts and Money
According to <a href="http://online.wsj.com/article/AP5e51ce7f65184273a8b61f3e3ad7732e.html&q…; target="”_blank”">an
Associated
Press article yesterday</a>, a New York City school principal
"didn't think there was a conflict of interest because there was no
exchange of money."<br>
<br>
According to <a href="http://www.bclocalnews.com/bc_thompson_nicola/salmonarmobserver/news/11…; target="”_blank”">an
article
in the Salmon Arm (B.C.) <i>Observer</i> yesterday</a>, a town councillor
argued against a relationship being a conflict as follows: "If I was taking a
financial look at this, it would probably have a negative impact. It’s
probably going to take [my business partner] away from our business,
just as council takes me away from it.”<br>
<br>
In other words, money is at the center of how many local government
officials view conflicts of interest.<br>
<br>
This isn't really their fault. Many ethics codes refer only to
"financial interests," as if money was all that matters. And officials
usually get insufficient ethics training, if they get any at all.<br>
<br>
The NYC school principal hired his baby sitter as a parent coordinator
and
let her live rent-free in his home. So yes, there was no exchange of
money. But there are two problems here: special consideration
and, it appears, a financial benefit.<br>
<br>
The principal showed special consideration in two ways, (i) by hiring
someone who both worked for him and lived in his home, and (ii) by giving
a school employee rent-free housing.<br>
<br>
Second, the principal cleverly managed not to exchange money, and yet
still get a financial benefit. The deal appears to have worked like
this: the principal gave the baby sitter rent-free housing, which
cost the principal nothing and gave him a live-in baby sitter, while
the city paid the baby sitter's salary.<br>
<br>
But even if there were no financial benefit through not having to pay a
baby sitter, this would still be an instance of special consideration
and of using one's office to get a job for someone in one's household,
who is working for the official. In other words, even if all the
benefits went to the baby sitter, and she earned every penny she got, it would still be an ethics violation.<br>
<br>
The town councillor's situation is more complex. He co-owns a financial
planning and insurance company with the site manager of a company
seeking a permit to hold a big "motorcycle and music extravaganza" in
Salmon Arm. The councillor fully participated in what appears to have been a controversial decision.<br>
<br>
Not only does he say that allowing the event will hurt his business by
taking his partner away from it, he also insists he has no relationship
with the event company, that he doesn't have much to do with his
partner socially, that his partner is promoting the event as an
individual, separate from the insurance business, and that he's
disappointed that people are questioning his integrity.<br>
<br>
With all of this, nothing about how it appears to the public when a
councillor is involved with an event involving his business partner's
other
business.<br>
<br>
As it turns out, the councillor supports holding the event, but which
side an official is on is irrelevant to whether there's a conflict that
requires him to withdraw from the matter. If he supports it, it looks
like he's helping his partner. If he opposes it, it looks like he's
helping his own business at his partner's expense, which may not help
relations with his partner much. In short, by participating, he
threatens his relationship with the public or with his partner,
depending on what he does. Why would anyone want to do this when he can
simply withdraw from the matter and make everybody happy?<br>
<br>
Conflicts are not about money, they're about trust. And trust is earned
by dealing responsibly with an apparent conflict rather than defending
your refusal to deal with it by saying no money was exchanged or that
you don't have a financial interest in the company involved.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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