A Contentious Conflict Situation in Kansas City, KS

Anonymous

Sat, 02/23/2013 - 06:40

Advisory Opinions

Some very interesting issues arise out of a past (and present)
conflict situation that has become an issue in this week's mayoral
primary in the Unified Government of Wyandotte County and Kansas
City, KS ("UG"). 
 
The conflict situation appears simple at first glance, but it is not. In 2007, a UG commissioner
became the paid executive director of the <a href="http://andakck.org/" target="”_blank”">Argentine Neighborhood Development
Association</a> ("ANDA"), a nonprofit Community Development
Corporation and Community Housing Development Organization that has
received funds from the UG. The executive director was paid, at least
partially, out of those funds.

Ethics Advice 
The commissioner did the right thing by quickly seeking ethics advice. The UG
has an ethics administrator who provides written advisory opinions,
which are public, by request. A copy of the advisory opinion is
attached (see below). Its conclusion is as clear as can be:<blockquote>

While serving as a member of the Unified Government Board of
Commissioners it would be a violation of the Code of Ethics for
[the] Commissioner ... to be personally compensated as part of a
contract with the Unified Government. 
 
I advise the officials of the Unified Government against executing
the proposed contract.</blockquote>

According to <a href="http://www.kansascity.com/2013/02/21/4079607/ann-murguia-denies-conflic…; target="”_blank”">an
article in the Kansas City Star on Thursday</a>, the commissioner
said that in 2007 she "voted for budgets that allocated those dollars. She
said an opinion from the Unified Government’s ethics administrator
at the time said she could." Unless there is another advisory
opinion, her voting wasn't the issue; it was her compensation from
UG funds. Therefore, her portrayal of the advice is not accurate. 
 
According to the article, the commissioner says that she also sought
ethics advice from the state ethics agency. This advice "concluded
that [the commissioner] must abstain from acting on any contract
between the Unified Government and ANDA, although she could
participate in 'legislative and administrative decisions' affecting
the community organization. Even though the state ethics panel said
she could legally vote on some matters involving ANDA, it said doing
so could 'foster an appearance of impropriety.'" 
 
I do not believe that a local official should be permitted to forum
shop for ethics advice. In a local government that actually has a
professional, independent, and highly knowledgeable ethics adviser
as the UG did at the time, an official should accept that adviser's
opinion or appeal it to the ethics commission, if that is permitted.
She should not go looking for better advice. 
 
As for the state advice, it appears to have made clear to the
commissioner that her involvement with funding of ANDA would foster
an appearance of impropriety, even if some aspects of
participation may be legal. When the impropriety of her conduct is
raised, an official who acted solely on the issue of legality has no right to raise an
objection. She knew that her
participation would appear improper, and yet acted anyway. 
 
In addition, the county attorney "cleared" the commissioner and ANDA
to get state funds. Too many people were involved in providing
ethics advice, all of it contradictory. 
 
The best way to look at the commissioner's conflict situation is
presented in the Star article by a former commissioner. She said
that at times it was confusing whom the commissioner was
representing at meetings — ANDA or the Unified Board of
Commissioners. That simply cannot be allowed. 
 
The Other Conflict 
Before I get into the aspects of the conflict situation that
both the local and state ethics advisers dealt with, I want to speak
to the other aspect of the situation: the fact that a district
representative manages a development association for a neighborhood
that does not appear to be co-extensive with her district. In other
words, it is her job to bring funds into one area of her district.
Therefore, her two roles conflict on an ongoing basis. A district representative is
expected to represent all the areas of her district. 
 
This is the sort of conflict that most ethics codes ignore and that
it can be difficult for an ethics administrator to provide advice
on. The reason is that it is essentially a political conflict, a
conflict involving representation, not a conflict that involves only
personal interest. But it is an important conflict, and an elected
official who puts herself in this conflict situation should discuss
it openly at a public forum in her district, asking people from
various parts of her district what they think. If there is
opposition, she should not accept the job. 
 
I should add that it would take an unusual politician to do this. I am talking about best practices, not what actual officials ordinarily do. 
 
Removing the Conflict 
Although I do not consider it a best
practice (see below), <a href="http://www3.wycokck.org/uploadedFiles/Departments/Ethics_Commission/Cod…; target="”_blank”">the UG ethics code</a>, like many ethics codes, prohibits conflicts:<blockquote>
(a) Except as provided in this section, no unified
government representative shall have a substantial interest in or
engage in any of the following activities: . . . 
 
(3) Any business entity that is receiving public
grant money or funds directly from the unified government or as a
pass through from state or federal agencies;</blockquote>

Apparently, due to the commissioner's situation, the definition of
"business entity" was broadened in 2009 to include nonprofits. But
it would have been reasonable for the ethics administrator to
include nonprofits in this definition back in 2007, since it makes
no sense to distinguish between officials paid by profit-making
or nonprofit corporations for the purpose of determining their
personal interest. 
 
In his advisory opinion, the ethics administrator recognized this prohibition of conflicts
of interest, as well as the ethics code's prohibition against
using the prestige of one's office for one's private gain.
However, instead of telling the commissioner she should resign
either from the commission or ANDA in order to remove her conflict,
he told the government not to execute the contract with ANDA. 
 
Which of these is the best way to handle the conflict situation?
Cutting off the funds to ANDA puts the commissioner in an
uncomfortable position. If she retains her ANDA job, there won't
be sufficient funds to pay her (but she could continue to serve as a
volunteer). If she resigns from her ANDA job, then ANDA can get the
grant. So far, so good. 
 
But let's say the commissioner keeps her job and finds another
source of funding that would be said to pay her salary, and then she
goes back to the city for funds, which would be said not to pay her
salary. The problem is that everyone knows money is fungible, and
that in effect the city would be paying at least part of the
commissioner's salary. The result would be a possibly legal, but
unacceptable fudge. In fact, this is effectively what happened (see the next section of this post). The ethics administrator's advice, wise as it appeared, left an open loophole. 
 
None of these problems would arise if the commissioner was required to
choose between her position and her job. If she resigned from
her position, she could participate in the matter only as the
ANDA director. If she resigned from her job and could not accept
it later, she could participate in the matter as a commissioner
who has sacrificed her job to remove the conflict. 
 
This latter means of curing the conflict is made more attractive
by considering the "other conflict," that is, the fact that the
commissioner's hats do not cover the same constituents, that she
serves people outside the Argentine neighborhood. This problem
is not cured by cutting off funds from the city to ANDA. 
 
Legal Solutions to Ethics Problems 
What actually happened was a clever way of taking advantage of the loophole left by the local ethics advice. According to the Star article, "the commission
pass[ed] a new ethics policy that barred [the commissioner] from
voting on budgets benefitting her nonprofit group. The new
policy forced ANDA to create a separate entity to receive
Unified Government money to pay for an office manager. [The
commissioner] cannot be part of that new organization." 
 
This is fudging at its worst. The reason for the fudging is the
limited view of conflicts that considers only direct financial
gains. This is a common problem in government ethics programs.
It is part of a bigger problem, that is, the problem of not
taking into account public perceptions. 
 
The public sees it like this. An individual becomes a
commissioner and quickly becomes the paid director of a
community development company that depends on government
funding, which comes from her commission. Whether the company is
profit-making or not makes no difference. It is seeking
government funds and its director is on the commission that
approves them. Whether the company breaks into two or twenty
different corporations doesn't matter. In fact, breaking up for
the express reason of allowing the commissioner to keep her job
and keep helping the company(ies) get funding looks like a
sneaky way to accomplish what the law prohibited. 
 
In other words, it is a legal solution to an ethics problem. The
conflict is not removed, and the public's trust is not improved
the way it would have been if the commissioner had been required
to remove the conflict entirely. 
 
Withdrawal 
Another important question with respect to this
conflict situation is whether to treat the conflict situation as
illegal and remove it, or whether to treat the conflict situation
as curable through the commissioner's partial or complete withdrawal
from participation in matters involving ANDA. 
 
I believe that ethics codes should not prohibit most
pre-existing conflicts. It is important to recognize that officials have
other relationships and obligations, and that instead of ending
these relationships and obligations, the principal goal of
government ethics is to get officials (1) to deal responsibly with
conflict situations that arise from them, usually through withdrawal
from participation, and (2) to prevent new relationships that give
rise to conflict situations, such as gifts or new jobs. 
 
However, when a conflict situation involves a high-level official —
a mayor, legislator, manager, department head, or member of an
important body, such as a planning commission or contract approval
board — withdrawal is often insufficient. A high-level official's
influence over her colleagues and subordinates is seen as too great
to allow withdrawal to allay the public's suspicions that she is
pulling strings behind the scenes or that her colleagues are sympathetic to her needs, due to personal relationship or because governing involves exchanging favors. This is especially true when the
conflict involves the official's business or job. 
 
It's important, in the UG case, to acknowledge that the commissioner
did not have the conflict when she entered public service. She took
the job soon after (she had been a volunteer before), creating the conflicting obligations of a leader and a paid employee. It is much
easier, and more fair, to prevent such new conflicts from existing
than it is to require officials to totally abandon old relationships
or jobs. 
 
Therefore, I believe that in this case withdrawal was and still is
insufficient. And yet, despite the advice of the ethics
administrator, much of the talk in the Star article is about whether
or not the commissioner should have been permitted to vote. There is
also talk of transparency and honesty, which are irrelevant. This talk misses the point altogether. The issue is the same as it was in 2007: removing the conflict. 
 
Robert Wechsler 
Director of Research-Retired, City Ethics 
 
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A Contentious Conflict Situation in Kansas City, KS

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