Preferential Treatment - Fairness and Process
Preferential treatment is one of the most difficult ethics provisions
to deal with, because it seems on its face so open-ended. Every time a
decision is made, someone is preferred over someone else, whether it's
a hiring decision, a contract award, or a zoning change. But if these
decisions are made fairly and through the appropriate legal process,
there is no preferential treatment.<br>
<br>
Preferential treatment involves acting unfairly and outside the
appropriate legal process to give an advantage to an individual or
firm. For example, allowing a company to write the specifications for a
contract bid, or writing a job description so that only a friend's
resume would fit.<br>
<br>
Often there is some sort of quid pro quo tied to preferential
treatment. Rarely does an official favor a company without getting
something for it, whether helping a family member or obtaining a promise of
future employment or representation. It's often hard to show a quid pro
quo, which would make the transaction criminal. But such a quid pro quo
does not have to be shown in order to prove an ethics violation.<br>
<br>
An excellent example of preferential treatment, with a possible quid
pro quo, has come out of a federal Interior Department investigation
into former Interior Secretary Gale Norton, according to <a href="http://www.latimes.com/news/nationworld/nation/la-na-norton17-2009sep17…; target="”_blank”">an
article</a> this week in the Los Angeles <i>Times</i>.<br>
<br>
The short form of the story is that the Interior Department awarded
Shell Oil three shale oil leases and then, a few months after resigning
from her position, Norton took a job with Shell. But it's the details
that make it a clear preferential treatment matter.<br>
<br>
The purpose of the leases, six in all, was to allow companies to try
out experimental processes to extract oil from shale. Shell filed its
first application the day after the call for applications in June 2005.
Then in August legislation, pushed by Shell, allowed companies to hold
multiple shale leases. Shell quickly filed two more applications, and
the other companies, not alerted about the new law or Shell's
applications, did not file multiple applications.<br>
<br>
The purpose of the leases was to experiment with methods, but Shell was
awarded half the leases to try out just one method, in contradiction to the express purpose of the program. And, according to an independent expert, Shell was given the
best land. Future profits from these leases are estimated to be in the hundreds of
millions of dollars.<br>
<br>
Each of these steps shows preferential treatment to Shell. One could
say that it was a reward for Shell's persistence in lobbying. It worked
harder and deserved to get more. But all bidders should be given the
same information at the same time, and an experimental program should
not be changed due to the persistence of one participant. No one should
be given multiple leases if the rules were changed in the middle of the
bidding, and all bidders did not know they could file multiple
applications. It is the failure to be fair and follow an appropriate
legal process that makes this situation so clearly preferential.<br>
<br>
See <a href="http://www.cityethics.org/content/preferential-treatment-what-it-what-i…; target="”_blank”">another blog post</a> on preferential treatment.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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