Ethics and the Unpaid (By Government) Adviser
The controversy surrounding the New York State pension fund returned to
<a href="http://www.nytimes.com/2009/03/20/nyregion/20morris.html" target="”_blank”">the
front page of the New York <span>Times</span></a>
today. The players are former state comptroller Alan Hevesi, his
political adviser Hank Morris, and pension fund investment officer
David Loglisci.<br>
<br>
The occasion is the indictment by the state attorney general of Morris
and Loglisci, along with charges brought by the SEC. The charges
involve kickbacks from Morris's acting as an intermediary between
investment firms and his close friend Alan Hevesi, who is the pension
fund's sole trustee. But I'm more interested in the ethics status of
Hank Morris, a man without any formal position in government who was
actually a major government mover and shaker. What can an ethics
program do about someone like him?<br>
<br>
Morris's lawyer put his finger on the problem: "the pension fund had
made 'hundreds of millions, if not billions, of
dollars on investments Hank Morris lawfully introduced to it, and the
fund did not pay him one penny.'" Wow, you might wonder, why not? How
generous can a guy get?<br>
<br>
This appears to be Morris's modus operandi. Back in 2001, according to <a href="http://www.nytimes.com/2001/08/17/nyregion/compromise-brings-hevesi-2.6…; target="”_blank”">an
article in the New York <span>Times,</span></a>
Morris was the campaign manager for Hevesi's unsuccessful run for New
York mayor (he was also campaign manager for Hevesi's successful runs
for city and state comptroller). Hevesi and Morris worked out a deal
whereby Morris wouldn't get paid for his services so that more public
money would be available for advertising and other purposes. The city's
Campaign Finance Board put a stop to that. ''I think they tried, as
every campaign does, to test the boundaries of
the law,'' said the Rev. Joseph A. O'Hare, chairman of the Campaign
Finance Board. ''They tried in a way that may have been a little more
inventive and creative than some others, but which in the end proved to
be unpersuasive.''<br>
<br>
On both occasions, Morris was not a public servant, but he was involved
in an underhanded scheme affecting government. And both times he took
no money. Ethics laws don't anticipate someone like him.<br>
<br>
And this is a serious problem. Political operators who have no
government position and receive no money from the government are often
in a position to do very well out of the government as well as to wield
a great deal of power. Party bosses are the most common instance of
this. They may have nothing but a party position, but they call the
shots, select appointees, contractors, and developers, as well as who's
going to run for office. The government pays them nothing, but they
make a lot of money off government and have a great effect on it.<br>
<br>
I've written about two other versions of this problem, <a href="http://www.cityethics.org/node/575" target="”_blank”">consultants and brokers who
arrange bonds</a>, and lawyers (again in New York State) setting
themselves up to get pensions, despite the fact that <a href="http://www.cityethics.org/node/466" target="”_blank”">they were just consultants</a>.
<br>
<br>
Consultants are sometimes covered by ethics codes, but unpaid advisers
are not. I am an unpaid adviser to officials in my own town's
government, as well as to officials throughout the country, with
respect to ethics issues. Aren't I acting in a governmental role, even
if indirectly (just as a paid adviser is)? Shouldn't I be required to
respect the rules on confidential information and conflicts, etc?<br>
<br>
The City Ethics Model Code does include consultants, defining a
consultant as "an independent contractor or
professional person or entity engaged by the city and in a position to
influence a city decision or action, or have access to confidential
information." The problem here is the phrase "engaged by the city." Why
not add something to include unpaid advisers: "...person or entity engaged by the city or advising a city official, and in a position to influence a city
decision..."? Sounds like a change worth making.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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