Ethics Act: Trends in Enforcement and Interpretation Michael R. - - PDF document

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Ethics Act: Trends in Enforcement and Interpretation

Michael R. Burchstead General Counsel, S.C. State Ethics Commission December 4, 2015

The Ethics Act of 1991

• The Ethics, Government Accountability, and

Campaign Reform Act of 1991.

– Passed in 1991 in the wake of Operation Lost Trust. – Amended in 1995, 2003, 2008, and 2011. – Regulations went into effect in 1997.

• If the conduct is not in the Ethics Act or its

regulations, then it is not within the jurisdiction of the Ethics Commission

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Ethics Commission jurisdiction

• Four subject areas of Ethics Act

– Rules of Conduct (§ 8-13-700 through 8-13-795) – Financial Disclosure (§ 8-13-1110 through 8-13-1180) – Campaign practices (§ 8-13-1300 through 8-13-1374) – Lobbyist/Lobbyist’s Principals (§ 2-17-5 through 2-17-150)

• Categories of people covered by Ethics Act

– Public officials – Public members – Public employees

• ***If Municipal Attorneys work for the government, they are

subject to Ethics Act; if on retainer, they are not subject to the Act

– Lobbyists/Lobbyist’s Principals

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Legislative Update on Ethics

• Some key provisions of what was proposed early in the year:

– Amended Section 8-13-1120 regarding contents of statement of economic interests to include additional private sources of income.

• Presently, income derived from government entities needs to be disclosed, but this

change adds specified private income. – Gave the Ethics Commission jurisdiction over members of the General Assembly.

• Presently, oversight of General Assembly handled by House and Senate Ethics
• Committees. This is perceived as a conflict of interest.

– Multiple provisions related to Political Action Committees and campaign practices

• A federal court several years ago declared the South Carolina definition of

“committee” to be unconstitutional, so the Ethics Commission hasn’t been regulating them since then. – Reconstituted the Ethics Commission

• Presently 9 members, appointed by the Governor with advice and consent of the

General Assembly.

• The bills may vary somewhat, but different versions allow some combination of the

House, Senate, Governor, judiciary the ability to appoint 9 or more members.

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COMPLAINTS AND CONFIDENTIALITY

Complaint Flow Chart

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Probable Cause Determination

• No probable cause

– Public – Order of Dismissal issued

• Probable cause finding

– Public – Next step: Notice of Hearing, Hearing Date Set, Consent Order Option – Another option: find probable cause and waive further proceedings

• Section 8-13-320(i): “If the commission finds probable cause to

believe that a violation of this chapter has occurred, the commission may waive further proceedings if the respondent takes action to remedy or correct the alleged violation

Confidentiality

• S.C. Code Ann. 8-13-320(10)(g):

– All investigations, inquiries, hearings, and accompanying documents must remain confidential until a finding of probable cause or dismissal unless the respondent waives the right to confidentiality. The wilful release of confidential information is a misdemeanor, and any person releasing confidential information, upon conviction, must be fined not more than one thousand dollars or imprisoned not more than

• ne year.

Confidentiality

• S.C. Code Ann. Regs. 52-718

(A) No person associated with a complaint…shall mention the existence of the proceedings or disclose any information pertaining thereto except to persons directly involved including witness and potential witnesses, and then only to the extent necessary for investigation and disposition of the complaint. Witnesses and potential witnesses shall be bound by these confidentiality provisions. (B)The Respondent may waive the confidentiality of the proceeding in writing filed with the Commission.

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Confidentiality Scenario

• Complainant send letter to the Ethics Commission

Executive Director and the media outlining ethics violations against a public official.

• Several days later, the Ethics Commission formally
• pens a complaint.
• A reporter calls several days later to inquire about

the status of the ethics complaint…

• A truthful answer: “Yes, there is a Complaint,”

does that violate confidentiality?

• YES

Confidentiality (continued)

• After a complaint is filed, until probable cause

is found, neither Complainant nor Respondent may discuss existence of complaint.

• Respondent may waive confidentiality, but the

waiver has to be in writing to the Commission

• Ethics Commission may find violation against

Complainant, Respondent, or other persons for violation of confidentiality.

Ethics Commission Opinions on Confidentiality

• Confidentiality attaches upon receipt of the complaint

letter by the State Ethics Commission

– SEC AO2002-010 (Mar 20, 2002)

• Confidentiality waiver must be in writing

– SEC AO2000-06 (Jan 19, 2000) – In order to properly waive confidentiality, the Respondent must forward written notice of his waiver to the State Ethics Commission prior to commenting. – “Clearly the confidentiality provision are in place to protect the Respondent; however, when the Respondent waives such confidentiality without written notice, the Commission and the Complainant are prevented in commenting on the complaint.”

12/7/2015 5 Ethics Commission Opinions on Confidentiality

• A councilmember with an ethics violation against

him can discuss his legal defense in executive session without violating confidentiality

– SEC AO92-130 (June 9, 1992) – In executive session, the council member can advise

• ther members of the fact of the complaint without

disclosing materials facts or allegations contained therein. – The Council could then go into open session to vote

• n a motion to provide legal counsel, without

disclosing facts or allegation or that it is an Ethics Commission complaint.

CONFLICTS OF INTEREST AND OTHER RULES OF CONDUCT ISSUES

Conflicts of Interests– 700A

• Section 8-13-700(A)

– “No public official, public member, or public employee may knowingly use his official office, membership,

• r

employment to

• btain

an economic interest for himself, a family member, an individual with whom he is associated, or a business with which he is associated.” – Exception for incidental use not resulting in additional public expense.

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Conflicts of Interests– 700B

• Section 8-13-700(B)

– “No public official, public member, or public employee may make, participate in making, or in any way attempt to use his office, membership,

• r employment to influence a governmental

decision in which he, a family member, an individual with whom he is associated, or a business with which he is associated has an economic interest.” “

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Conflicts of Interests– 700B (continued)

• Section 8-13-700(B)(continued)

– "A public official, public member, or public employee who, in the discharge of his official responsibilities, is required to take an action or make a decision which affects an economic interest of himself, a family member, an individual with whom he is associated, or a business with which he is associated shall:

(1) prepare a written statement describing the matter requiring action or decisions and the nature of his potential conflict of interest with respect to the action or decision; … (3) if he is a public employee, he shall furnish a copy of the statement to his superior, if any, who shall assign the matter to another employee who does not have a potential conflict of

• interest. If he has no immediate superior, he shall take the action prescribed by the State

Ethics Commission; (4) if he is a public official, other than a member of the General Assembly, he shall furnish a copy of the statement to the presiding officer of the governing body of an agency, commission, board, or of a county, municipality, or a political subdivision thereof, on which he serves, who shall cause the statement to be printed in the minutes and require that the member be excused from any votes, deliberations, and other actions on the matter on which the potential conflict of interest exists and shall cause the disqualification and the reasons for it to be noted in the minutes;

Definitions

• “Economic interest” (Section 8-13-100(11))

– Interest distinct from that of the general public. – Large class exception. If the only economic interest realized is that which would be realized as a member of a “profession, occupation, or large class,” then the public official, public member, or public employee may participate in the decision.

• “Family member” (Section 8-13-100(15))

– Includes a member of the person’s immediate family, also: spouse, parent, brother, sister, child, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, grandparent,

• r grandchild.

– Amended in 2011 to include in-laws.

• “Individual with whom he is associated.” (Section 8-13-100(21))

– “Individual with whom the person or a member of his immediate family mutually has an interest in any business of which the person or a member of his immediate family is a director, officer, owner, employee, compensated agent, or holder of stock worth one hundred thousand dollars or more at fair market value and which constitutes five percent or more of the total outstanding stock of any class.”

• “Business with which he is associated.” Section 8-13-100(4)

– “Business of which the person or a member of his immediate family is a director, an officer, owner, employee, a compensated agent, or holder of stock worth one hundred thousand dollars or more at fair market value and which constitutes five percent or more of the total outstanding stock of any class.” – If you or your spouse is employed by a company, that is a business with which you are associated.

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Anti-nepotism provision

• May not cause the employment, promotion,
• r transfer of a family member to a position in

which one supervises. Prohibits discipline of

• ne’s family member. Section 8-13-750.

Prohibition on representation

• Section 8-13-740 states in part:

– (4) A public official, public member, or public employee of a county may not knowingly represent a person before an agency, unit, or subunit of that county for which the public

• fficial, public member, or public employee has official responsibility except:
• (a) as required by law; or
• (b) before a court under the unified judicial system.

– (7) The restrictions set forth in items (1) through (6) of this subsection do not apply to:

• (a) purely ministerial matters which do not require discretion on the part of the governmental entity

before which the public official, public member, or public employee is appearing;

• (b) representation by a public official, public member, or public employee in the course of the public
• fficial's, public member's, or public employee's official duties;

– (c) representation by the public official, public member, or public employee in matters relating to the public official's, public member's or public employee's personal affairs or the personal affairs of the public official's, public member's, or public employee's immediate family. – (8) A state, county, or municipal public official, public member, or public employee, including a person serving on an agency, unit, or subunit of a governmental entity shall not be required to resign or otherwise vacate his seat or position due to a conflict of interest that arises under this section as long as notice of the possible conflict of interest is given and he complies with the recusal requirements of Section 8-13-700(B). A governmental entity includes, but is not limited to, a planning board or zoning commission.

Other Rules of Conduct provisions

• May not receive or give anything of value with intent to influence

(Anti-Bribery Statute). Section 8-13-705.

• May not accept an honorarium for speaking engagements in one’s
• fficial capacity. May accept payment for actual expenses. Section

8-13-715.

• May not accept additional money for assistance given while

performing one’s duty. Section 8-13-720.

• May not use confidential information gained through employment

for personal gain. Section 8-13-725.

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Other Rules of Conduct provisions

• Post employment restrictions. Section 8-13-755
• Employee participating in procurement may not

resign and accept employment with a person contracting with the governmental body. Section 8-13-760.

• A public official/employee may not have an

economic interest in a contract with the State or a political subdivision if the public

• fficial/employee is authorized to perform an
• fficial function relating to the contract. Section

8-13-775.

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Recent Ethics Commission Orders

• Complaint 2013-069

– Respondent was a town administrator and her son was a police officer for the town. – Police officers generally paid for 42 hours a week, but only 40 when they were attending the Criminal Justice Academy. – Respondent allegedly engaged in conversations with town personnel (her subordinates) in an effort to increase her son’s hours to 42 while attending the academy. – Commission Decision and Order

• Violation of 700B for using her employment to gain an economic

interest for a family member.

• Public reprimand
• Fine of $1,000 and administrative fee of $1,000

Ethics Commission Opinions on Recusals and Conflicts of Interest

• County Council member whose wife is employed by the County may

participate in voting on general pay raises for County employees, but not specific matters directly affecting his wife as an individual. Large class exception.

– SEC A092-144 (March 25, 1992)

• No prohibition on person serving in more than one capacity, such as

County Council member also serving on Board of Visitors of City Museum; he just must recuse himself when required to take action on one position affecting the other.

– SECAO92-077 (February 26, 1992)

• The question of whether a public official has a conflict of interest with

respect to zoning ordinance must be decided on a case by case basis; here, because he owns an adjoining piece of property, he has a conflict of interest and must recuse.

– SEC AO2003-001 (July 17, 2002).

12/7/2015 9 Ethics Commission Opinions on Recusals and Conflicts of Interest

• “Business with which he is associated” includes non-profits agencies and

boards on which public official serves, unless he serves by virtue of his

• fficial capacity as a board member.

– SEC AO2000-011 (May 17, 2000).

• Town council member who is a named defendant in a lawsuit brought by

town council must recuse himself from any discussions or votes about that lawsuit.

– SECAO2002-007 (January 26, 2002).

• Council Member who is stockholder and employee of solid waste company

may vote on general business issues that affect his firm no more than

• ther businesses (such as licensing and business taxes); however, on

issues directly regarding his firm he is required to recuse.

– SEC AO92-239 (October 21, 1992).

USE OF PUBLIC RESOURCES FOR REFERENDUMS AND OTHER ELECTIONS

Use Caution with Referendums

• Section 8-13-1346

– (A) A person may not use or authorize the use of public funds, property, or time to influence the outcome of an election. – (B) This section does not prohibit the incidental use of time and materials for preparation of a newsletter reporting activities of the body of which a public

• fficial is a member.

– (C) This section does not prohibit the expenditure of public resources by a governmental entity to prepare informational materials, conduct public meetings, or respond to news media or citizens' inquiries concerning a ballot measure affecting that governmental entity; however, a governmental entity may not use public funds, property, or time in an attempt to influence the

• utcome of a ballot measure.
• Section 8-13-765

– (A) No person may use government personnel, equipment, materials, or an

• ffice building in an election campaign. The provisions of this subsection do

not apply to a public official's use of an official residence.

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Definitions

• Section 8-13-1300
• (2) "Ballot measure" means a referendum,

proposition, or measure submitted to voters for their approval.

• (9) "Election" means:

– (a) a general, special, primary, or runoff election; – (b) a convention or caucus of a political party held to nominate a candidate; or – (c) the election of delegates to a constitutional convention for proposing amendments to the Constitution of the United States or the Constitution of this State.

Ethics Commission Opinion

• Pretty extensive opinion

– SEC AO2000-008 (Jan 19, 2000)

• Some highlights:

– May not use physical premises of government office for campaign. – Cannot use government materials, but a public official may reprint his letterhead at his own expense with a disclaimer: “not paid for with public funds” or the like. – No publicly owned telephones, faxes, copiers, computers may be used – Staff must work on campaign on their own time off government premises

Another Ethics Commission Opinion

• Public facilities may be used for political

meetings or campaign-related activities provided they are rented or made available on similar terms to all candidates or committees.

– SEC A092-140 (March 25, 1992).

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What Can you Do

• Provide information to the public explaining the

rationale for the referendum.

• Provide description of the referendum, including the

cost, tax impact, and the scope of the proposal.

• Answer questions about the referendum, including the

impact of passage or failure.

• Develop, print, and distribute fact sheets.
• Sponsor and hold general information meetings with

the general public.

• Provide voter registration information

What You Can’t Do

• Public employees may not engage in any activity on public

time or using public resources to promote or oppose a certain vote.

• Solicit yes or no votes. This includes using language like

“VOTE,” “SUPPORT,” or similar language.

• Collect funds to support a vote.
• Print, copy, email, or mail materials advocating a particular

vote.

• Wear promotional t-shirts or buttons of advocacy while on

the clock.

• Display signs on public property that advocate for a yes or

no vote.

Advisory Opinions

• If you have any doubt as to whether a course
• f conduct will be a problem, you may seek an

advisory opinion from the Commission.

• Anyone subject to the Act may request the
• pinion
• Limitations
• Formal versus informal

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Conclusion

My contact information:

Michael R. Burchstead General Counsel SC State Ethics Commission 5000 Thurmond Mall, Suite 250 Columbia, SC 29201 (803) 929-2503 mburchstead@ethics.sc.gov http://ethics.sc.gov/

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