Legal Defense Funds as Misuse of Office and Gifts

Update: June 29, 2010 (see below)

I thought I would never write about anything concerning Gov. Sarah Palin again, but the report on an ethics complaint against her, regarding the fund created to pay the legal expenses from her defense against prior ethics complaints, is too interesting and valuable to ignore.

The report (attached; see below) deals with two provisions that appear in most local government ethics codes:  misuse of office and gifts. The report's author, Thomas M. Daniel, brings a rather fresh perspective to these provisions, in the context of officials' legal defense funds.

Misuse of Office
The misuse of office provision in Alaska states that a "public officer may not use, or attempt to use, an official position for personal gain." There is clearly personal gain from the creation of the fund, Daniel writes, but it is less clear that the governor used her position to get it. But the language of the website of the fund, called the Alaska Fund Trust, makes it appear that, according to a 2003 Alaska attorney general's opinion, Palin was "a public official who 'trades' on the fact that the officer holds a position in state government in order to raise funds."

This is not a conclusion one would reach at first blush. But it makes perfect sense, especially in light of the attorney general's interpretation of the language. As Daniel says, an ordinary citizen could not have a legal defense fund to raise hundreds of thousands of dollars to defend against allegations. On the other hand, an ordinary citizen doesn't have to deal with ethics complaints. (On the other hand, Palin didn't have to fight the complaints so strenuously, but Daniel doesn't say this. Nor does he note that an ordinary government employee would not be in a better position than an ordinary citizen, and could in fact have to deal with ethics complaints.)

Gift Prohibitions
The gift provision issue is more complex. The Alaska gift prohibition applies to all gifts made "under circumstances in which it could reasonably be inferred that the gift is intended to influence the performance of official duties, actions, or judgment." I generally don't like this sort of provision, since it does not provide clear guidance (who's to know what "could reasonably be inferred"). But stuck with this language, Daniel looks at all its ramifications. There's too much here for me to summarize; I recommend you read this part of the report (pages 5-7).

But the conclusion that payments of legal expenses from the Alaska Fund Trust would be prohibited is based primarily on the fact that the founder of the trust is in a position to be seen as benefiting from the gifts. The founder is "a long-time friend of the governor. The governor appointed Ms. Cole to the position of chairman of the Board of Agriculture and Conservation, a state agency in the Division of Agriculture. The governor also appointed Ms. Cole to the board of the Royalty Oil and Gas Commission." Founding the Alaska Fund Trust could very well be seen as a payback.

Who Pays for an Official's Defense in an Ethics Proceeding?
The rest of the report discusses the issue of the governor having to pay for her own defense against ethics allegations. This is also an important issue at the local level, where many codes provide (i) that the government will defend an official against an ethics complaint; (ii) that officials' legal expenses will be paid by the government if charges are dismissed (the approach Daniel recommends Alaska take, by passing a law to that effect); or (iii) that the official can sue the complainant for legal fees, or even twice the cost of legal fees.

I don't agree with any of these approaches. The government should not defend any party in a proceeding before its ethics commission or a state ethics commission for the reason stated by the Alaska attorney general and included in the report: "because the essence of an ethics complaint is an allegation that the officer took actions that elevated his personal interests over his official responsibilities, for which the officer may be subject to personal liability and penalties."

As for the second approach, many reasonable complaints do not lead to findings of violations for many reasons, including settlements, technicalities, quorum problems, and even threats of lawsuits against the commission or its members. In fact, in this very case, while recommending that Gov. Palin not accept any money from the Trust and withdraw her authorization of it, Daniel sees no necessity for holding a formal hearing. This effectively provides for a settlement and means that the complaint would be dismissed. Therefore, although the complaint was considered valid on two grounds, under any of these approaches, the governor would be recompensed for legal fees. See City Ethics Model Code §213.14 for an alternative approach that would not allow compensation in this situation.

Alaska law is not clear on this issue. However, the attorney general said that he does not represent officials charged with ethics violations, for the reason stated above. I think this is excellent reasoning, reasoning that is very often ignored by local governments faced with requests to defend officials in ethics as well as freedom of information proceedings.

The attorney general went on to give four conditions that, if met, would require the state to reimburse a public official for the expense of hiring private counsel, perhaps capped by a dollar limit: (1) the legal proceeding results in exoneration of the public official with respect to a code of conduct, (2) the public officer was acting within the scope of his office or employment, (3) the legal fees are reasonable, and (4) an appropriate source of funds is available to pay the expense.

Legal Defense Funds
Of course, national politicians have legal defense funds all the time. The report notes that "ethics provisions governing members of the United States Senate and House of Representatives specifically permit members of Congress to have Legal Expense Trust Funds so long as they comply with certain restrictions." The Alaska Fund Trust complied with these restrictions, but such trusts are not expressly permitted in Alaska.

Local politicians sometimes have legal defense funds. A recent example is the former mayor of Detroit. It's unlikely that there is such a thoughtful consideration of legal defense funds intended to aid local government officials.

For more on the Palin legal defense fund, see articles in the Washington Post and New York Times.

Update: June 29, 2010
According to an article in yesterday's Anchorage Daily News, Gov. Palin reached a settlement with the state personnel board that the fund would return the $390,000 it raised. And a new legal defense fund was quickly formed, which is already controversial for e-mails it has sent out that misrepresent facts and makes false accusations. For example, the fund blames the Democratic Party for the ethics complaints, when it played no role in them. It also refers to the legal defense fund settlement as a victory of Palin's enemies "in their vicious campaign to smear, bankrupt, and force this dedicated public servant and conservative leader out of politics!" Sounds highly ethical to me.

Robert Wechsler
Director of Research-Retired, City Ethics

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