2004 Legal Seminar. Avoiding Legal & Political Land Mines: Developing a Legal Ethics Strategy for...

2004 Legal Seminar

Avoiding Legal & Political Land Avoiding Legal & Political Land Mines: Developing a Legal Mines: Developing a Legal Ethics Strategy for Municipal Ethics Strategy for Municipal UtilitiesUtilities

American Public Power Association

2004 Legal SeminarPRESENTED BY:

Corey R. Elmer

Vogel Law Firm, Moorhead, MN

Topic OutlineTopic Outline

1. Recent Ethical Controversies2. Sample of State Gift Laws3. Effective Strategies for Counseling

Municipal Utilities4. Dealing with Press and Political

Investigations5. Legal Limits and Ethical Limits

Why a discussion of ethical and legal issues affecting municipal utilities?

Recent accounts of ethical problems faced by public officials and employees illustrate the importance of ethical conduct and the consequences of improper and illegal conduct.

These recent accounts highlight the importance of ethical conduct by public officials and employees, including municipal utility officials and employees.

Municipal utilities, as public entities, are entrusted with the trust and confidence of the public.

As public officials, the responsibility is to follow the law, maintain high standards for conduct, and avoid any appearance of impropriety or conflict of interest

As attorneys, the responsibility is to provide sound advice and counsel

Recent Ethical

Controversies

Recent Ethical Controversies Recent Ethical Controversies

Connecticut:

Governor John Rowland resigned July 1, 2004, following series of revelations of corruption and acceptance of improper gifts.

Recent Ethical ControversiesRecent Ethical Controversies

Gifts included:– Free chartered flight to Las Vegas– Hot tub from an employee (plus use of

state workers to move hot tub routinely)– Thousands of dollars in renovations to

cottage paid for by political supporters and friends (new heating system, deck, kitchen work)

– Discounted vacations at homes owned by people doing business with state


Shady real estate deals, including sale of condo to straw buyer

Wife received large speaking fees and support of personal book venture

Governor backed loans and projects for friends and supporters


Legislature established Committee of Inquiry to investigate conduct by Governor

Calls for resignation grew as details of improprieties revealed

Subpoenas issuedGovernor resigns before testifying


Massachusetts:

State Office of the Inspector General investigated allegations of ethical and legal violations in several municipal light departments, including Braintree, Reading, Taunton, Chicopee, in 2002 and continuing today.


Expenditures Questioned:– Accommodations for personal vacations at

premier luxury hotels– Entertainment and recreation, including

Las Vegas Show tickets– Fine dining at top-rated and nationally

renowned restaurants– $584 worth of bedding and bathroom items

from Bed, Bath, and Beyond


Gifts included:– Numerous items of substantial value

bestowed upon department employees from vendors

– Rounds of golfing – Red Sox baseball tickets– Lunches– Christmas parties


Conflict of interest law prohibits public employees from accepting gifts from people with whom they conduct official business

Substantial value gifts = anything $50 or more, including:– Waived fees– Discounts– entertainment


Press had field day with allegations

State reports issued on each light department

Employees left light departments over the controversies

State investigations continuing


Minnesota:

Suburban city of Brooklyn Park investigated in 2002 by State Auditor (4th largest city in MN) for questionable city expenditures.


Questionable Expenditures:– Employee appreciation events– $15,000 for employee awards and gifts

during recognition events– $7,000 for employees, officials and private

individuals to play golf at various locations– Food at city meetings


Issue of whether expenditures served a valid “public purpose”

Debate centered around scope of implied authority of municipalities

Legitimate difference in opinions between city, state investigators

Points Illustrated by Examples

Points Illustrated by ExamplesPoints Illustrated by Examples

Ethical conduct by public officials and employees does matter

Objectivity of vendor selection called into doubt when employees receive freebies

Public confidence can be undermined


Oversight and accountability are essential

Adequate procedures are essential. Lack of adequate procedures frustrates accountability, can raise suspicion (even if unwarrented)


Past conduct can and will be uncovered by authorities or the press

Press coverage likely a feeding frenzy

Employee morale can be negatively impacted by either undisclosed inequities or disclosed scandals

##

Sample of

State Gift Law

Restrictions

Sample of Gift Law RestrictionsSample of Gift Law Restrictions

Acceptance of gifts (e.g., from vendors) can pose big problems for public officials

Problem: Acceptance of personal benefits from those who could gain advantage by influencing official actions raise suspicions that undermine the public trust

State Gift Law RestrictionsState Gift Law Restrictions

Different states have radically different approaches to the acceptance of gifts by public officials and employees

Approaches range from highly restrictive prohibitions to virtually no rules at all

Gift Laws – IowaGift Laws – Iowa

Iowa:

– highly restrictive of gift acceptance

– Intent: discourage all gratuities that create unacceptable conflicts of interest or the appearance of impropriety

Gift Laws - IowaGift Laws - Iowa

A “gift” is a rendering of anything of value for which legal consideration of equal or greater value is not given and received

Law prohibits public officials, public employees, candidates and the immediate family members from accepting or soliciting gifts from a “restricted donor”


Restricted Donors:– Party to contract to/from agency in which

donee holds interest or employed– Substantially affected greater than public

or a class– Party to pending matter before donee’s

regulatory agency– Lobbyist or client of lobbyist


Exceptions– Campaign contributions– Informational material– Inheritances– Plaques or items of negligible resale value– Non-monetary items with a value of $3.00

or less– Gifts for a wedding or 25th/50th wedding

anniversary

Gift Laws - MinnesotaGift Laws - Minnesota

Minnesota:

– Less extensive than Iowa

– Deals with specific fact patterns rather than blanket prohibitions


Allowable Gifts:– Computer mouse pad (worth less than $6)– Coffee mug (cost $4.75)

Non-Allowable Gifts:– A plaque valued at $20– Sale of box seats to an event at any price

when equivalent seating not available to the public


– Local official may not accept gift from an interested person

– Interested person may not give gift or request another to give gift to local official

Interested person: someone who has a direct financial interest in a decision that a local official is authorized to make

Gift Laws – MassachusettsGift Laws – Massachusetts

Massachusetts:

– Public employees prohibited from accepting gifts from people with whom they conduct official business

– Substantial value gifts = anything $50 or more

– Pattern of gift giving, even if below $50, is violation of state law

Gift Laws – South DakotaGift Laws – South Dakota

South Dakota:

– SD law does not impose strict restrictions or prohibitions on gifts to public officials or employees

– Public officials may be liable under state criminal laws (e.g. bribery)

Practical Solutions

For Counseling Municipal

Utilities

Effective StrategiesEffective Strategies

1. Develop a Code of Conduct

– Formalized importance of legal and ethical conduct

– Information sources like state and federal professional associations may have information and model documents


2. Adopt a Gift Policy Covering

Utility Officials and Employees

– Use state law as basis

– Uniform prohibitions help eliminate confusion and problems


3. Establish Budget Expenditure Policies

– Governing board to adopt policies on gift giving, recognition events, and other expenditures

– Policies should articulate the public purpose of expenditures


– Utility to develop approval procedures to implement policies

– Obtain and keep appropriate documentation of expenditures


4. Add an Ethics Component to Official/Employee Orientation

– Use (or develop) orientation of new public officials or employees to educate from beginning

– Opportunity to discuss policies, responses, conflicts of interest, expenses


– Prepare packet of written materials

– Materials include applicable law, local policies


5. Offer an Annual (at least) Ethics Training Session

– An opportunity for update since orientation or last training session

– Will ensure periodic review of policies and refresh individuals

– Require documentation of attendance


6. Designate a Chief Ethics Person

– Single source for ethics information and rules, providing consistent advice

– City or utility attorney may be best suited

– Difficult for a staff member to police the electeds


7. Conduct an Ethics Audit

– Audit is a preventative measure to discover and fix potential problems

– Interview selected appointed and elected officials and staff to identify areas of concern


– Review ethics code and existing policies to check compliance and need for update

– If any problems discovered, take corrective action promptly


8. Don’t Establish Policies for sake of Establishing Policies

– Even the best policies don’t matter if not used

– Use policies in orientations, training, swearing-in ceremonies


9. Investigate Ethical and Legal

Violations and Take Corrective Action

– Take issues seriously: investigate and discipline as necessary

– Enforcement is essential: policies meaningless without enforcement


10. Create an Ethical Culture

– Sustained effort over time required

– Follow procedures and institutionalize focus on good ethics

– Nature of public service requires higher standard of conduct

##

Dealing with Press and Political Investigations

Press and Political InvestigationsPress and Political Investigations

1. Consult City or Utility Attorney

– First step: Determine the utility’s legal rights and responsibilities in a situation

– Prepare a strategy to deal with situation


2. Be Open and Disclose Information

– Public entities have general responsibility to be open to public

– Utility should provide information requested

– Open policy builds trust and avoids negative perceptions


– Avoid coverups or shielding of information

– Limit access where law requires (and explain why information being withheld)


3. Nothing is Really “Off the Record”

– Be careful in comments to reporters or investigators

– Don’t “buddy-up” – it won’t work and credibility can be affected


4. Control Message with Single Spokesperson

– One person should field all inquiries, provide information and answers

– Helps eliminate contradictory material


Possible Spokespersons:

• Top-level staff (e.g. general manager)

• Communications Coordinator, or

• City or utility Attorney


5. Admit Mistakes

– If mistakes made, explain what happened and how

– Plan corrective action (and do it)

– Don’t give lame reasons


6. Make your Case – but Not

Unnecessary Apologies

– Explain what utility did and why

– If good story and reason for action, tell it


– Describe the decision-making process used to arrive at policy or decision

– Show appropriate legal authority for action

– Don’t apologize because investigation creates feeling of guilt when nothing done wrong


7. Be Prepared to Face the Music

– Being right under the law may not matter or be enough to avoid investigation

– Investigations may be motivated by some political or other reason


Bad things can happen to good people:

• Bad press• Negative governmental reports• Defeat at the ballot box

##

Legal Limits

and Ethical Limits

Legal Limits and Ethical LimitsLegal Limits and Ethical Limits

1. First Things First

– Just because an attorney says it’s legal doesn’t mean it’s the right thing to do

– The law may allow certain actions, which may not be the best, ethical approach


2. Working Definitions:

– Legal limitations: imposed by law on conduct by public officials

– Ethical limitations: imposed by ethical considerations on actions or decisions that may otherwise be legal


3. Filling in the Blanks

– State law is not always going to cover all situations that a municipal utility may consider important

– Utility officials must decide if gaps should be filled in, and how


Questions to be considered when

filling in the blanks from state law:


a. Just because something may be legal (or not illegal), should we allow it here?


b. If we decide to allow it here, can

our integrity and the trust placed

in us by the public be called into

question?


c. How is the public interest best

served by our behavior or actions?


d. Will there be an appearance of

impropriety?


e. Will there be conflicts of interest

that may result?

Ethical Limits and Legal LimitsEthical Limits and Legal Limits

f. How would this look on the front

page of the local newspaper?


g. If we allow this behavior or action,

will some people go too far?


h. How should acceptable limits or

appropriate boundaries be defined?


i. Is there any reason NOT to error on

the side of caution by taking the most ethical path?

###

End of Presentation

2004 Legal Seminar. Avoiding Legal & Political Land Mines: Developing a Legal Ethics Strategy for...

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