An Upside-Down Conflict of Interest
According to <a href="http://www.signonsandiego.com/news/metro/20080721-1926-bn21sedc.html&qu…; target="”_blank”">a
recent article in the San Diego <span>Union-Tribune</span></a>,
the chair of one of the city's economic development commissions made an
unusual deal with, and a half-million-dollar instant profit from (the
purchase and sale transactions were filed at the same time), the
commission three years <i>before</i> he became a member.<br>
<br>
Assuming this article is accurately describing the situation, this
creates an unusual conflict of interest. Clearly, the commission
chair was not using his position to give himself a financial benefit,
because he obtained the financial benefit three years before he joined
the commission. He also did nothing that would make it more
likely for him to join the commission, all things being rational,
because he had essentially cost the commission a half million
dollars. This is the opposite of the usual quid pro quo.<br>
<br>
<a href="http://www.cityethics.org/node/476">Click here to read the rest of this blog entry.</a>
<br>
<br>
Should this person have refused the offer to join the commission?
I think so, because he apparently had a rather unusual relationship
with it already, and if this relationship were to come out, it would
look bad for the commission, if not for him.<br>
<br>
The article does not consider where the actual conflict might be, that
is, whether the commission members or staff had a conflict, but there
is something that implies some sort of problem with the commission
staff. Two statements appear separately in the article:<br>
<br>
"After Flannery's blog posting on July 3, 2007 [disclosing the
transaction], James Waring, the mayor's top land-use official at the
time, requested explanations from Smith [president of the commission]."
[and]<br>
<p>"Mayor Jerry Sanders and four members of the City Council have
demanded the resignation of longtime SEDC President Carolyn Smith.
Smith and her staff received more than $1 million in extra compensation
over the past five years." More information about this issue can be
found <a href="http://www.signonsandiego.com/news/metro/20080709-9999-1m9sedc.html" target="”_blank”">here</a>.<br>
</p>
<p>The transaction with the commission chair occurred eight years ago,
and he joined the commission five years ago.<br>
</p>
<p>The article reports that the city attorney is looking into a
possible conflict of interest regarding the chair, but the implication
is that this apparently upside-down conflict may be something more. According to <a href="http://www.signonsandiego.com/news/metro/20080709-9999-1m9sedc.html">the
second article, </a>county grand jury recently questioned why three
sets of highly-paid executives are required for urban development in
San Diego. And a special audit of the economic development commission
is being done.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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