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Disgorgement of Gains or Civil Forfeiture
Saturday, October 30th, 2010
Robert Wechsler
Hidden in the middle of Question 2
on the New York City ballot this week are two important changes in
the city's conflicts of interest law (to my knowledge, the nation's
only aptly named ethics code). The current conflicts of interest
section of the
city charter can be found at pp. 319 ff.
The first is the addition of a penalty known as the disgorgement of gains, an ugly-sounding term that means that the Conflicts of Interest Board could require any money gained by violating the conflicts of interest law be paid to the city. Although the proposal also increases the top fine from $10,000 to $25,000, this is a more important change in the area of enforcement, because even when it is determined a fine is not required, for example, when it is clear that the official did not really know what was going on, it is important to require that benefits of ethical misconduct be returned. For serious misconduct, especially in a big city, a fine alone may not be commensurate with the violation. And the public certainly doesn't want to see officials keep ill-gotten gains.
See the City Ethics Model Code provision on this, which is referred to as "civil forfeiture." It is important that the proceeds of civil forfeiture be given to the local government, not used to fund the ethics program. One of the most serious areas of ethical misconduct by police departments is using civil forfeiture for the department's or its members' own use. This creates perverse and dangerous incentives that can undermine an agency's ethics environment.
Second, the proposal requires ethics training for all public servants. This, along with the easy availability of ethics advice, is the most important part of an ethics program. Unfortunately, it is also the most expensive part, and therefore is often left out, or training is only required for certain positions or for new hires. The larger the local government, the more feasible on-line training is, supplement by specialized in-person training for officials who are required to do the most complex ethical decision-making.
Robert Wechsler
Director of Research-Retired, City Ethics
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The first is the addition of a penalty known as the disgorgement of gains, an ugly-sounding term that means that the Conflicts of Interest Board could require any money gained by violating the conflicts of interest law be paid to the city. Although the proposal also increases the top fine from $10,000 to $25,000, this is a more important change in the area of enforcement, because even when it is determined a fine is not required, for example, when it is clear that the official did not really know what was going on, it is important to require that benefits of ethical misconduct be returned. For serious misconduct, especially in a big city, a fine alone may not be commensurate with the violation. And the public certainly doesn't want to see officials keep ill-gotten gains.
See the City Ethics Model Code provision on this, which is referred to as "civil forfeiture." It is important that the proceeds of civil forfeiture be given to the local government, not used to fund the ethics program. One of the most serious areas of ethical misconduct by police departments is using civil forfeiture for the department's or its members' own use. This creates perverse and dangerous incentives that can undermine an agency's ethics environment.
Second, the proposal requires ethics training for all public servants. This, along with the easy availability of ethics advice, is the most important part of an ethics program. Unfortunately, it is also the most expensive part, and therefore is often left out, or training is only required for certain positions or for new hires. The larger the local government, the more feasible on-line training is, supplement by specialized in-person training for officials who are required to do the most complex ethical decision-making.
Robert Wechsler
Director of Research-Retired, City Ethics
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