Appearance of Impropriety
Johanna Bishop, Eric Monzo, Beatrice Patton Dixon, Paula Jenkins-Massie, Sally Jensen and Robert Ralston
COMPLAINT FINAL ORDER
The Commission received a complaint of violation of the Ethics Code alleging that a County official, while serving on a County Board, had an unresolved conflict of interest which allowed for the perception and/or actual financial self-dealing.
The complaint in this matter alleged that the respondent, who was serving on a New Castle board (the “Board”), was possibly using his influence on the Board, and/or his vote, to maintain a business relationship for a vendor who performed financial investment services for the County (the “Vendor”). The complaint alleged that the respondent had benefitted financially in the form of finder’s fees or other types of commissions or remuneration from the Vendor as a result of his service on this Board. The allegations in the complaint, if true, would be clear violations of the Ethics Code, among other applicable laws. The Commission investigation included the review of documentary evidence as well as interviews of 18 persons with information about the board and the facts relevant to the allegations in the complaint.
During the relevant period, the respondent served on the Board and, at times, exercised considerable influence on the decisions made by the Board. The respondent was a Board member for over 10 years. The decisions made by the Board involved the financial welfare of certain County investments and financial obligations. The Commission investigation revealed that, at a point in time, the Board was trying to decide whether to terminate the Vendor’s contract with the County which had been providing financial services to the County for a long period.
The investigation also found that the Vendor was willing to pay a finder’s fee to persons who generated business for its company. While such finder’s fees or commissions may be acceptable in private industry or other transactions which do not involve the County and/or persons covered by the County Ethics Code, such a payment to someone sitting on the Board would be in violation of the Ethics Code.
When it came time for the Board to vote on whether to end its relationship with the Vendor and hire a different company, the investigation revealed that the respondent was involved in the deliberations, research, preparation, discussions, and negotiations involved with the Board’s decision-making with respect to this Vendor. At the Board meeting where a vote was taken on the issue, the respondent spoke favorably about maintaining the business relationship with the Vendor notwithstanding its recent poor performance. The investigation further revealed, however, that the respondent, after participating in the discussion about the Vendor, recused himself from the actual vote. The reason for the respondent’s recusal on such vote was publicly questioned. Shortly thereafter, the respondent resigned from service to the Board.
The investigation did not reveal that the respondent received a finder’s fee or any other financial benefit from the Vendor as a result of his involvement on the Board or his actions while serving on the Board. Nor did the investigation reveal that the respondent had a conflict of interest involving the Vendor. Rather, the investigation revealed that the respondent recused himself from the vote on whether to terminate the contract with the Vendor because of a fear of reprisals from certain persons in positions of authority in County government at the time of the vote. The investigation findings support a conclusion that if a conflict existed in this matter, it was a conflict among strong and competing personalities, not a conflict as contemplated by the Ethics Code.
RELEVANT AUTHORITY AND ETHICS CODE PROVISIONS
Relevant provisions in the definition section of the Ethics Code, Section 2.03.102, include the following:
Appearance of impropriety means conduct which is prohibited by Section 2.03.104A.
Compensation means any money, thing of value or any other economic benefit of any kind or nature whatsoever conferred on or received by any person in return for services rendered or to be rendered by oneself or another.
Conflict or conflict of interest means conduct which is prohibited by Section 2.03.103.
County means New Castle County and including any County Department.
County official means any person elected or appointed to any County office, board, commission or the New Castle County Council Audit Committee provided, however, that for purposes of Sections 2.03.103(B)(2), 2.03.103(C), and 2.03.104(C). "County official" does not include any member of a board or commission which operates solely in an advisory capacity, and whose members are not compensated, other than reimbursement for expenses.
Financial interest means any interest representing more than five (5) percent of a corporation, partnership, sole proprietorship, firm, enterprise, franchise, organization, holding company, joint stock company, receivership, trust, or any legal entity organized for profit.
Recusal means, including but not limited to, withdrawing from sponsorship, deliberation, vote, research, preparation, discussion, negotiation, contract formation, policy making, planning, decision making, and/or implementation of a matter. It also includes a prohibition on conducting, in an official capacity, any private or public discussion of a measure raising a conflict or improper appearance. As soon as a potential conflict or improper appearance arises or is recognized, an official or employee must end direct or indirect participation, advice, input, direction, recommendation, or discussion, as well as refraining from vote, if the person is a not an elected official. Elected officials may choose to avoid recusal and may vote if they follow the alternate process described in Subsection 2.03.103.A.2.
Certain portions of the New Castle County Ethics Code are relevant to this opinion, including the following:
Section 2.03.101. - Purpose of Division.
A. It is hereby declared that public office is a public trust and that any effort to realize personal financial gains through public office other than compensation provided by law is a violation of that trust. It is further declared that the people have a right to be assured that the financial interests of holders of or nominees to or candidates for public office do not conflict with the public trust. Because public confidence in government can best be sustained by assuring the people of the impartiality and honesty of public officials, this Division shall be liberally construed to promote complete financial disclosure as specified in this Division. Furthermore, it is recognized that clear guidelines are needed in order to guide public officials and employees in their actions. Thus, this Division intends to define as clearly as possible those areas which represent conflict with the public trust.
B. It is recognized that many public officials are citizen-officials who bring to their public offices the knowledge and concerns of ordinary citizens and taxpayers. They should not be discouraged from maintaining their contacts with their community through their occupations and professions. Thus, in order to foster maximum compliance with its terms, this Division shall be administered in a manner that emphasizes guidance to public officials and public employees regarding the ethical standards established by this Division.
Section 2.03.103. - Prohibitions relating to conflicts of interest.
A. Restrictions on exercise of official authority.
1. No County employee or official knowingly or willfully shall use the authority of his or her office or employment or any confidential information received through his or her holding County office or employment for the personal or private benefit of himself or herself, a member of his or her immediate family or a business with which he or she is associated. This prohibition does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the County official or employee, a member of his or her immediate family or a business with which he or she or a member of his or her immediate family is associated. There will be a rebuttable presumption of a knowing or willful violation of this section if the action benefits the County official or employee, his or her spouse, or his or her dependent children (whether by blood or by law).
2. In any case where a person has a legal and/or statutory responsibility with respect to action or nonaction on any matter where the person has a personal or private interest and there is no provision for the delegation of such responsibility to another person, the person may exercise responsibility with respect to such matter, provided that promptly after becoming aware of such conflict of interest, the person files a written statement with the Commission fully disclosing the personal or private interest and explaining why it is not possible to delegate responsibility for the matter to another person. If the matter is one in which the legal and/or statutory responsibility requires the person to vote upon the issue, the written statement filed with the Commission shall be read into the public record prior to the time the person's vote is cast. Any person choosing to abstain from voting on an issue where or she has a conflict shall state the reasons for his or her conflict on the record; an abstaining voter need not file the written statement with the Commission required when acting on, rather than abstaining from, an issue involving a conflict.
Section 2.03.104. - Code of conduct.
A. No County employee or County official shall engage in conduct which, while not constituting a violation of Subsection 2.03.103.A.1., undermines the public confidence in the impartiality of a governmental body with which the County employee or County official is or has been associated by creating an appearance that the decisions or actions of the County employee, County official or governmental body are influenced by factors other than the merits.
B. No County employee or County official shall acquire a financial interest in any private enterprise which such employee or official has reason to believe may be directly involved in a decision to be made by such official or employee in an official capacity on behalf of the County.
C. Any County employee or County official who has a financial interest in any private enterprise which is subject to the regulatory jurisdiction of, or does business with, any County Department shall file with the County Human Resources Office a written statement fully disclosing the same. Such disclosure shall be confidential and the County Human Resources Office shall not release such disclosed information other than to the Commission and to the Department head of an employee, except as may be necessary for the enforcement of this Division. The filing of such disclosure statement shall be a condition of commencing and continuing employment or appointed status with the County.
D. No County employee or County official shall use such public office to secure unwarranted privileges, private advancement or gain.
E. No County employee or County official shall engage in any activity beyond the scope of such public position which might reasonably be expected to require or induce such County employee or County official to disclose confidential information acquired by such employee or official by reason of such public position.
F. No County employee or County official shall, beyond the scope of such public position, disclose confidential information gained by reason of such public position nor shall such employee or official otherwise use such information for personal gain or benefit.
Section 2.03.106. - Financial disclosure: statements required.
A. Each designated County official and County employee shall file a statement of financial interests for the preceding calendar year with the Commission no later than May 1st of each year that he or she holds such a position and of the year after he or she leaves such a position. The General Manager or individual of equivalent rank of the Office of Human Resources shall provide the Commission with the names of the individuals required to file statements of financial interest by January 31st each year such statements are required to be filed. For purposes of this Section, the phrase "designated County official and County employee" shall mean:
1. All elected County officials;
2. All County officials who perform work that is nonministerial in nature;
3. Members of the Board of Adjustment, Planning Board, Historic Review Board, Pension Board, License, Inspection and Review Board, Board of Assessment Review, New Castle County Financial Advisory Council, New Castle County Audit Committee, and the Ethics Commission. Members of any County Board or Commission not listed in this paragraph are not required to file statements of financial interest.
4. The Chief of Police;
5. All Department General Managers and personnel of equivalent rank;
6. All Department Division Heads and persons of equivalent rank;
7. All purchasing agents, public works contract officers and personnel of equivalent or higher rank;
8. All assessors, assessment technicians, right-of-way agents and personnel of equivalent or higher rank;
9. All Code Enforcement Officers, all inspectors, all plan examiners including architects and engineers, all permit processors, and personnel of equivalent or higher rank;
10. All housing rehabilitation specialists and personnel of equivalent or higher rank;
11. All land use planners and personnel of equivalent or higher rank within the Department of Land Use;
12. With the exception of the Chief of Police, no police officer shall be required to file a statement of financial interests within the meaning of this division unless the officer serves on one of the boards, councils, or commissions named in Subsection 3. of this section.
B. Each candidate for County office shall file a statement of financial interests for the preceding calendar year with the Commission not later than seven (7) days after the last day for giving notice of candidacy pursuant to 15 Del. C. § 3106 (Filing of candidacy for nomination at a primary election).
C. Each nominee for County office who is subject to confirmation shall file a statement of financial interests for the preceding calendar year with the Commission and with the official or body that is vested with the power of confirmation at least ten (10) days before the official or body shall approve or reject the nomination. Each nominee to the New Castle County Farmland Preservation Advisory Board, established under the authority of 3 Del. C. § 906 or its successor, shall file a statement of financial interests for the preceding calendar year with the Commission and with New Castle County Council at least ten (10) days before County Council shall approve or reject the nomination.
D. No County official, candidate for County office, or employee shall be allowed to take the oath of office or enter or continue upon his or her duties, nor shall he or she receive compensation from County funds, unless he or she has filed a statement of financial interests as required by this division.
1. If the Commission determines that a filing has not been made or that a filing is deficient, the Commission shall provide a written notice to the individual required to file, identifying the deficiency or delinquency and reciting the penalties for failure to file.
2. The individual notified in accord with Subsection D.1. has ten (10) calendar days from the mailing date of the notice to correct the delinquency or deficiencies.
3. If the individual fails to file or correct the noted deficiencies by the conclusion of the ten (10) day period, the Commission may issue a notice by certified mail to the individual that a civil penalty of ten dollars ($10.00) per day is being imposed for each calendar day the statement of financial interests remains delinquent or deficient beyond the ten-day period. The individual shall pay any such penalty before the Commission may accept a filing from the individual.
4. The penalty described in Subsection D.3. is in addition to other penalties provided by law and the filing of a statement of financial interests in compliance with this section does not otherwise obviate the failure to comply with Subsections 2.03.106.A, B, or C.
5. An individual who receives the notice described in Subsection 2.03.106.D.3 and who knowingly or willfully fails to pay the penalty imposed by the Commission shall be subject to the sanctions contained in Section 1.01.009.
6. An individual against whom a financial penalty has been imposed pursuant to Subsection D.3. may contest the imposition of the penalty in whole or in part by filing an appeal in writing with the Commission within thirty (30) days after payment of the assessed penalty. If the penalty amount is overturned in whole or in part, the Commission shall refund the appropriate amount of the penalty to the appellant. The successful appellant shall not be entitled to interest or any other costs.
E. All statements of financial interests by a County official, candidate for County office or nominee for County office pursuant to this Division shall be made available for public inspection and copying during regular office hours. All statements of financial interests by a county employee containing financial information of a privileged or confidential nature shall not be deemed a public record for purposes of 29 Del. C. Ch. 100 (Freedom of Information Act). Nothing in this subsection shall be construed as prohibiting access by the Commission to all statements of financial interests filed in accordance with this Division. Nothing in this subsection shall be construed as prohibiting access by any general manager or individual of equivalent rank to all statements of financial interests filed by a County employee in accordance with this Division.
The New Castle County Ethics Code prohibits conduct on the part of County officials or employees which either creates the appearance of impropriety even where no direct conflict of interest is present. Specifically, conduct which creates an appearance of impropriety is prohibited by Section 2.03.104(A) of the New Castle County Code. To determine if an appearance of impropriety exists, the Delaware courts have stated that “[t]he test is… if the conduct would create in reasonable minds, with knowledge of all relevant facts, a perception that an official’s ability to carry out [his or] her duties with integrity, impartiality and competence is impaired.” Hanson v. Delaware State Public Integrity Com’n, 2012WL3860732, at *16 (Del.Super. 2012), aff’d, 69 A.3d 370 (Del.Supr. 2013); and “[t]he test for appearance of impropriety is whether the conduct would create in reasonable minds, with knowledge of all the relevant circumstances that a reasonable inquiry would disclose, a perception that the [official’s] ability to carry out [the official’s] responsibilities with integrity, impartiality and competence is impaired.” In re Williams, 701 A.2d 825, 832 (Del.Super. 1997). The courts have advised the Commission to look at the totality of the facts presented, and this Commission has historically applied this standard when reviewing the conduct of County officials and employees.
STANDARD OF PROOF
The burden of proof regarding a determination of whether a violation of the Ethics Code occurred is the “clear and convincing” standard recited in Code Section 2.04.103.H. That standard has been defined by the Supreme Court of Delaware as follows: “to establish proof by clear and convincing evidence means to prove something that is highly probable, reasonably certain, and free from serious doubt.” Hudak v. Procek, 806 A.2d 140, 147 (Del. 2002). The Court in Hudak v. Procek also cited the definition found in the Delaware Superior Court Pattern Civil Jury Instructions: “evidence that produces in the mind of the trier of fact an abiding conviction that the truth of a factual contention is highly probable.” Id., Section 4.3 (2000).
The Commission does not find any evidence to support the allegation that the respondent benefitted financially from his service on the Board, his favorable comments about the Vendor made during discussions at Board meetings, or his recusal from the vote on whether to terminate the Vendor’s County contract. The investigation showed that the respondent recused himself from a Board vote where no actual conflict existed. While the respondent’s recusal in this instance could have been handled in a more transparent manner, the reasonable person reviewing the facts of this case would conclude that the respondent’s decision to recuse himself from a vote on the termination of the Vendor’s contract with the County may have caused confusion and much misunderstanding, but was not a violation of the Ethics Code.
The manner in which the respondent handled his recusal from the vote on the Vendor’s contract left room for controversy and after-the-fact involvement of the Ethics Commission. Actively voting County officials and employees are strongly encouraged to review the Ethics Code, and Section 203.103.A.2, in particular, which section deals with conflicts and vote abstentions. Additionally, prior to voting, all voting officials and employees may confidentially submit questions regarding potential conflicts of interest to the Ethics Commission for an Advisory Opinion.
Complaint C16-01 is DISMISSED.
BY AND FOR THE NEW CASTLE COUNTY
ON THIS 12TH DAY OF OCTOBER, 2016.
Johanna P. Bishop, Chairperson
New Castle County Ethics Commission