How Candidates Should Deal Responsibly with Conflicts
<a href="http://sogweb.sog.unc.edu/blogs/localgovt/?p=5018" target="”_blank”">A post
yesterday in Coates' Canons: NC Local Government Law Blog </a>raises
an interesting issue about the situation of a local government
candidate who has an interest in a contract with the local government
which, by NC law, is prohibited not for candidates, but for a winning
candidate the day he or she takes office. This provides a good occasion
to look at the intersection of candidates and local government ethics
codes, outside of the more common campaign finance issues.<br>
<br>
<b>Dealing with a Contract That Will Become Illegal</b><br>
According to the post, a NC statute prohibits officials and their
spouses from benefitting from public contracts over which the official
or his body or agency has authority. Non-incumbent candidates, however,
are not in any way prohibited from benefitting from local government
contracts. It is only on the day they take office that the statute
affects them. On that day, the candidate becomes an official with
authority to oversee, make decisions about, or interpret the contract.
According to the state statute, the contract is rendered void, and any
direct benefit derived by the newly-elected official from that point
forward is illegal, with criminal law consequences.<br>
<br>
This is serious stuff, and the law seriously affects the local
government (having a contract voided) and often many individuals besides the candidate. What should
the candidate do to responsibly prepare for this eventuality?<br>
<br>
The candidate should, if possible, arrange that he will not receive any benefits
under the contract from the day he takes office, or even earlier for
the sake of appearances. And as soon as he wins the election (or even
earlier if his victory is very likely) he should start the process to
have the contract bid out, so that a new contractor can do the work as
soon as possible. The statute allows the continuation of a contract
until an alternative can be arranged when “immediate termination would
result in harm to the public health or welfare,” which would be true in
the great majority of cases. The continuation does, however, have to be
approved by a state official, which prevents the local agency from
looking like it is helping the new official.<br>
<br>
<b>Voiding Contracts</b><br>
It's worth noting that the new official cannot simply withdraw from
participation in matters involving the contract, because it is
automatically void the day he takes office. Automatic avoidance seems
like a very severe penalty, but an official who benefits from a
government contract over which his body or agency has authority creates
one of the most serious appearances of impropriety there is. Allowing a
body or agency to oversee a colleague's (sometimes a boss's) contract
not only makes its decisions questionable, but also places a great deal
of pressure on honest officials who want to make the right decisions,
but become worried that their decisions will look like favoritism
toward their colleague, boss, or council member.<br>
<br>
The state statute does have an exception for small contracts in small
towns, which are much more common, and harder to replace, than in larger
jurisdictions.<br>
<br>
<b>Taking the Initiative with Respect to Upcoming Conflicts</b><br>
<a href="http://www.cityethics.org/content/handling-indefinite-conflict-it-becom…; target="”_blank”">Last
year, I wrote about a situation in Tampa</a> where a candidate headed a
nonprofit that had a large contract with the city. I felt that the
candidate should say what she is going to do about the situation, and
why. Since there were questions about the language in the local
ordinance, I felt that the candidate should seek an advisory opinion
from the ethics commission, so that the interpretation came not from
the candidate's attorney, but from the proper, neutral source.<br>
<br>
Instead the candidate said things like, "My compensation does not
change. I'm a
little offended that these questions are even coming up."<br>
<br>
A candidate shouldn't wait to be attacked by his opponents about the
conflict he would have when elected. He should anticipate this, and
responsibly deal with the issue as early as possible.<br>
<br>
<b>When Withdrawal Is Sufficient</b><br>
There are situations where drastic action is unnecessary. <a href="http://www.cityethics.org/node/812" target="”_blank”">Two years ago I wrote a post</a>
about a school board candidate who worked for a company that had a
minor contract with the school district. The school board attorney said
that he would have to choose between the school board and his job, and so
he resigned his job. The size of the contract and the limited benefit
the candidate would receive from the contract made withdrawal from
matters regarding the contract a sufficiently responsible way to deal
with the conflict.<br>
<br>
<b>Making Appointments of Agency Directors That May Investigate a Candidate</b><br>
<a href="http://www.cityethics.org/content/indirect-conflicts-involving-appointm…; target="”_blank”">Last year, I wrote about a situation involving a Florida gubernatorial
candidate</a> whose company was likely to be investigated by the state's
health department, whose director he would appoint if he won the
election (which he did). He said that he would withdraw from the matter
in every way, but would appoint the health director who would be
involved in deciding about and overseeing an investigation of his
company. I felt that he should have announced that he would not replace
the current health director. An alternative would be to have an
independent body, current or created for the purpose, make the new
appointment.<br>
<br>
<b>EC Jurisdiction Over Candidates</b><br>
Sometimes candidates can abuse their candidacy by using it to favor a
business they own. <a href="http://www.cityethics.org/content/local-candidates-promoting-their-comp…; target="”_blank”">I
dealt with this situation in a post last year</a> with respect to a
senatorial candidate in Connecticut whose company decided to give away
merchandise with its name on it at the polls. A mayoral candidate could
similarly use her campaign to push her car dealership or restaurant.
Once elected, this kind of conduct would be considered an ethics
violation, but most ethics codes do not cover candidates. I think they
should.<br>
<br>
Similarly, candidates should be required to fill out financial
disclosure statements, so that potential conflicts are made public. And
candidates should be permitted to request advisory opinions from ethics
officers or commissions, so that they can start dealing responsibly
with their conflicts as soon as possible. And candidates should be
required to take an ethics training course, if one is available during
the candidacy.<br>
<br>
<b>Two Other Candidate-Related Posts Worth Looking At</b><br>
Also see <a href="http://www.cityethics.org/content/taking-big-ethical-step-government-la…; target="”_blank”">my
post on a mayoral candidate</a> who was counsel to the city's sports,
transit, and port authorities (and his firm was bond counsel to the
school district). I recommended that the candidate make it clear how he
was going to handle all the possible conflicts that might arise,
personally and with respect to his law firm.<br>
<br>
And <a href="http://www.cityethics.org/node/549" target="”_blank”">a post about a clerk
candidate</a> who was suing the city for wrongful termination from her
position as finance director. The city attorney argued that she had a
conflict, but I found none of these arguments convincing.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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