It's Easy As ABC to Create Poor Ethics Environments
<b>Update</b>: February 3, 2010 (see below)<br>
<br>
A <a href="http://sogweb.sog.unc.edu/blogs/localgovt/?p=1704" target="”_blank”">NC Local
Government Blog post</a> yesterday made me aware that there have
recently been some very public conflict of interest issues involving
North Carolina's alcoholic beverage control (ABC) system, the state
liquor sales program, which allows
each city and county to have a local alcoholic beverage control board
and employees (163 boards in all).<br>
<br>
ABC Employees are not considered state or local government employees,
but they are
hired by boards that are appointed by local elected officials. State
law has <a href="http://www.nccrimecontrol.org/div/ale/t04_02r.pdf">conflicts
provisions</a> for board members (see p. 17), but these do not include
gift provisions. Each board is supposed to create its own personnel
rules for employees.<br>
<br>
According to <a href="http://www.thesunnews.com/564/story/1275012.html" target="”_blank”">an
article
last weekend in the <i>Sun News</i></a>, a liquor company gave many
free meals to board members across the state, including a $12,000
dinner for the members of two county boards.<br>
<br>
In addition, local boards sometimes pay their administrators
unusually high salaries and bonuses. Most egregious appears to be
Hanover County,
whose administrator made, last year, well over $250,000 plus a $30,000
bonus for a
relatively small operation, according to <a href="http://www.thesunnews.com/564/story/1272816.html" target="”_blank”">another
article in the <i>Sun News</i></a>. The assistant administrator is the
administrator's son, who was paid $120,000 with $20,000 bonuses
each of the last four years, according to <a href="http://www.wral.com/news/news_briefs/story/6745524/" target="”_blank”">an article
on the wral.com website</a>. The state ABC commission chair referred to
the Hanover County board's "culture of entitlement."<br>
<br>
But it's much more than that. It is a culture of nepotism, of secrecy,
and
of non-accountability. The county commissioners appointed the board,
but
provided no oversight. Nor did the state commission do anything about
the situation. Since the board was self-sustaining, even profitable, it
did not have to do what was necessary to get county or state funds.<br>
<br>
In fact, Hanover
County's ABC made an $11.2 million profit last year, which went to
state
and local governments. So it is in the interest of the state and of
local governments to
turn a blind eye to profitable ABC boards; they're a good way to keep
taxes down.<br>
<br>
According to <a href="http://www.starnewsonline.com/article/20100116/ARTICLES/100119769" target="”_blank”">an
extensive
<i>Star News</i> article</a>, one of the Hanover County ABC board members hid
important
information, including bonuses and longevity pay, from the county
commissioners when they sought to investigate the situation after it
was disclosed by the
local newspaper. When this coverup was
uncovered, the board resigned en masse, and the county commissioners
appointed three top county administrators to the board.<br>
<br>
Setting up a state monopoly run by local boards appointed by local
officials whose governments profit from it, and providing no serious
oversight, is an excellent way to ensure that more people than usual
will use their positions for their personal benefit. There is talk
about ethics reform in the ABC system, and even some talk about taking
the state out of the liquor business, but it will probably take more than a few minor
scandals to get state and local governments to give up, or provide independent ethics enforcement for, such a nice cash
cow, especially at a time when governments have budget deficits.<br>
<br>
<b>Update</b>: February 3, 2010<br>
According to <a href="http://www.charlotteobserver.com/breaking/story/1221026.html" target="”_blank”">an article in yesterday's Charlotte <i>Observer,</a></i> the state ABC commission has sent the local ABC commissions a set of ethics guidelines on gifts, travel, and conflicts of interest. The guidelines, if accepted by local commissions, would bar board employees from giving or receiving "any special treatment, consideration or advantage" from anyone because of their position.<br>
<br>
The gift provision prohibits the taking of any gifts from liquor suppliers, even promotional objects.<br>
<br>
The Mecklenburg ABC was the first to pass the ethics guidelines.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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