Being Indirect -- A Gift Loophole to Watch Out For
Earlier this week, <a href="http://www.cityethics.org/node/737" target="”_blank”">I wrote</a>
about an application of Louisiana ethics law that I felt was too
severe. Today I'm going to write about a Louisiana ethics provision, a fairly typical gift provision that applies to local government officials,
which is too weak, because it has a big loophole in it.<br>
<br>
<u>Ethical Leadership</u><br>
But before identifying this common loophole, I want to make it clear
that New Orleans' mayor, by taking advantage of the loophole and by
acting as if ethics stops at the end of an ethics provision sentence,
has shown extremely poor ethical leadership. No wonder there are so
many ethics problems in New Orleans. What he did is not only the fault of the state
legislature, but moreso the fault of the mayor.<br>
<br>
<u>The Gift Provision</u><br>
The gift provision of <a href="http://www.ethics.state.la.us/Pub/Laws/Title42Ch15.pdf" target="”_blank”">the Louisiana Ethics in Government Act</a>, which is also the controlling provision for doing
business, as discussed in <a href="http://www.cityethics.org/node/737" target="”_blank”">my
recent blog entry,</a> reads as follows:<br>
<br>
<div>§1115. Gifts<br>
A. No public servant shall solicit or accept, directly or indirectly,
any thing of economic value as a gift or gratuity from any person or from any officer, director,
agent, or employee of such person, if such public servant knows or reasonably should know that such person:<br>
<div>(1) Has or is seeking to obtain
contractual or other business or financial relationships with the public servant's agency, or<br>
(2) Is seeking, for compensation, to influence the passage or defeat of
legislation by the public servant's agency.<br>
</div>
B. No public employee shall solicit or accept, directly or indirectly,
anything of economic value as a gift or gratuity from any person or from any officer, director,
agent, or employee of such person, if such public employee knows or reasonably should know that such
person:<br>
<div>(1) Conducts operations or activities
which are regulated by the public employee's agency.<br>
(2) Has substantial economic interests which may be substantially
affected by the performance or nonperformance of the public employee's official duty.<br>
</div>
</div>
<br>
<u>The Loophole</u><br>
According to an ethics complaint filed by the <a href="http://www.metropolitancrimecommission.org/" target="”_blank”">Metropolitan Crime
Commission</a>, "a non-profit, privately funded, citizen’s organization
dedicated to exposing and eliminating public corruption ... in the
Baton Rouge and New Orleans metropolitan areas and throughout
Louisiana," two trips taken by Mayor Nagin and his family were funded
by a firm owned by a city technology vendor's owner.<br>
<br>
Note that: not by the vendor, not by a firm owned by the vendor, but by a firm owned by the individual who owns the vendor. In the real world, beyond corporate fictions, the trips were paid for with the
vendor's money. But since they weren't paid for by the vendor, they're kosher. That's the loophole.<br>
<br>
<u>Plugging the Loophole</u><br>
How is this loophole plugged? Very easily, with the words "directly or
indirectly." Well, not all that easily, because the placement of these
words is crucial.<br>
<br>
In the City Ethics Model Code, these words (actually "directly or
through a relationship with another person or entity") relate only to
the person or entity that "has
received or sought a financial benefit" from the city. It does not
relate to the person giving the gift. Both are necessary to plug both
indirect ways of getting around the gift law.<br>
<br>
In other words, a gift provision should prohibit anyone to give
anything to an official when the gift, directly or indirectly, is
coming from anyone that, directly or indirectly, is doing business with
the city. I will have to rework the City Ethics Model Code gift
provision, and I thank Mayor Nagin for the heads up.<br>
<br>
Section B of the Louisiana provision arguably does fill the loophole by
including a gift from an "agent" of someone who has substantial
economic interests which might be affected by the official's action or
inaction. Thus one could argue that, using the credit card of a company
owned by someone whose company is a city vendor, the then city chief
technology officer, who paid for the mayor's vacations with this credit
card, was acting as the vendor's (not the corporate vendor, but its
owner's) agent. But it is likely that this would not hold up in court.
It's better to have language that clearly includes indirect gifts.<br>
<br>
<u>The Role of the Government Lawyer</u><br>
Above, I said that this is the fault of the mayor. But I'd like to add
the lawyers who recommended this solution and/or told the mayor that it
was legal (assuming such lawyers did not also say it was unethical, even
if legal, and the vendor and mayor weren't interested in the ethics part of the advice). This would be especially bad were one of the lawyers a government lawyer.<br>
<br>
It's one thing when a politician wants to accept a gift, it's
another when a government lawyer who knows the gift is wrong finds the politician
and/or the city vendor a loophole, or approves what another lawyer
found. This is not acting in the public interest, which is what
government lawyers should do; it is acting in an official's personal
interest and, therefore, in the lawyer's personal interest, as well.<br>
<br>
<u>For More Information</u><br>
Some of the information here comes from two <i>Times-Picayune</i>
articles: <a href="http://www.nola.com/news/index.ssf/2009/05/metropolitan_crime_commissio…; target="”_blank”">1</a>,
<a href="http://www.nola.com/news/index.ssf/2009/05/jamaica_trip_a_blur_mayor_ra…; target="”_blank”">2</a>.
There are some fascinating details to this case, which weren't relevant
to my blog entry.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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