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Law vs. Function, and Oversight
Tuesday, August 21st, 2012
Robert Wechsler
An interesting issue has arisen in Louisiana. It involves an
important distinction in government ethics, between law and
function.
According to an AP article this weekend, the Louisiana Board of Ethics found that a state board of education member may keep both this position and her job as executive director of the New Orleans branch of Teach for America, even though Teach for America has a sizeable contract with the state board of ed and the law is that a board member cannot be an officer of an entity that has a contract with the board.
The Law and the Facts
The law is that a board member's employment is prohibited if certain elements are true. The element relevant to this situation is that the official “must be neither an officer, director, trustee nor partner in this non-governmental employer.”
There are two important facts to consider:
(1) The member is not executive director of the contractor, but only of its New Orleans branch. However, it is this branch that will be supplying the teachers under the contract.
(2) The contract was already in place when the executive director was elected to the board, so there was no conflict involved. However, there will be a conflict when the contract comes up for renewal.
The Legal Interpretations
The board of ed felt that its member must choose between the board and her employer, resigning from one or the other (but then it correctly sought an advisory opinion from the ethics board; self-regulation is not the responsible way to handle an ethics matter). The ethics board staff felt that the executive director's position with Teach for America fit the employment element and, therefore, that she needed to choose.
But the ethics board unanimously rejected the staff's advice, arguing that the executive director headed an office, not the organization, and therefore the employment element did not apply to her.
The executive director's lawyer went even further. He called her position an "honorific that nonprofits hand out." That is, she was not really an officer, just a low-level head of an office.
Law vs. Function
It is arguable, as the ethics board found, that the executive director is not an officer of the organization entering into the contract with the state. However, this is a purely legal argument. The ethics of the situation goes beyond interpretation of legal language.
The fact is that the executive director is an officer of the office that is fulfilling the terms of the contract. Functionally, she is the most important person in the organization relative to the contract. Functionally, she is more important than the national organization's board and executive director put together.
The best way to look at the situation is not in terms of the contract, which already exists in any event, but in terms of what would happen if a problem with fulfilling the contract was to arise. The board of ed would not talk to the head office. It would talk to the local office, which is where the problems would likely occur. In other words, the board (or its staff) would talk to its own board member.
All the legal interpretations in the world cannot change this fact. That is why, as in so many conflict situations, an ethics adviser has to go beyond mere legal interpretation.
Oversight
Contracts are generally bid competitively. But oversight of a contract is not. Therefore, conflicts raise a lesser problem with respect to a competitive bid than they do with respect to oversight.
A board should not have to oversee its members' personal (as opposed to official) work. This puts board members in an uncomfortable position, and it can undermine the public's trust in the board when the board makes a decision that appears to be going easy on its member. It's a lose-lose proposition.
This is why many ethics codes, like Louisiana's, recognize that withdrawal is not enough in such a situation. A board member should not be doing business with her board, not only because it might favor its member when it comes time to choose a bidder or negotiate terms. It's also about oversight.
Robert Wechsler
Director of Research-Retired, City Ethics
---
According to an AP article this weekend, the Louisiana Board of Ethics found that a state board of education member may keep both this position and her job as executive director of the New Orleans branch of Teach for America, even though Teach for America has a sizeable contract with the state board of ed and the law is that a board member cannot be an officer of an entity that has a contract with the board.
The Law and the Facts
The law is that a board member's employment is prohibited if certain elements are true. The element relevant to this situation is that the official “must be neither an officer, director, trustee nor partner in this non-governmental employer.”
There are two important facts to consider:
(1) The member is not executive director of the contractor, but only of its New Orleans branch. However, it is this branch that will be supplying the teachers under the contract.
(2) The contract was already in place when the executive director was elected to the board, so there was no conflict involved. However, there will be a conflict when the contract comes up for renewal.
The Legal Interpretations
The board of ed felt that its member must choose between the board and her employer, resigning from one or the other (but then it correctly sought an advisory opinion from the ethics board; self-regulation is not the responsible way to handle an ethics matter). The ethics board staff felt that the executive director's position with Teach for America fit the employment element and, therefore, that she needed to choose.
But the ethics board unanimously rejected the staff's advice, arguing that the executive director headed an office, not the organization, and therefore the employment element did not apply to her.
The executive director's lawyer went even further. He called her position an "honorific that nonprofits hand out." That is, she was not really an officer, just a low-level head of an office.
Law vs. Function
It is arguable, as the ethics board found, that the executive director is not an officer of the organization entering into the contract with the state. However, this is a purely legal argument. The ethics of the situation goes beyond interpretation of legal language.
The fact is that the executive director is an officer of the office that is fulfilling the terms of the contract. Functionally, she is the most important person in the organization relative to the contract. Functionally, she is more important than the national organization's board and executive director put together.
The best way to look at the situation is not in terms of the contract, which already exists in any event, but in terms of what would happen if a problem with fulfilling the contract was to arise. The board of ed would not talk to the head office. It would talk to the local office, which is where the problems would likely occur. In other words, the board (or its staff) would talk to its own board member.
All the legal interpretations in the world cannot change this fact. That is why, as in so many conflict situations, an ethics adviser has to go beyond mere legal interpretation.
Oversight
Contracts are generally bid competitively. But oversight of a contract is not. Therefore, conflicts raise a lesser problem with respect to a competitive bid than they do with respect to oversight.
A board should not have to oversee its members' personal (as opposed to official) work. This puts board members in an uncomfortable position, and it can undermine the public's trust in the board when the board makes a decision that appears to be going easy on its member. It's a lose-lose proposition.
This is why many ethics codes, like Louisiana's, recognize that withdrawal is not enough in such a situation. A board member should not be doing business with her board, not only because it might favor its member when it comes time to choose a bidder or negotiate terms. It's also about oversight.
Robert Wechsler
Director of Research-Retired, City Ethics
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