Enforcing Ethics Laws Against Contractors: Quickest Is Not Always Best
It is important to bring contractors into an ethics program,
requiring them to disclose gifts their employees make to officials, and to deal responsibly with
possible conflicts they are aware of. Businesses tend to deal with
such things internally. Bringing them into an ethics program requires them to
recognize that dealing with conflict situations internally is not
enough.<br>
<br>
The fact is that most ethics programs do not place sufficient
requirements on contractors. Often, ethics programs have no
jurisdiction over them or no enforcement powers. This means that
contractors have nothing to fear from dealing irresponsibly with
conflict situations or even from making gifts to officials. Or it
means that enforcement is left in the hands of officials, thereby
politicizing enforcement.<br>
<br>
The latter is what occurred in Chicago, according to <a href="http://www.chicagotribune.com/news/local/ct-met-emanuel-red-light-camer…; target="”_blank”">an
article in yesterday's Chicago <i>Tribune</i></a>. When, last week, the
<i>Tribune</i> got hold of a letter mentioning an internal investigation of
possible ethical misconduct by the employee of a company that has operated
Chicago's red-light camera program since 2003 (the conduct involved a gift to the principal
official overseeing that program), the city's chief procurement
office quickly went to work, without handing the matter over the
city's ethics board.<br>
<br>
Why? Because there is currently a bid for another
red-light camera program, and the company is bidding on this one, too. Putting off the bidding while the matter is dealt with by the ethics program might
make it impossible to go ahead with the controversial program when the process is complete. The mayor does not want to take this chance.<br>
<br>
The company's internal investigation determined that, two years ago, an employee had
paid a $910 hotel tab for the official who oversaw the red-light
program (he has since left government service). This is a clear but relatively minor violation of
the city's ethics code. A more serious problem is that the
company, despite being fully aware of what occurred, did not
disclose the gift to the ethics board. And there is a question about
a Chicago subcontractor, who is a friend of the official, getting
$570,000 in commissions for installing red-light cameras.<br>
<br>
So, rather than letting this matter go through the ethics
enforcement process, the chief enforcement officer (apparently with the mayor's full support) decided to reject the company's bid for the new
contract, while letting it manage the current program. He said, "I
find that Redflex's failure to timely report this incident to the
city is unacceptable behavior and is a failure by Redflex to act in
the city's best interest." The good and unusual part of this quote
is that the chief procurement officer recognized that a contractor,
like an official, should act in the city's best interest, not solely
in its own interest, which was keeping the matter under wraps.<br>
<br>
Although the former Chicago official says
that he inadvertently accepted payment for the hotel (he was
attending baseball spring training), the company quickly admitted
its responsibility for not reporting the illegal gift (referring to
it as "a single isolated incident"). The problem is that it's hard
to believe this. It's clear that the company takes these matters
seriously; in fact, it also overhauled its expense reporting
policies and sent the employee, an executive vice president, to
"anti-bribery training." What the company doesn't take seriously is
its responsibility to the governments it contracts with.<br>
<br>
As with so much ethical misconduct, there is more to the story. The
former official who accepted the hotel room left Chicago's
government to be a consultant to the Traffic Safety Coalition (TSC).
TSC is partially funded by the Chicago contractor and it is run by a
"longtime political ally of the mayor." According to the article, TSC
supported the mayor's successful push last year to expand the city's
red-light camera program.<br>
<br>
Punishing someone makes it look like you're being serious. But it is
more serious to let an independent ethics program deal with
situations such as this. The result might be the same, less strict or more, including a rebid of the current contract. Whatever the decision, it would not be seen not as
politically motivated, but as the decision of an independent board
(or it would if the board's members had not all been chosen recently by the
current mayor, yet another reason why this was not a good thing to do).<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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