Presentations by Claire Guthrie Gastañaga
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Ethical Concerns for Local Government Employees: 
The Fundamentals of Legal and Ethical Behavior
Training Session for County Employees, December 2001

What is legal is not always ethical. The law may not tell you what is right.
In Virginia, the legal rules establish a minimum standard for ethical behavior by local and state officers and employees.

Ethical behavior goes beyond these rules and relies on personal and professional integrity.

What are the legal rules that help define ethical conduct by local officers and employees in Virginia?
In Virginia, there are three basic statutes that concern themselves with ethical conduct by state and local government employees and decisions regarding public contracting: the Virginia State and Local Government Conflict of Interests Act, §§ 2.2-3100-3127; the Ethics in Public Contracting Act, §§ 2.2-4367-4377, and the Virginia Governmental Frauds Act, §§ 18.2-498.1-498.5.

The Ethics in Public Contracting Act supplements the other two. Compliance with the Conflict of Interests Act may not be sufficient to assure compliance with the Public Contracting Act provisions. The Governmental Frauds Act applies primarily to those seeking to engage in commercial dealing with public agencies but could apply to any public employee involved in commercial dealings with his agency who falsifies or covers up a material fact or makes or uses a false writing or document knowing it to be false.

Other laws have an ethical component, for example, the Freedom of Information Act, nondiscrimination and privacy rules, and prohibitions against misuse of public property or funds.
What is the purpose of the State and Local Government Conflict of Interests Act?

The General Assembly passed the current version of the state ethics law in 1987 “declaring that [Virginia’s] citizens are entitled to be assured that the judgement of public officers and employees will not be compromised or affected by inappropriate conflicts.” “To that end and for the purpose of establishing a single body of law applicable to all state and local government officers and employees on the subject of conflict or interests, the General Assembly enacts this … Act so that the standards of conflict of such officers and employees may be uniform throughout the Commonwealth.” The legislature stated that the law shall be liberally construed to accomplish its purpose.

What are the basic requirements of the Conflict of Interests Act?
Generally prohibited and unlawful conduct

The Act prohibits local officers and employees from:

Accepting money or any other thing of value for services performed within the scope of their official duties, other than the remuneration they receive from their agency;
Accepting money or other thing of value for assisting someone to obtain employment, appointment or promotion within a government or advisory agency;
Accepting money or other thing of value for assisting a person or business to obtain a contract with any governmental or advisory agency;
Using confidential information acquired through their public position for their own or another’s economic benefit;
Accepting any money, loan, gift, favor, service, or business or professional opportunity that reasonably tends to influence them in the performance of their official duties;
Accepting a business or professional opportunity when they know that the opportunity is being offered to influence them in the performance of their official duties.

Prohibited conduct regarding contracts

The Act has different prohibitions for members of local governing bodies and local officers and employees.

The Act prohibits any local government employee from having a personal interest in a contract with the agency of which he is an employee, other than his own contract of employment.

The Act also prohibits an officer or employee of a local governmental agency from having a personal interest in any contract with any other governmental agency that is a component of his local government unless the contract is:

Awarded as a result of competitive sealed bidding or competitive negotiation as defined in the State Procurement Act, or is awarded as a result of an authorized procedure embodying competitive principles;
Is awarded after a finding, in writing, by the administrative head of the governmental agency that competitive bidding or negotiation is contrary to the best interest of the public.

There are several exceptions to the general prohibitions applying to local employees. One exception exempts contracts of employment between an employee’s own government agency and a member of his immediate family, provided the employee does not exercise any control over the employment or the employment activities of his immediate family member and the employee is not in a position to influence these other activities. A second exception exempts contracts for the sale by a government agency of services or goods at uniform prices available to the general public. A third excepts a personal interest in a contract of employment with any other governmental agency that is a component part of his local government.

There are several other exceptions that include:

The sale, lease or exchange of real property between an employee and a governmental agency, provided the employee does not participate in the transaction on behalf of the public body and this fact is made a part of the public record; and
Contracts for the purchase of goods or services when the contract does not exceed $500.00.

Prohibited conduct regarding transactions

A transaction is any matter on which official action is taken or contemplated (such as a zoning or permitting decision).

An employee with a personal interest in a transaction must disqualify himself from participating in the transaction if the transaction has application solely to a property or business in which he has a personal interest. This disqualification must be on the record. Disqualification means that the employee cannot act in any manner on behalf of his agency in the transaction.

The employee may participate in a transaction if he is a member of a business, profession, occupation, or group the members of which are affected by the transaction, if he complies with the declaration requirements.

He may also participate in the transaction if it affects the public generally, even though his interest, as a member of the public, may be affected.

What constitutes a personal interest?
To understand these prohibitions, one must first understand the definition of a “personal interest.”

The Act defines “personal interest” as a “financial benefit or liability accruing to an officer or employee or to a member of his immediate family.” It goes on to say that “such interest shall exist by reason of (i) ownership in a business if the ownership interest exceeds three percent (3%) of the total equity of the business; (ii) annual income that exceeds, or may be reasonably be anticipated to exceed, $10,000 from ownership in real or personal property or a business; (iii) salary, other compensation, fringe benefits, or benefits from the use or property, or any combination thereof, paid or provided by a business that exceeds or reasonably may be anticipated to exceed, $10,000 annually; (iv) ownership of real or personal property if the interest exceeds $10,000 in value and excluding ownership in a business, income, or salary, other compensation, fringe benefits or benefits from the use of property; or (v) personal liability incurred or assumed on behalf of a business if the liability exceeds three percent (3%) of the value of the business.

“Immediate family” means a spouse or any other person living in the same household, who is a dependent of the employee or of whom the employee is dependent.

What are the disclosure requirements for local employees?
Local employees designated in an ordinance passed by the local governing board are required to file a Statement of Economic Interests annually on or before January 15. The clerk of the local governing body maintains the forms as public documents.

What are the penalties for violating the Act?
An employee who knowingly violates the Act shall be guilty of a class 1 misdemeanor and malfeasance in office. Upon conviction, a judge may order forfeiture of public office in addition to any other fine or penalty. A contract made in violation of the Act may be declared void and may be rescinded within 5 years. Any money or thing of value the employee received shall be forfeited.

What conduct is not covered by the Conflict of Interests Act?
The Act provides minimum rules for sate and local officers and employees. The Act defines certain standards or types of conduct that are clearly improper. The law cannot, however, protect against all appearances of conflict. It is incumbent on all individuals to determine whether their conduct will present an appearance of impropriety that is unacceptable and that will affect the confidence of the public in their ability to perform their public duties.

What is the purpose of the Ethics in Public Contracting Act?
This Act is designed to supplement other laws governing the ethical conduct of public officials. Conduct that does not violate the Conflict of Interests Act may violate the Ethics in Public Contracting Act.

For example, while personal interest is defined the same, “immediate family” is a broader term for purposes of the Contracting Act. “Immediate family” includes a “spouse, children, parents, brothers and sisters, and any other person living in the same household as the employee.” There is no requirement that such persons be dependents of the employee or that the employee be their dependent.

What are the basic requirements of the Ethics in Contracting Act?
A public employee may not participate in any procurement transaction if any bidder or offeror contemporaneously employs him. Furthermore, participation is prohibited if the public employee, his partner or a member of his immediate family holds certain positions with a bidder, offeror or contractor (vendor) such as being an officer, director, trustee or if that person is in a position that involves personal and substantial participation in the procurement transaction. Similarly, participation is prohibited if the public employee owns or controls an interest of more than five percent of the vendor company.

Whenever a public employee, the employee’s partner or any member of the employee’s immediate family has a pecuniary interest (personal interest) arising from a procurement transaction, the employee is barred from participating. Finally, if the employee, the employee’s partner, or any member of the employee’s immediate family is negotiating for, or has arranged for employment with, any vendor, the employee is barred from participating in any transaction involving that vendor.

No public employee may solicit or accept anything of more than nominal value from a bidder, offeror, contractor or subcontractor.

An employee who has had procurement responsibility for a public body, who within one year of his employment with the public body accepts employment with a bidder or contractor with whom he has dealt in the past, must give notice of his new employment before he begins with the new employer.

Contractors are prohibited from demanding, receiving, or making kickbacks or engaging in price fixing.

Public bodies may require employees to submit certificates annually that they have complied with this Act.

No public employee with responsibility for a procurement transaction shall knowingly falsify, conceal or misrepresent a material fact, make false statements or make false writings.

What are the penalties for violating the Ethics in Public Contracting Act?
An employee convicted of a violation is guilty of a class 1 misdemeanor. In addition, he shall forfeit his employment. [Note: the Conflicts Act allows the judge to require the employee to forfeit his employment; this is not discretionary].

What are the basic requirements of the Governmental Frauds Act?
This Act provides criminal penalties for persons who engage in fraudulent practices in commercial dealings with the Commonwealth or local government.

“Commercial dealing” is defined as any “offer, acceptance, agreement, or solicitation to sell or offer to sell or distribute goods, services or construction, to the Commonwealth of Virginia or any local government within the Commonwealth or any department or agency thereof.”

What is the penalty for violating the Governmental Frauds Act?
The Frauds Act makes it a class 6 felony for any person, in any commercial dealing, to knowingly falsify, conceal, mislead or cover up by any trick, scheme or device a material fact or to make any false, fictitious or fraudulent statements or representations or make or use any false writing or document knowing it contains false or fictitious statements or entries.

Looking beyond state laws for guidance regarding ethical behavior by Caroline County employees
County Policies

Caroline County policy, 12.7 Gratuities and/or Gifts to County Employees, prohibits employees from accepting “any personal gift or gratuity of value from any firm, contractor, consultant, individual or others that may relate to County businesses or services provided.”

The policy requires employees to “exercise careful judgment with the overriding consideration being that any gift, regardless of value, is accepted as a courtesy, has no value to the employee, is not requested by the employee, and is in no way related to ‘special treatment’ for the giver.”

The policy expressly advises employees to discourage any gift when possible.

Employees who have questions about any gift are advised by County policy to talk with the department head who may seek clarification from the County Administrator.

An employee who is determined to have violated the County’s policy on gifts may be disciplined, and may be dismissed, depending on the severity of the violation.

Accepted ethical standards that address public service at the local government level
The International City/County Management Association has adopted a code of ethics that can be found on the web at http://www.icma.org. These standards provide general ethical standards to which all public employees can aspire and to which your managers subscribe.

The ICMA has published advice on the website regarding gifts and special events, ‘Tis the Season: Advice on Gifts and Events, that underscores the appearance of favoritism that can arise out of the acceptance of any gift no matter how small.

Tenet 11 of the ICMA Code encourages all members to “handle all matters of personnel on the basis of merit so that fairness and impartiality govern a member’s decisions, pertaining to appointment, pay adjustments, promotions and discipline.

Tenet 12 of the ICMA Code encourages members to “seek no favor; believe that personal aggrandizement or profit secured by confidential information or by misuse of public time is dishonest.”

Broader concepts of personal and professional integrity
Integrity and unintegrity
Writing in his book, Integrity, Stephen L. Carter says that integrity “requires three steps: 1) discerning what is right and what is wrong; 2) acting on what you have discerned, even at personal cost; and 3) saying openly that you are acting on your understanding of right from wrong.

In order to “work” these steps, Carter argues that you must do serious soul searching to decide what you truly believe to be right and good; that you must do something rather than “drift as activists in behalf of none of [your] beliefs;” and that you must say what you do.

In other words, according to Carter, integrity means you must “do right,” “play by the rules” and “keep your commitments.”

What Carter calls “unintegrity” or “corruption” is “getting away with things we know to be wrong.” He says that inconsistency is the easiest example of unintegrity to spot and that unintegrity is “corrosive” to an individual or an organization.

Courageous conscience
Complementing this concept of integrity is Robert Kelley’s concept of the “courageous conscience” set out in his book, The Power of Followership. Kelley describes a variety of followership styles including that of the exemplary follower.

For a follower to exemplary, Kelley says the follower must have a “courageous conscience” which he defines as “the ability to judge right from wrong and the fortitude to take affirmative steps toward what one believes is right. It involves both conviction and action, often in the face of strong societal pressures for followers to abstain from acting on their beliefs.”

Included in Kelley’s concept is not merely the ethical duty to refrain from acts that are wrong, but an affirmative motivation to make a positive contribution to the organizations of which we are part.

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